otc hearing aids audiology practice

Successfully Integrating OTC Hearing Aids into an Audiology Practice

After last week’s discussion on the essential elements of running a successful practice, such as calculating cost/hour and how this can be used in a bundled or unbundled approach to hearing aid dispensing, Dr. Michael Valente returns to discuss how audiology clinics can integrate OTC devices into their clinic offering.

In Part 2 of his presentation, Dr. Valente covers:

  • Impact of OTC/PSAP/DTC on Audiology
  • Impact of Diminished reimbursement for clinical services
  • Adoption rate of hearing aids
  • Review of 2 studies on performance of PSAPs for mild to moderate hearing loss
  • Creating a strategy to integrate OTC devices by offering an entry level hearing aid using an unbundled approach
  • Importance of counseling on difference between bundled/unbundled approach to allow patients to decide best option for themselves
  • A discussion on how this actually ‘played out’ at the Washington University clinic

Full Episode Transcript

Dave Kemp 0:10
All right, welcome back to This Week in Hearing. So here we have Mike Valente, ready to present part two of his presentation here. So Mike, take it away.

Michael Valente 0:20
David, thank you so much again for the invitation. And in this presentation, I’m going to talk about an example of how our clinic at Washington University decided to embrace and integrate OTC/DTC devices into our practice, and OTC of course is over the counter and DTC our hearing aids that can be gotten strictly online, so direct to the consumer online. Just as a brief overview of what Part One was all about. I showed you how to calculate cost of hour by extracting your direct and indirect costs, as well as other items directly from your p&l, and then calculate your billable hours. Also, you needed to complete a time analysis of all visits involved in the syncing process. And then you could utilize an Excel spreadsheet that I talked about in that first presentation, convert your cost per hour to a charge per hour, based upon what you feel is your desired profit and percent, or what kind of profit you want, at the end of the year be at 100,000 200,000, whatever it might be. And then I shared with you my thoughts as to why you would want to be profitable and what it brings to the table. And then, in the end, how you can use this all of this information to create a bundled or an unbundled model in terms of how you want to dispense and we’ll go into that in greater depth today. So now I’m going to shift gears, and in this presentation, I’m going to briefly touch on the impact of OTC, PSAPs, and DTC on audiology. And then I’m also going to touch on the impact of diminished reimbursement on clinical services. So how the two of those are combining for some people to make it believe as if audiology as we know it is the end of the world. And we’ll go into that explaining why that really is not true. I’ll then also talk briefly about the adoption rate, which is roughly around 30% in the United States, and why, and then reviewed to strategies of performance of PSAPs for mild to moderate hearing loss. And if that portion of the presentation, I will share my thought that from the studies that I that we did, and also from some of the studies that I’ve read PSAPs, many, many PSAPs, I think perform just fine if you have a mild hearing loss. But there is some question as to whether or not they would perform for moderate losses as being accepted in the FDA. And I’ll share the data to point to why I believe that to be true. And then I’m going to share with you how we created a strategy to integrate these devices by offering an entry level hearing aid and dispensing it utilizing an unbundled approach, utilizing the same processes that we talked about in the first presentation. And then really, really, I’m going to delve into why you’re really in order for this to work, you really have to rethink how you counsel your patients on the differences between unbundled and bundled, and then allow patients to determine what paths they want to take, and then share with you how this strategy played out in our clinic. All of this is based upon real data, not some hypothetical pie in the sky, kind of a thing. So first of all, this I I mean, I think in talking to colleagues around the country and listening to some of the social media websites, there is a large percent of the population in the United States and by the way, also in Europe, that really views OTC, direct to consumer as the end of audiology as we know it, they look at it as this insurmountable threat. Whereas I, as I’ll share with you look upon it as an incredible opportunity. And I’ll explain to you why I believe that to be true. So audiologists, in my view, must adopt new services to increase patient visits and revenue. That is because of the decreasing revenue by Medicare and other third party payers. First, and to this point, the unknown impact of OTC… OTC and DTC Products audiometric tests have been done with apps and other challenges. So, I believe that integrating OTC like devices into the clinic is one example that could help address this need. So, I’m not going to go through all of this. But these are the various meetings that were held in DC, to create OTC. And essentially, they wanted to find, why is it that 70% of hearing aids in US, 70% of the population in the United States who could use hearing aids are not using them. And they came out with things of reasons for that as greater accessibility, reduced cost.

