Selling Hearing Aids: Ethical Issues – Again

Conflicts/Turmoil/Antagonism

This blog is a continuation of last week’s that described the changes manufacturers had to make as audiologists began to legally and ethically sell hearing aids for profit.  Today, having a hearing aid practice in which hearing aids are also sold is most likely the single largest employment opportunity for audiologists, and hearing aid sales the largest revenue-generating activity.

ASHA Ethical Practice Board

In January of 1972, all ASHA audiologists (audiologists were singled out even at that time within ASHA because this letter was not sent to Speech Pathologists) were sent a letter from the Chairman of the Ethical Practice Board (EPB) identifying a “problem” of ASHA Members” who involve themselves with business or promotional activities of commercial interest allied with our profession.”  The letter follows:

The letter, while not specific, was referring to a practice by a hearing aid company new to the United States, Oticon, to introduce itself and its products to the audiological community.  Oticon loaded planes filled with audiologists and flew them to Copenhagen, Denmark, entertained them while they were there, and introduced them to their products.  Many audiologists, as a result, recommended Oticon hearing aids to their patients upon returning to the US.  This was actually good business on the part of Oticon.  Oticon had no presence in the US and this provided them with essentially immediate sales.  Oticon was not concerned about the hearing aid dealer network who had not embraced this new “foreign hearing aid” and found a way to bypass them by getting audiologists involved in directing which hearing aids would be recommended and sold.  The way I saw it, Oticon had nothing to lose by ignoring the dealer and courting the audiologist.  Of course, this angered many of the hearing aid dealers and they did not speak kindly about Oticon who they saw as assisting the audiologist in becoming competitors of theirs.  Regardless, the marketing ploy worked for Oticon.  Interestingly, many “ethical” audiologists, including many University teaching audiologists, took advantage of the program and enjoyed a nice expense-paid trip to Denmark.  I was never invited so I didn’t have to make a “decision” as to whether my ethics would be challenged, even though I was running a clinic and personally recommending about 40 hearing aids a month to dispensers.

Conflicts/Turmoil/Antagonism

After ASHA was forced into allowing audiologists to sell hearing aids for profit, turf protecting became the order of the period.  States started to develop hearing aid dealer licensing to “protect the consumer,” and these licenses set up requirements for individuals selling hearing aids.  Hearing aid specialists were generally in favor of such licensing.  Concerned that the licensing of hearing aid specialists would generate a legal definition of the hearing aid specialist, audiologists felt that they should secure licensing for themselves.  In May of 1973, ASHA issued a “Manual on State Licensure of Speech Pathologists and Audiologists.”  The document specifically directed audiologists to convey alleged instances in which a hearing handicapped individual’s health interests were adversely affected by the actions of a hearing aid specialist, and report this to State Consumer Affairs agencies.  The intent was to stimulate adverse publicity regarding hearing aid specialists and engender favorable attitude toward the licensing of audiologists.  The audiological community was heavily engaged in pushing through audiology licensing, and generally exempted themselves from being competency tested.  Audiologists claimed that their education and experience relative to hearing aids was superior to that of the dealer community, and, as such, there was no need for them to be licensed, or if licensed, that they should be excluded from being tested to ensure that they had sufficient hearing aid competence.

