Three known factors that impede hearing aid adoption rates.

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28 hearingreview.com MAY 2012
Research
Three Known Factors That Impede
Hearing Aid Adoption Rates
The influence of adoption rate reporting, marketing, and pricing strategies
Increasing market growth, or the
demand for a given product or service,
is the objective of every industry. In
the hearing aid industry, market growth
is estimated by the conventional adoption
rate, or the percentage of impaired listen-
ers who have purchased amplification
technology relative to all listeners exhibit-
ing impaired hearing. Since 1980, the US
conventional hearing aid adoption rate
has ranged between 17.50%1 and 24.60%.2
Given the historically stagnant adoption
rate for this technology, we report here
known factors that have impeded and
continue to impede market growth.
Is the Market That Underserved?
Figure 1, taken from MarkeTrak
VIII, shows the estimated number of
Americans who are expected to exhibit
a hearing loss between the years 1989
and 2050.2 Note that, during this 60-year
period, the number of Americans with
a hearing loss is estimated to increase
by 28.2 million—or by an average of
roughly 460,000 individuals annually.
For the year 2012, extrapolated from
Figure 1, an estimated 34.36 million
Americans will experience some form
of hearing loss (eg, sensorineural loss,
losses with a conductive component,
single-sided deafness, and losses better
suited for cochlear implants), with an
estimated 8.45 million Americans owning
amplification technology (34.36 million
impaired listeners x 24.60%). These data
then suggest an untapped market of
25.91 million Americans (34.36 million
impaired listeners—8.45 million hearing
aid users).
Professional organizations, federal
agencies, and hearing aid manufacturers—
to name only a few—often portray the
market as under-served because these
25.91 million Americans do not own
a hearing aid. Use of the data in this
manner overestimates the underserved
market potential, as it is inconceivable to
assume that all 25.91 million Americans
who do not own a hearing aid actually
want or need amplification technology.
A more precise estimate of the market
can be determined using an economic
model.3 This model considers those
Americans who presently own a hearing
aid, and concedes that some Americans
do not want or need a hearing aid, with
the difference being a more realistic
estimate of the true untapped market.
For the year 2012, the economic model
agrees that an estimated 34.36 million
Americans will experience some form
of hearing loss, and that 8.45 million of
this population own a hearing aid. Of
the 25.91 million Americans who exhibit
a hearing loss, the economic model
concedes that 17.88 million Americans
do not want or need amplification. In
other words, the untapped market for
those Americans who do want or need a
hearing aid is an estimated 8.03 million,
suggesting an adoption rate of 51.28%.
Why are these differences in estimates
important and what is their impact
on the adoption rate? Consider, for
example, that United Healthcare entered
the hearing aid market to gain market
share of the reportedly nearly 18 million
underserved Americans who do not want
or need a hearing aid, based on estimates
derived using the conventional adoption
rate.4 Had the hearing industry reported
the adoption rate using the economic
model, it is fair to assume that United
Healthcare would have been less likely to
enter the market.
Improved accuracy in reporting
the hearing aid adoption rate,
promoting hearing aid features
using evidence-based data in
language that the layman can
understand, and unbundling
prices are three things that our
industry needs to improve upon.
Furthermore, this article makes a
case that—if properly promoted,
distributed, and regulated—direct-
to-consumer hearing aids may
not pose the imminent threat to
consumers and professionals that
many in our industry fear.
BY AmYn m. AmlAnI, PhD, AnD BRIAn TAYloR, AuD
Amyn M. Amlani, PhD, is an associate professor of
audiology in the Department of Speech and Hearing
Sciences at the University of North Texas, Denton, Tex,
and Brian Taylor, AuD, is the director of practice
development/clinical affairs at Unitron, Plymouth, Minn.
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MAY 2012 hearingreview.com 29
Clearly, use of the conventional
adoption rate increases the influence
of Internet sales and third-party
distributors to enter the market. To
lessen this effect and, more importantly,
to provide a more accurate estimate of
market penetration, the economic model
is a salient option.
With respect to impacting the
adoption rate, the service delivery model
created by United Healthcare’s presence
only amplifies the confusion as to the
appropriate consumer entry-point for
hearing healthcare. For many potential
hearing aid users, the lack of clarity in
the service delivery model only fosters
the negative attitude and low expectation
of hearing aids, which in turn, stagnates
market growth.
Technology
Over the past 30 years, hearing
aid technology has advanced from
analog to digital, from linear to wide-
dynamic-range-compression (WDRC),
from single-channel to multichannel,
from omnidirectional technology to
directional technology having adaptive
and null steering options—and the
list goes on. Despite these advances
in technology, marked increases in
adoption rate are not evident.
One reason that technology has not
increased the stagnant adoption rate stems
from the fact that the market has failed
and continues to fail at providing would-
be users with evidence-based benefits of
the technology in a meaningful way. In
a recent study, Amlani and colleagues5
framed technology from the same hearing
aid in three different ways:
1) Using vague, technical terms—such
as “100% digital”—often seen in
local and national newspaper and
online advertisements;
2) Using detailed, technical terms,
such as “memories,” “channels,”
“adaptive directionality,” and
“adaptive feedback control”; and
3) Using layman’s terms, such
as “environmental listening
programs,” “reduces background
noise,” and “reduces whistling.”