Again, cost is the primary reason, accessibility is another reason, affordability, access, and then mild to moderate hearing losses. And you got to read this and understand that these are the obstacles that are viewed by people as why this 70% has not attempted this technology. And then what do you have to do in the clinic to jump over those obstacles and make accessibility not a problem, make cost less of a problem and to be competitive. And that’s what the approach that I will discuss with you is all about. And at the bottom, I just want to point to you. It’s my view that all of this the all these meetings and the FTC and the FDA, I view this as free marketing, because it has placed this problem front and center in the United States. And it has taken hearing aids that nobody seems to really want to talk about upfront, and it’s made it a thing that you should grab on to and embrace and bring these people into your into your practice. And then it really gets down to the bottom line, if they come to your clinic, retain them, and don’t have them go someplace else, when they talk to you about these other ways in which they can get here. And I understand that. But guess what, you can do it here. And we can do it better. And show them the data. And that’ll come hopefully clear by the time we get to the end of the presentation. So this is the increasingly challenging landscape that was there when I was active. And I’ve been retired now for two years. One is Medicare and third party payers are providing reduced payment for diagnostics. And I don’t think it’s a secret that for Audiology for an audiology clinic to be profitable, you’re not going to do it if your income is based purely upon diagnostics. That’s number one. Number two, more Medicare beneficiaries are using Medicare Advantage plans for the supplemental plans. And a lot of these plans offer less than optimum reimbursement for your services, and significant costly tactics that delay payment. Then you have this, what it seems to be growing on a daily basis, direct to consumer devices that can be on the net. And that’s just the list of a lot of them. And it just seems that every time I get back onto the onto the web, more and more devices are being added to this. So this is a never ending-and why is it? Why is it there’s this monstrous increase in manufacturers wanting to dispense hearing aids, and I think I’ll share some of that data with you. If the FDA approval OTC devices will cause reduced patients who can hearing aids via an audiology practice, but will increase the invisibility of hearing aids to a large segment of patients who are currently not seeking hearing aids.

So this is just a slide that I got from Beckett et al in 2021. That shows the incredible rise in the number of Medicare beneficiaries who are enrolling in Medicare Advantage plans for their Part B supplemental. And I know I my wife and I were involved in this. So I’m very much aware of this. And in it varies from state to state and in Missouri. And also we’re in the United States. I could actually get supplemental insurance as a Medicare Advantage plan at zero at $0 per month doesn’t cost me anything. And it also includes hearing aids, dental drugs vision, and my best guess is is that this percent of beneficiaries enrolling in this plan because of its low cost is just going to grow and grow and grow. And there are going to be more More patients who have access to hearing aids in these plans, that would be my best guess. And this is an interesting slide that I want them to spend some time with you. This is from Windmill and Freeman in 2021. And there are three slides that follow. And what this shows is various audiometric procedures. This is comprehensive audio. This is air conduction and bone conduction. This is SRT and word recognition. This is AC air conduction thresholds only. And this is SRT only, from 2007 to 2020. And their point is there’s this common sense that Medicare reimbursement is decreasing. And what they’re suggesting is up to 13 to 2020, it’s remained relatively stable, which is true. But a couple of points. Number one, look at this axis here and look at the Medicare approval for these procedures. So in our clinic, when we did an air conduction through air conduction threshold, only our fee ticket, our gross charge was $60. But air conduction only the approved Medicare payment is 33. Which means my net income is 55% of my gross for that procedure. If you’re looking at your comprehensive audio, which went down and stayed stable, we charged $170. That was our feature, if that was our gross charge. But Medicare approved 38, which means our collection rate was 54%, remember, is the 38 balance is to $33. That’s what floats the boat, not what you charge, it’s what you receive. It’s the net income, not the gross charge. So the point that I’m making is, yes, the Medicare fees have stabilized over time. But number one, the amount that they pay is really low in comparison to what you’re charging. Number two, although the charge may stayed the same, from Tuesday, 2013 to 2020. Take my word for it, your expenses for running your practice has not. So although your income is stable, your cost to do business has increased, therefore your net profit has decreased. So to say that charges have stable by Medicare over time is a good thing. In my opinion, not so because my expenses over those seven or eight years has increased, therefore my net profit has decreased. And so somebody might say, we’ll charge more for your procedure. The answer is you really can’t do that. Because what you’re going to get is based upon your CPT code. So if I charge $300, for a comprehensive audio is an example, I’m still only going to get $38. So increasing the fee is really not going to increase your income. So those are those procedures. Now, if you’re looking at some of the electrophysiology and image procedures, again, look along your side there and you’ll notice that the costs are low. So as an example immittance we charged $78

We get paid 21. That means our collection rate was 27% of charge. Again, it’s that $21 that’s running the ship, not the 78. Now there was a time when I first started in audiology way back when, when we charged 78. We got 78 That was known as fee for service, but that changed decades ago, and now you have reduced renumeration for your services. Here’s another slide electrophysiology, you know, in our clinic for an Ecog we charged $396 we get 75. That’s a 19% collection rate. For Stenger, we charge $50. We got we got $18 That’s a 16% collection rate and ABR we charge 490, we get $138. And again, these are Medicare patients, but again, Medicare kinda steers the boat. And other third party payers come behind them one, two or three years behind them. So when Medicare’s reducing the rates, so while these other third party reimburses, so part of the challenge that audiology is facing is decreasing revenue due to increase in costs, and you have no control over that. Okay, so I put this in there. This is my own bill that I got from my dentist, I want to walk you through it, make you feel bad, I want to make you feel bad. So I had this procedure done by my dentist in April of 2021. My charge was 1541. The, my, my insurance paid $946.40 Leaving a balance of $594.60 and 60 cents. Who do you think paid that? $594.60? Me. So, if a dentist can receive 100% reimbursement via balanced billing, why shouldn’t an audiologist? Two As you know… I’ll get back to in a few moments. Well, I’ll say it, you know, this is why if you remember about six months, nine months, 12 months ago, Bernie Sanders and a lot of other Democrats and I’m not gonna get I’m not getting into politics here wanted to change Medicare to include hearing aids, dental vision, and the National Dental Association up in arms. This is part of the reason they got up in arms, because they knew that if now this was covered by Medicare, their income would be dramatically reduced. And they weren’t that was not included in the final bill. The final bill never passed in itself. But they did not want to have this changed. Here’s something else you want. There’s another one of my personal bills. So if you think audiology is bad, for if you think reimbursement is bad for Audiology, take a look at this. I had a procedure done by one a physician, his bill to Medicare was $670 He got $236.09 Or a collection of 35% of gross charge. So this under a payment if you will is not restricted audiology. This is an all aspects of medicine. So for him, his office charged me 670 Medicare paid $26. The $23 was applied to my deductible on Medicare B and then my plan paid $6.62. So if you take 203 26 and $6.62, that comes to 236.09. That’s what was paid for that charge. Now, I want to give you another one, just to make you feel better. That is not just audiology that’s in this boat. Every year I have an annual physical exam. So I had this one on for 821. So you see doctor’s office visit $132. That was the charge routine physical exam, 223 urine analysis 20 detailed blood count CBC 61, metabolic panel 100, cholesterol testing 120 approach the PSA exam 118. And then just drawing the blood from my arm was $26. The total bill was $80. What they got $800 excuse me. What they got was 313 and 62 cents, or 39% of the of the of the charges. So again, it’s not unreasonable to say that virtually all