Hearings were held at the State and Federal levels addressing these issues.  Many audiologists were called to testify at hearings, and I was not excluded.  I presented testimony relative to hearing aid dispenser licensing to Senate and House Hearings, and served as an expert in testimony to the Federal Trade Commission (FTC) relative to the “Status of the Hearing Aid Industry.”  Being in industry, I represented the Hearing Industries Association in hearings in both Chicago and Washington, DC in 1976.  The dealer organization, the National Hearing Aid Society (now the International Hearing Society) was concerned that audiologists wanted to put them out of business.  NHAS published a rather lengthy document titled “The Elimination of the Hearing Aid Specialist,” which was sent to the FTC {{1}}[[1]] The Elimination of the Hearing Aid Specialist, National Hearing Aid Society, March, 1975 [[1]].  This was described as an outline of the procedure by which a limited number of clinical audiologists sought to unlawfully eliminate the hearing aid specialist as a competitive threat to their monopolizing the sale of hearing aids in the United States.  Volumes were written and expressed about whether audiologists had the practical skills to manage hearing aids, or if hearing aid specialists had that competency.  The most effective campaign of disparagement was carried on in the Twin Cities of Minneapolis and St. Paul, Minnesota, where clinical audiologists combined with the State’s Nader Group, the Minnesota Public Interest Research Group (MPIRG), and prepared and published a scathing 81-page attack upon hearing aid specialists.  As a result of these activities, coordinated with a publication in the Minneapolis Star on November 13, 1972, all hearing aid specialists, including those who were competent and ethical, suffered financial losses, and many lost their businesses.  What this did to the discipline of hearing care in general was to cast a shadow over everyone involved with hearing and hearing aids: the otolaryngologist, the audiologist, the hearing aid dispenser, clinics, etc.  Consumers trusted nobody involved with hearing or hearing aids as a result of this controversy.  Even the Mayo Clinic reported that their hearing-related business suffered.  It was ironic that this happened in the Twin Cities, which at that time was the hearing aid capitol of the world!  Manufacturers were not happy and funds that could have gone to research and development, or to expanding the hearing aid market, were being spent on damage control.  (Unfortunately, these arguments continue to this date, which is a sad commentary on where we are as a hearing discipline that should have the best interests of the hearing-impaired community in mind).  In some cities, “Favored Dealer Plans” were set up between audiologists and a single dealer who would sell hearing aids for a price established by the clinical audiologists.  These outlets had various names, such as “Master Plan” and “Professional Referral Services,” and were generally supported by ASHA and audiologists in general.  The Justice Department did notify ASHA that the “fee schedule” was illegal under the law (restraint of competition and price fixing) and should be discontinued.

Senator Percy Committee

Controversy continued when a scathing document was entered into the Congressional Record – Senate, on June 26, 1974, by Senator Percy of Illinois, “Heartbreak of the Hard-of-Hearing: Florida Has its Problems Too.”  This was entered by Senator Percy in response to remarks made on the Senate floor June 11th by Senator Gurney of Florida, who had responded to some remarks made earlier by Senator Percy questioning certain practices by some hearing aid dealers throughout the country.  This led to what I titled this section as the Senator Percy Committee, but it actually fell under the United States Senate Committee on Government Operations Senate Permanent Subcommittee on Investigations.  In direct discussions that followed with the Senator and his two staffers handling the hearing aid matter, they commented repeatedly that the industry had not been responsive in a positive way to any of the problems or recommendations Senator Percy had raised.  HAIC removed somewhat that irritant by supplying a copy of the “Partnership in Better Hearing” that had been developed by HAIC to accomplish a more positive input by the industry, and which also would involve some research to accomplish this.  This had been presented to David Link, Acting Director of the Bureau of Medical Devices and Diagnostic Products, in August.  The Percy staff picked up on the research segment and requested a fleshing out of the idea.  Conferences led to an HAIC suggestion that $10 million of old and new Federal funds be put into four research area.  Stuart Statler, Percy’s top hearing aid man and a key Percy advisor, suggested upping the ante to $50 million over a 5-year period.

In response to this, Ansel Kleiman, president of HAIC at that time, assigned to audiologists in HAIC member companies a crash program to develop a draft proposal for Federal research activities envisioned in the “Partnership” draft.  Probably because Ansel was my boss and we communicated daily, I was elected to chair a committee to develop a “Proposal for Federally-Funded Research and Ancillary Reports Intended to Assist the Nation’s Hearing Impaired.”  Committee members were James Curran, Terry Griffing, James Delk, Robert Briskey, and Sam Lybarger.  The 119-page final report was sent to Senator Percy in December 1974 to give him the information in time for the reconvening of Congress in January, where he would introduce a comprehensive program of hearing research, complete with specific projects that could be undertaken in dollar amounts needed for the 1976 Federal budget.  This plan was encouraged by both the Department of Health Education and Welfare, as well as Senator Percy’s office. So, how was the Report used?  My notes show that the last correspondence I had with Senator Percy’s office on this was February 10, 1975, in which he reiterated his intention that this should move forward.  Then, nothing.