professionals in the medical field, their collection rate is somewhere less than 50%. So when audiology, screams about the low collection rate, you’re not alone. This is going on in all aspects of medicine. So the adoption rate. This is a data that came out years ago, that goes from 1994 1984, up to 2014. And what you’re looking at is bilateral. And you can see that in terms of bad bilateral fits. It went from 22% Not so good. In 1984 to 72% in 2014. That’s good. If you’re looking at user satisfaction, it went from 33% in 1984 to 81% in 2014. That’s great. And part of that, if not all of that is related to improvements in technology and fitting binaural as opposed to mono. But penetration rate has remained relatively constant. And it’s about 31- 32% in the United States. That means there’s about 73 There’s about 70% of the population who have hearing loss, who could benefit from hearing aids who are not using them. And that’s what all of these manufacturers have getting their teeth surrounding about, because that is a large number of patients who have been sitting around with hearing loss not doing anything about it, because of accessibility, cost and a few other issues. But this is the one that I love the most. So here you have this triangle, the gray area is the non adopters. The blue area is the adopters. So as you see, as hearing loss increases, the adoption rate increases. As hearing loss decreases, the adoption rate decreases. It’s this huge leap lake of patience, that all of these companies are building technology to achieve. And they’re not achieving it perhaps because they have a better mousetrap. It’s because it’s convenient. OTC a patient doesn’t have to call and make an appointment, they can go to the nearest store and pick it out on the shelf web based one, just go on the web or it comes into your into your house. So they have they have addressed the accessibility and they have addressed the issue of convenience. Whereas an audiology you have to make an appointment, you got to go in, you got to wait, you’ve got to order hearing aids come back again, to get the hearing aids. with what’s going on here. Accessibility and convenience is the key and cost. So I don’t think OTC is going to have a major impact on you. Because it’s my guess that the vast majority of people that are going to be attracted to OTC is down here. And you’re not seeing them anyway. So you’re worried about a population you haven’t seen for like a half a century. And so I would say don’t worry about it. But what it’s done is it’s placed hearing aids in the forefront. And when these patients come to you, and they talk to you about an alternative means in which to get to hearing aids, you need to think about what I’m about to suggest later on in the presentation. What can you do to say, Okay, I understand. But we can do better here. And we’ll talk about that as we get into the presentation. This lower rung, that’s the 90% of the non adopters. That’s the part that people are concerned about. I don’t view these as a threat. I look at this as a program builder. And I’ve I’ve looked at that since I’ve heard about OTCs, way back when in 2015.

So no one has my opinion. But that’s never stopped me. So here’s my view on OTC piece apps, and DTC is as a significant opportunity. Most of these devices are patients in the lower rung, and you haven’t seen them, so will have no impact on your practice. This is a group that’s going to go online and they’re going to go into a store. This is the group you have to build your practice on to increase your revenue in a short and long term. I’m gonna I think I’m gonna share with you how to go about doing this. I do know I’ve heard it. And I cringe when I hear it. When you it’s when you explain to people, you really need to think about somehow integrating this in your practice. And you get something to the effect all No, oh, no, this is below us. This is not part of what we’re about. And I think you need to think about readapting, your thoughts about that. Because you can do it in a very good manner. And I’ll talk to you about that. There are those people who are going to try them are going to dislike them. And assume all of these devices out there are like that, and they’re going to drop out. Again, you haven’t seen them, it’ll have no impact on on your practice. But somewhere along the line of this person’s life, their hearing loss is going to decrease to the point where they’re eventually going to pursue your services, as their hearing loss decreases and impacts their negative the negative impact on their life. That may be next year. It may be five years it may be 10 years. But one day they’re going to be in your clinic and you need to retain them. Some will like or dislike but investigate better options that you can attract and then you retain them to build your practice and your revenue. Now here’s a key point. I think for mild hearing loss and by my definition, mild is 40 dB or better. And I’ll show you some data on why I think That’s true. For mild hearing loss, many PSAPps, OTC devices are going to … So just some patients these are not going to work. That’s really not true. These will work on a subset of patients. But once you get in my mind past a mild hearing loss, the performance of these devices drop off rapidly. And you have to, you have to explain that to your patients. And I’m going to share with you the data by voice at all that demonstrates this. Also, the cost of many quality piece apps are greater than the invoice of a basic hearing aid. And we took that information and integrated a basic hearing aid into our practice as our PC PSAP type device. And I’ll share with you how we did that. However, we always dispense these devices with REM, to a valid prescriptive target, and always measure them to see before he does it, before we dispense it to a patient utilizing an unbundled approach. And we’ll talk about this. Now, for anybody who knows me. I’m not a political person I get I just don’t get involved in the politics of Audiology. But there was this article that appeared in JAMA out of Johns Hopkins that said cost was a barrier to hearing aid adoption. And I read that and the hairs on the back of my neck rose- Because I know that’s not true. And I’ll share that with you in a moment. Yes, it is an important reason. And to say it’s not your got your head in the sand. There’s a difference between getting a hearing aid for $30 at Walmart versus 3000 5000 $6,000. And there is a difference, okay. But other factors also play a major role, convenience. That is going on the web in rural America and getting a hearing aid as opposed to having traveled to the city make an appointment, and all those other things, accessibility. And then there’s denial. And that’s not a river in Egypt. That’s denial that you know, you don’t have a hearing loss, then there is the stigma attached to hearing aids. And then this is the one How many times have you heard an audiologist or somebody pushing amplification on an unwanted patient. And that person tells everybody his mother about his miserable experience. I had a friend who went to Harvard Business School, who told me you know, Mike, when you’re in business, and medicine is a business, when you’re in business, and you have a positive interaction with the patient, if you’re lucky, another patient may hear about it.

But if that patient has a negative experience 10 People are going to hear about it. I satisfied patient is your bed is your best marketing tool. A dissatisfied, dissatisfied patient is your worst nightmare. And your worst my nightmare is pushing a patient to hearing aids, who clearly in the course of hearing aid evaluation saying I don’t want this, I’m only here because my wife wants me to be here, when my grandkids want to be here. Those words out of that person’s mouth should be red flags coming out of the top of your head, this is not the time to do it. I explained it to the family. It’s just not going to work. So this is an important slide. What this is, is the adoption rate of hearing aids in a large number of countries, Europe predominantly. And keep in mind that in many of these company countries, hearing aids are part of the National Health System. And they’re provided at no cost, or a very, very low rate. The adoption rate in the United States is 30%. And then when I heard that Medicare, Congress was considering putting Medicare and hearing aids into Medicare, a little a little concern went up in my body. But that’s a whole nother issue. So utilizing this data, would provide hearing aids free to patients in the United States significantly increase the adoption rate. I don’t think so. numerous countries provide hearing aids at no cost or a significant discount. The highest is 53% in Denmark, the lowest is 14% in Japan. So I believe the current adoption rate is 30%. And if for some reason it was offered free, I think it would move the dial maybe to 45 or 50%. But it would not be much greater than that. That would be my prediction. This is already occurring in some degree in Medicare Advantage B and other things. third party payment plans. And that has been discussed in Medicare B by Sanders and colleagues in Congress. But again, my point is, in these countries, they’re offered free. And the adoption rate, although better the United States is not huge. It’s about a 10% 20% difference. It’s not huge. So it’s stating OTC which is part of the law, appropriate for mild to moderate hearing loss supported by the literature. No, results are mixed. But most data suggests PSAPs may be appropriate for mild hearing loss, and not perhaps moderate hearing loss. And this finding, as part of your counseling package needs to be counseled to patients who are hearing loss exceeds mild and are considering this route. They may after you talk to them consider this route. But to not point them to the data, I think would be an injustice. So what data am I talking about?

So here’s your mild to moderate hearing loss 25 to 50-55 dB, that’s considered a mild hearing loss. And that’s written within the FDA. So one point is by limited all they looked at this, and you can see results from our studies suggest that caution is warranted and extending the consumer driven that is out of the box worn by a patient that is appropriate for moderate losses. Specifically, without probe microphone verification, these individuals may end up with less than optimal, aided audibility. And here’s their data. So here is their data. And you can see the hearing loss here, and I’m pointing at 1000 hertz, because it’s 55. And I’ll show you data in a little bit from voice et al. That suggests you really need to look right here at 40 dB at 1000 hertz and above. And our data suggests that once you reach 40 dB, and then you have a sloping configuration, the benefit of a PSAP diminishes significantly, especially when the hearing aid is ordered taken out of the box and used out of the box, as opposed to being programmed, which is not going to happen when you’re doing it online, or you’re doing it over the counter, but looking at their data. So they did a quick lesson. And again, as a general overview, a quick lesson. This is the audiology based utilizing real ear measures. This is the consumer driven out of the box, no real ear verification, and then two PSAPs, the Etymotic IQ Bean and the Soundhawk which by the way, are two good PSAPs. So let’s just look at this first, for the unaided condition, the QuickSIN SNRL hl, which is really how much do you have to improve the signal to noise ratio for the person to hear is if they have normal hearing. So in this case, you you would have had to improve the signal to noise ratio by almost 25 dB in this population, for them to hear as well as a person with normal hearing. And then with the audiology driven, real ear verification, it brought this down to four bringing them from a moderate severe to a slight hearing loss, you only would have had to improve the signal to noise ratio by five dB, as opposed to 25 dB. And the benefit, the difference between these two is about 18 dB. Now if you’re looking at the consumer driven out of the box, no verification, again unaided, but look at this, it improved aided performance by about two dB. And you see that down here, the Bean out of the box, same, the Soundhawk only slightly better. So these three devices, consumer driven, same device but not verified utilizing real ear And these two other devices out of the box did not really significant change on a to performance. And if you look down here at performance, unaided performance was less than 20%. With the audiology adjusted hearing aids, it climbed to 62%. And in the other three devices that is without real ear, and then two PSAPs, it stayed at about 32% a significant difference in performance between two PSAPs, and the same device, one program and one not program out of the box. This is a study by Powers and Rogan that appeared in 2019- 15 different attributes belong here. This is a satisfaction of PSAPs. And this is satisfaction of hearing aids in virtually every single parameter The user satisfaction was superior for a hearing aid than with a PSAP, except for all the way to the right, cost out of pocket. And you’ll notice that the difference really is remarkably small. But in all other attributes, patient satisfaction with a hearing aid was superior than a PSAP. And now there’s this study by four of my colleagues, Adam Voss, upper left. kristi oeding we’ve now got her PhD at the University of Minnesota. My friend and colleague and friend of Dave AU Bankaitis drumroll, please, drumroll. John Pumford from audioscan. And then this weird looking dude here to the lower left.