This activity with Senator Percy was going on at the same time that the Food and Drug Administration (FDA) and Federal Trade Commission (FTC) were promulgating rules controlling the activities of the hearing aid industry (another potential blog).  As often happens when blood is smelled, others entered into the fray to advance their positions.  Such was the case with “Paying Through the Ear” by Ralph Nader.  This set the Department of Health Education and Welfare into a “let’s do something” mode and they set up an HEW Intradepartmental Task Force on Hearing Aids to look into all this.  The chair of the Intradepartmental Task Force was the ASHA Executive Secretary.  The Task Force’s first meeting was saturated with venom by presentation of staff summary of Nader’s publication.  A request by HAIC (Hearing Aid Industry Conference – now HIA, Hearing Industries Association, the organization consisting of hearing aid manufacturers) to respond to Nader’s comments was refused.  Unwilling to let the Nader poison stand unchallenged, HAIC went to the Task Force chairman and was given a 30-minute slot at the second meeting of a positive presentation responsive to the Nader report.  With high interest in HAIC insights and the total negativity of the Nader report, the Task Force gave HAIC more than an hour.  Instructed to keep strictly on the Nader subject, HAIC had to avoid many promising areas of discussion that came up.  HAIC requested a second opportunity to present a more comprehensive orientation, but that was declined.

Another Bad-Timing Decision to be Made

During all of this activity, the head of the Hearing Aid Division of Telex, Bob Alexander, dies of a heart attack.  Ansel Kleiman, President of Telex Communications offers me the position as head of the Hearing Aid Division.  Keep in mind that I had only been in the industry for a little over 2 years, having come from the academic environment.  Ansel had been my business mentor from my first day working at Telex.  He sent me to Stanford University Graduate School of Business to learn and I was invited to all Telex Corporate Annual Meetings and banking meetings.  I believed that I could handle the job.  However, we were involved in the transition of audiologists dispensing hearing aids, new product development in which I was involved, FDA, FTC, HEW, Percy Committee, writing articles and getting information to dispensers and audiologists worldwide, etc.  In other words, we were busy and I was heavily involved in many of the activities.  I was concerned about what might happen if they were interrupted, because I would not be able to function in both capacities.  Besides, we had a very good person who had been at Telex for about 16 years – Ed O’Gara, and I knew that he would do well.  I suggested that he be offered the head position and that I continue to work along the directions we were going – and improving our image and position within the industry.  Ansel accepted my recommendation, but with the following words: “I’m glad that you said what you said.  But, I want you to realize that the job is yours and you can have it any time you want it.”

About Wayne Staab

Dr. Wayne Staab is an internationally recognized authority on hearing aids. As President of Dr. Wayne J. Staab and Associates, he is engaged in consulting, research, development, manufacturing, education, and marketing projects related to hearing. Interests away from business include fishing, hunting, hiking, mountain biking, golf, travel, tennis, softball, lecturing, sporting clays, 4-wheeling, archery, swimming, guitar, computers, and photography. Among other pursuits.

2 Comments

  1. Hi Wayne:

    As usual, great stuff. I’m sure you agree the entire blow-up during those years was finely orchestrated by the mighty pooh-bahs at ASHA. Their vision was that all hearing aid dispensing was to be be controlled in the US by audiologists, and that dealers would be under audiology’s direction as technicians and assistants. They were counting on legislative and agency initiatives to accomplish this, thus, their hand in glove working with the various committees, agencies and interest groups. None of these outfits would have been able to investigate as well as they did and come to the conclusions they did, without active force-feeding by ASHA. I’m sure there are sources or files that exist somewhere where ASHA’S goals/plans were written down, but I’m only aware of a few comments in the 1976-78 FTC summaries of the hearings where it is suggested that this indeed was the aim of ASHA, and especially of Ken Johnson. This of course, was a naive pipe dream, for if one thing is sacrosanct in the US, it is the role of the small businessman and entrepreneur in our society, and no government agency was going to actually take hearing aid businesses away from from the dealers.

    I remember as you do frantically writing defensive articles and rebuttals, for it seemed that all the heavens had opened up on the industry and the dealers, and all kinds of storm and strife were raining down. Worst for me, and probably for you and the rest of the company audiologists, was the fact that that we were in a struggle not only with public perception and the government, but also with our own confreres and colleagues and former classmates, and that we were defending an industry that because of its past sins of commission and omission deserved a good deal of the heat it was getting. But there was no going back and besides, I was absolutely convinced, in the long run, that I was in the right place and on the right side of the issues.

    We did live through interesting times!

    Jim

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