So what did we do? We created NAL-NL2 on our audio scan for two targets 50 and 65 dB. for eight typical audiograms. We measured the REAR to the target for for hearing aids, to premium to entry and 21 PSAPs. The first measure for all these devices was out of the box, we didn’t do anything, we just wanted to see how did it match up to the target. The second measure, we programmed to NAL-NL2. A job unfortunately is not done by about now, depending on who you read about, I don’t know 60 70% of audiologist, the dependent variable was what percent of the measured REAR are matched NAL-NL2 to within five dB at 250 to 2000, and 8 dB at 3000 and 6000, which is the British side of audiology criterion for a hearing aid that is appropriate to be dispensed in England for 50 and 65. For the for hearing aids to 21 PSAPs. And then we created a kind of a color code that if it matches quite well, that is within 85 to 100%, we gave it a green. If it was close, but not quite, we gave it a yellow. And if it was like not so good, we gave it a red. And that’s what you’re going to see in the slides that follow. So first of all, this is what the typical REAR look like out of the box. So here, you have the target for 50. And here, you have the measured REAR for 50. And as you can see, except for the low frequencies, the measured REA R is significantly below target. This is the target for 65. This is the measured for 65. And again, as you can see, the measured was not close to target, especially in the high frequencies. And by the way, this is what you will see on virtually all hearing aids out of the box from hearing aid manufacturers. And here you have the target for 80. And then here you have the measured out of the box. And you can see match fairly well here in the lows even a little above and then below again at the upper upper frequencies, take that same hearing aid and program it and now you see target and measured very close for 50. Same for 65. And the same for 80. So the question is if you had this hearing aid, and you had this hearing aid, would there be a difference in performance? That is does real ear measures make a profound difference? Well, in 2018, we actually did that in a study that was in JAAA and what we found is we wanted to know Are there differences in performance in terms of speech recognition in quiet noise and also subjective preference. What we found out as we found is that yes, taking the time to do real ear did provide significantly better performance, but equally as important at the conclusion of the study and a double blind study. That is the first audiologist did all the measures that did all the programming. The second audiology did all the measures. And then the patient we did we did the manual measurements on they did not know which was in hearing aid A which is in hearing a B which which one was in there. At the end of the study when we asked the patient do you prefer a or do you prefer a B? Almost 80% The preferred B, which is the program. And again, that was counterbalanced. So think about all of these people out there with hearing aids or PSAPs or anything that’s unprogrammed. And you’re simply took them back in the clinic and you program them, you could in 80% of the cases go from an F to an A, that’s not bad. So again, for those of you who out there who questioned the value of the usefulness of real ear, really think about that. And that’s why in our programs use later on, it’s obviously a part of what we do. So anyway, going back now to the study, on the left, in the next eight slides, you’re going to see one of the eight audiograms. So in this case, within normal limits at 250 to two followed by a slight to mild hearing loss at three to six, not bad. On the left. Here, you’re going to see out of the box.

And on the right, you’re going to see the same hearing aids programmed. First thing you’ll notice, even for this mild hearing loss, there is a lot of red. On this side, these four here are your hearing aids, and they’ll remain constant. In the next seven slides. All of these down here are the peace apps between the two of them. When you see an asterisk, next to the piece, that is our conclusion. Looking over here. Because if you look here, there’s a lot of red out of the box. And you’ll look here, there’s a lot of yellow and green, we move them to better performance by programming. And if you took the time to read each one of these boxes, you’ll know that in almost every single case, the percent fit to target is significantly higher in the programmed versus the out of the box. So on your first case, mild hearing loss, not such good performance for a lot of them better performance for a lot of them. But even here, you’ll notice poor performance, whether program or not. So even in this case, of these 22, there are only 10. If you count the answer, it’s who moved from not so good to acceptable from the left to the right. Okay, so bear that in mind as we go through the next slides. So now we’re moving down in hearing loss. Going back, now look at the left side, you see all of that red, you didn’t see that all in the milder hearing loss. But now look at it. And then again, you’re seeing more green in yellow in the right. And now you went from 10 to five. In the mild hearing loss, we found 10 that we could we could live with it. Now we have it to five, but notice hearing aids, they’re up there. Now I want to point out the hearing aids. The first four, the first two are our Phonak. The top one is the premium. The second one is the entry. The second one is the white X, the top one is the premium. And the bottom one is the entry. Premium entry premium entry hearing aids. Just bear that in mind. Okay, so now we’re going to create a graded hearing loss. Now we’re at 40 dB, at 1000 hertz, there’s no green or yellow. And now there’s some green but not a lot. And there’s now only one PSAP- Bose that was able to maintain good performance when programmed. Now we’re going to go even higher. Nothing white again, bear in mind up here on top the hearing aids there green premium or entry. Now we’re gonna go down even further. Nothing but look on top. Premium and entry are still in the green region for the most part. Now we’re going to come back up a little bit mild hearing loss and then a moderately severe in the high frequency. Now there’s more coming back. But still remember in the first one, we had 10 Now we have what five but still not much in the out of the box, but a lot more in the program. Here are seven again With more severe high frequency hearing loss, almost nothing in the out of the box and some in the in the in the program, but again, look at the performance of the hearing aids eight. Again, not very many performed well, even with programming, but look up here again at the hearing aids

so the key points from boss at all programming REAR to NAL improved performance very first fit for the for hearing aids and the 21 PSAPs after two input levels as as an overall statement. Most piece apps could not match NL2 at either input level for the first fit or program if the hearing loss exceeded 40 dB above 1000 hertz for 1000. and above. For all eight configurations. The two premium and the two entry level hearing aids were able to adequately a match NL2 when programmed at both input levels. That is the premium and the entry level perform the same as far as being able to hit target. For the four hearing aids, there was little difference between the premium and the basic when program to enable enable to for the eight audiograms. Bear in mind that most PSAPs first fit performance was poor. performance improved when programmed. But how many people have people going to get the hearing aids program? Very few of none. But even then performance was still poor right hearing aids. This is especially true for hearing loss of exceed 40 dB 1000 hertz and above. So now we’re gonna get into the nitty gritty of how we did it. And why we did it. The results from Voss with a catalyst to pursue an entry level hearing aid using an unbundled approach as our strategy to embrace OTC. Now, mind you, prior to this, our dispensing model was purely bundled. In retrospect, big mistake. Because when you have a bundled approach, it’s a cost. You’re really not educating the patient as to the expertise and the services that go into that hearing aid. And I’ll talk about that in a little bit. Practice might decide to select other devices, whether it’s entry level hearing aid or some other device, it really doesn’t make a difference. The point is, you need to get into the game. Now, when I left, we had entry level as our game. If I was still there, I would add other devices to the mix. But that’s that’s a whole different story, but use the same model, the cost of the device, adding on your services, to keep a high quality product at a low cost to be competitive with OTC and direct to consumer. And I’ll I’ll show you that in a little bit. We as consumers, we as audiologist need to really look at the FTC and the FDA, and look at the issue of convenience and accessibility. And how do we overcome that?

Right keeping quality devices in stock, so that you don’t get into the model of what order for you to come back, we’ll do the fit. That’s not how PSAPs and direct to consumers are done. So you have to kind of change your model to accommodate a different model. And then the other one is if you look at a lot of these devices that are offered online, one of their offering points is convenience. You don’t have to come in, dial us up on the internet, and we’ll talk to you we’ll do a zoom, and we can resolve your problems. I think audiologists need to take a better look at remote care. It’s it’s incredible. And your competitors are doing it. And they’re using that argument to take your patients away from you. And you have the tools to do it. Why not? Do it. Like you know, Jordan, do it- just do it. And then cost and unbundled approach because you got to use the unbundled approach to address the cost issue. And we’ll talk about that in a little bit. And again, counsel, counsel counsel, and I’ll share that with you in a few minutes. In our practice, we saw where we were short in counseling. We were not we thought we were doing a good job. But we were not doing a good enough job. And we retooled our counseling tools. For patients they come because if you counsel in the office, they’re not going to remember much of what you said. So they gotta be able to take it home with them. So we developed counseling tools that they could take home to kind of refresh the mind what we talked about. We felt I felt and that the counseling was the key to success of offering this new fitting option. And I’ll share this in the slides ahead. So how do we do this? We did it based upon the evidence, we knew that programming was better than out of the box. We knew that before of loss. We knew that a long time ago. And we needed a device to allow for effective programming that was cost effective to match nao as best as possible for wide variety of audiograms. And we demonstrated in voice, we could do that with an entry level hearing aid. For all eight audiogram, we could do it. So we sought a traditional hearing aid with an invoice cost that was equal to or lower than many PSAP devices that were available at that time. I contacted 4 manufacturers to pursue their interest in providing us with an entry level hearing aid, that my invoice cost would be less than $200 have a one year warranty and could be returned. Those are my stipulations. We had meetings with the staff to determine how to introduce this new option. I mean, to be honest, we had 9 audiologists, and everybody -not everybody was on board. I mean, there was some who had been there for quite some time. And their answer was this is not WashU. And my response was this is not 1950. It’s not 1984. This is 2022. And we have to change with the time. We knew rem and 2cc had to be part of dispensing. And this had to be added to the cost of the aid utilizing an unbundled approach, utilizing the procedures I talked about in part one. And we had to use the unbundle approach to determine the charge for the aids at each post visit a menu of options. So the charge of the patient had to be competitive what they could do online or in the store. And if we didn’t do this, this was not going to be successful. We had to we had to address that challenge. And the only way to do it was a low cost hearing aid utilizing an unbundled approach, do the necessary things that’s quality, and save the other stuff in a menu and let them come back for it if they want it. Up to this point I’ll clinic utilized a bundled approach. And this was discussed in part one. We created brand new counseling tools to help directions the best option based upon numerous factors, and I’ll share those with you. And I tracked it I wanted to find out how successful or unsuccessful this was. And I’ll share that with you. So

no price here I’m, I’m transparent. I contacted our vendors Widex Resound and Phonak. Widex said I can do it for 250. This is way back this was like four years ago, I could do it for 215 That didn’t match my 200. Resound said we could do for 225 been matched my goal, Phonak 200. If you go down a widex, they would not allow us to return their hearing aid that was then thrown out, that was no longer an option. Then you’re left with the Resound at 225 and the phonak at 200. We selected the phonak. And to get that price. I agreed to purchase 100 hearing aids. Again, if you don’t have this stuff in stock, that’s not going to work. The idea is to make it accessible, make it user friendly. And we divided those amongst the three clinics. And they were two colors. And if a patient wanted a different color, we charged them for it. It was part of our menu. So not unsurprisingly, in all the years we did this and have two years worth of data. Nobody changed color. Not one. And here’s this is an important slide. And I want to go through this slowly with you. Okay, now my, my ugly mug and Dave’s beautiful mug is over part of the slide too much I remember what’s on that side of my slide, but that’s okay. So what we’re doing all my math, we offered a – this basic entry hearing laid at $640 that included 2CC analysis, hearing aid when it came in from the clinic to make sure that it worked properly. Not every hearing aid knew works properly, you should know that. And remember, we had to do REM, that was not negotiable. So adding my cost for rem and adding my cost for 2cc onto the cost of the hearing aid. Utilizing again an unbundled approach that I talked about in the first part, it was 640 for two, it ended up being 1000. And that was significantly lower than what we were charging for hearing aids in the past. And this is an unbundled approach. So this is how we explained it to the hearing aid to a basic aid, what you see here and a competitive price, we do a hearing aid evaluation. And if you go to the right on the PSAP, there is no hearing aid evaluation, you get a long line or your walk in the store, we do 2CC measures as quality control to make sure the hearing aid is working to manufacturer’s specifications on the right side, don’t know probably not least not when it gets to you. Three, it comes with a one year warranty. Number three, the other side may or may not. Four, we have we give you a four week trial, and you can return on the other side, no dice, five, we program it on the other side, they don’t program it. And we talked to them about the problem with that in terms of user satisfaction with hearing aids. Number six, we’re not going anywhere. Now, we all know some of these companies are already out of business. And then what what do patients do with that seven, you can purchase an extended warranty you want seven as I may not be able to do that. Eight, we repair, we repair and we send for repair eight on yet so you’re on your own. And then nine, it’s a greater level of service than any other PSAP on the earth. So far lower level of service than any of our entry level hearing aids. And then when you see below, this is our menu of costs based upon an example, if it were $248 per hour, and what each one of these different services would cost if you would like to come back and do that. And the patient has all of this. So they know out of the box. It’s 640- 1000. It’s got 2CC and it’s programmed. If that’s what you want, that’s what you get. But if you want these other services, these are add on expenses.

And then we give them a handout on this bundled approach. We use this to educate patients of the services of each service and the value of each service provider utilizing the bundled approach. We want them to know the value that audiology adds to hearing aids that is not there when it’s online or you walk into a store. And we counted it only REM and 2 cc measures are included in the entry level hearing aid. So this is literally step by step. We tell them that what we do is best practice based upon to national guidelines. These are the services that we provide we provide before you get hearing aids and we go through this step by step. So they know what audiologist add to the table hearing aid evaluation to help you select hearing aids earmolds other features, ear mold impressions, I’m going to talk to you about ear molds in a minute. There’s my pet peeve questionnaires, you know what, what what is it you want and what technology can address that. And then quality assurance a 2cc. Alright, so now I’m gonna step away for a second I’m going to do my spiel on on earmolds it’s my thing. Okay. Dave, hang in there with me. Okay, domes, which is predominantly used, versus custom earmolds. And I’m a big custom RIC earmold kind of a guy, I always explain this to the patients on why I think you should do this. I tell them, domes are free. This is going to cost you a few extra Snuggles. So here’s one of my favorites. This was with a dome on the right ear. And I did fairly well in hitting target. And up here in the high frequency region. Because I was reaching the headroom because of the dome, no matter what I did, I could not match it. That was on the right ear. Same thing on the left ear. Okay. I put a custom mold on this person’s head. All I did was change from a dome to the custom ear mold didn’t do anything. And I was able to match it beautifully. And here now is the opposite here. If you’re looking on the manufacturer screen, this is Widex. This is the limit. This is the this is the target. And I couldn’t get anything else because I was getting feedback. And this is on the opposite side. But when I put the dome in and I did the feedback test. Look how much greater headroom I was provided just by having the dome. So again, excuse me, but I had to put that in there. I’m a big custom mold kind of guy. So then we go on and we find once you get the hearing aids, we do really our measures and why we do it. And we also pointed out unfortunately, such measures are not completed by approximately 70 80% of audiologists. You’re fortunate to be in the 30 to 20% to do it. How lucky you’re you testing and background noise, there’s a hearing aid trial. And we give you back all your money except for a restocking fee. And audiologist here, do not receive any commission. The carry provide after the trial, if you have a one to three year, there’s no charge, we’ve asked you to fill out a survey. And then appointments during the warranty, we go through each one of these. Again, all we’re doing here is explaining in detail the services we apply and why we do it. And it’s all related to optimal hearing.

Care of the hearing aids after the warranty that is you’ve elected not to pursue a warranty. Well guess what, the services are no longer at no charge, you’re no longer in the bundled model. You’re now in the unbundled model. And we explained to them what the charges are based upon time, utilizing the spreadsheet that I explained in the first presentation, we are committed bottom line, we are committed to providing quality care, using the most advanced technology with compassion, sensitivity and empathy. Our audiology provide a level of care, they would provide their own family, again, audiologists do not receive commission. And then this is a brochure that we created your options for hearing aid devices, we go into hearing aids, we go into basic entry level, which is the new one, and we go into peace apps. And this was created by us through our marketing department. And it’s a trifold. And we give this to all patients. And on the inside, there is this table that lists a whole series of attributes, if you will, on the left side. And whether or not is covered with an advanced or premium hearing aid bundled, whether it’s covered with a basic hearing aid unbundled and if there’s an asterisk, that means there is a charge applied to that piece up. And then an OTC This is our best case of that turn our best guess. And they take that with them. And we think this is a very helpful tool. And then there’s this other little thing that went through general counsel that they sign that they understand that future visits will be paid for. And they understand this is not covered by their insurance. Because we do we have two insurance companies that we deal with. Both of them are bounced billing, but they do not. They don’t they don’t include entry level hearing aids on the model model. And then you might want to be interested, this is just one when snapshot. Having done this now at that time for about a year and a half, I looked back and I said okay, we’ve offered this now, you bundle your unbundle utilizing entry level hearing aids. How how did the data shake out and this has been as consistent as consistent can be when all is said and done. And you’ll lay down all the options to a patient a bundled premium, different levels of hearing aid that’s going to cost you $3,000 or more for a bilateral set. This is your entry level hearing aid that has real ear to see and then everything else is covered. What would you like to do to the patient and then you know all that counseling. Interestingly 93% went with your bundled traditional hearing aid 7% When with your entry level hearing aid, again that points to me anyway, if you take the time to spell it out. And you lay it on the cards and explain to them what is the service that is added to the product. The product is your OTC the product is your order the hearing aids on the net here it’s the product and the service and there’s a on the on the actual level side there’s a slight difference then if you do the OTC and direct to consumer a big difference if you do it relative for the for the judicial hearing, in spite of all that 93% selected the traditional model and that’s just further evidence to me for the number of people who are well this coming to an end. No it’s not. If you took the time to think out of the box and explain not just explain offer them material they can take with them your value, in our case, 93% say thank you for the time on explaining this less expensive model, we’re gonna go this way. And that’s gotta make those people feel a little better. But you got work to do. You got it you got to do, you got to do the work we did to get to this point. It’s just not gonna, it’s not coming your lap, you got to work and do the due diligence.

Anybody interested? These are the references that I put together to put this together. And I thank you for your interest. If you have any questions, email me, and I promise you, I answer all emails. And final slide.

Dave Kemp 1:05:51
This has been fantastic. Mike, thank you so much for coming on here. I mean, for me, just a quick thing that I guess I’ll highlight that really stood out to me is like you mentioned, these are people that aren’t really seeing you today. And I think that’s the key point is like, you still have to I think, you know, I think what you did so beautifully, was you, I think positioned OTC as a way to show the disparity between your service and your value. And clearly, you know, 93% of people responded to that. So maybe that’s the big opportunity is it’s an almost an opportunity to juxtapose the two side by side.

Michael Valente 1:06:33
And it’s because for decades, we hadn’t explained what was going on in the background on the product that got us into the mess we’re in now. And it’s really not a mess. I mean, it really is a good place to be, but a major rethink Why did we do this bundling approach exclusively for so many years and not offer an option?

Dave Kemp 1:06:57
Yeah. Really awesome. Thank you so much, Mike. This is fantastic. Thank you for sharing all of your wisdom with us on how to think about the OTC side of this market.

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About the Panel

Michael Valente, PhD, is Professor Emeritus of Clinical Otolaryngology at Washington University in St. Louis School of Medicine. For 34 years he directed the Division of Adult Audiology. In that position, Mike was active in the clinic, directed the Hearing Aid Research Lab, taught graduate courses in amplification and the business component of Audiology and he administered the Division of Adult Audiology. He received his Ph.D. from the University of Illinois at Urbana-Champaign in 1975.  His interests include spending time with his beautiful wife Maureen, two daughters Anne and Michelle and three grandchildren Noa, Salem and Lumen. 

 

Dave Kemp is the Director of Business Development & Marketing at Oaktree Products and the Founder & Editor of Future Ear. In 2017, Dave launched his blog, FutureEar.co, where he writes about what’s happening at the intersection of voice technology, wearables and hearing healthcare. In 2019, Dave started the Future Ear Radio podcast, where he and his guests discuss emerging technology pertaining to hearing aids and consumer hearables. He has been published in the Harvard Business Review, co-authored the book, “Voice Technology in Healthcare,” writes frequently for the prominent voice technology website, Voicebot.ai, and has been featured on NPR’s Marketplace.


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