Findings from this study (Figure
2) revealed that, when advertising
utilized both vague and technical terms,
listeners provided similar willingness-
to-pay amounts for each individual
technology. However, when the
technology was framed using layman’s
terms that demonstrated evidence-based
benefit, respondents were willing to pay
statistically more to obtain the same
technology.
A post hoc analysis assessed the
mean willingness-to-pay as a function of
respondents’ experience with hearing aids.
Figure 1. Hearing industry estimates of hearing impairment in the United States based on MarkeTrak VIII.2
Figure 2. Willingness-to-pay results for hearing aid technology and professional service by framing condi-
tion as determined in the unbundled pricing strategy. Key: Prof Fee = professional fee for services; WDRC
= wide-dynamic-range-compression; DIR = directional technology; NR = noise-reduction technology;
Warr = service warranty related to device.
Figure 3. Post hoc analysis of Figure 2 that shows mean willingness-to-pay as a function of respondents’
experience with hearing aids. Key: Prof Fee = professional fee for services; WDRC = wide-dynamic-
range-compression; DIR = directional technology; NR = noise-reduction technology; Warr = service
warranty related to device.
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30 hearingreview.com MAY 2012
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Specifically, inexperienced respondents
who were shown technology described
in layman’s terms that demonstrated
evidence-based benefit were willing to pay
more than their experienced counterparts
for professional services (Figure 3).
Experienced listeners, on the other hand,
were willing to pay significantly more for
technology—specifically for directional
microphones—than their inexperienced
counterparts.
Technology alone will not improve
adoption rates. Improving adoption rates
through technology is based, in part, on
two factors. First, technology needs to
be promoted in a manner that enhances
user benefit, based on sound empirical
evidence. Second, inexperienced hearing
aid users are not technology driven, but
rather, driven by the services they will
receive related to the hearing aid fitting
and rehabilitation process. Conversely,
experienced listeners tend to be more
technology driven, given that they
have likely experienced the fitting and
rehabilitation process previously.
Historical percentage values2 suggest
that, as digital technology was introduced
into the market in the mid-1990s, there
has been impetus on the technological
aspects of amplification technology,
and not on rehabilitation. This impetus
on technology is one reason that only
30% to 40% of hearing aid fittings are
dispensed to first-time users over the past
two decades.2
Retail Price
The high retail cost of hearing aids is
often promoted as the primary deterrent
to adoption of this technology. Data
reported in various MarkeTrak surveys
suggest that, while price is important, it
is not the most important factor.
For example, data taken from
MarkeTrak VI6 found that, while
85% of respondents desired lower
retail prices, price was ranked fourth
in importance behind the ability to
hear speech against competing noise,
improved sound quality and fidelity,
and feedback reduction. In addition,
MarkeTrak VIII7 queried respondents’
sensitivity of “value,” which is defined
as the perceived performance for the
price paid. For the variable of “value,”
16% of respondents renounced the price
paid for the performance provided by
the device, while 84% of respondents
were mostly content with the price they
paid and the technology they received.
Had price been an issue—specifically
buyer’s remorse—the percentage of
unhappy respondents would have been
much higher than 16%.
Another aspect of assessing the
influence of price as a barrier to adoption
is to compare today’s hearing aid retail
cost to previous years’ retail costs. Figure
4, adopted from Lundeen,8 compares
modern hearing aid price to historical
values. Note that all hearing aid prices
have been adjusted to represent constant
dollars in the year 2000. The horizontal
line labeled “Historical Mean” represents
the average retail cost of hearing aids
engineered with carbon, vacuum tube,
and transistor technology between 1905
and 1961. The mean constant dollar
price for these technologies is $882.
The shaded areas above and below
Figure 4 represent the mean ±1
standard deviation. The black filled
diamonds signify the average hearing
aid prices determined in the MarkeTrak
VI survey. The blue- and red-filled
Figure 4. Average hearing aid prices over time. See text for details.
Figure 5. Retail price of hearing aids adjusted for inflation over time. See text for details.
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32 hearingreview.com MAY 2012
Research
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diamonds represent the average price
of a hearing aid in 2008 and 2010,
respectively, with prices also adjusted
to constant dollars in the year 2000.
Note that, although hearing aid prices
in 1999, 2000, 2008, and 2010 were
higher than the “historical mean,” each
of the filled diamond symbols is still
within the +1 standard deviation range.
This data suggests that, while the price
of hearing aids has increased over the
past 50 years, the rate of increase is
not significantly different compared to
historical hearing aids.
Figure 5 represents the price of hearing
aids over time, and is adopted from Doyle.9
In 1960, an analog BTE with a single-
frequency response, omnidirectional
microphone, and possibly a trim-pot or
two retailed for $350. That same hearing
aid, when adjusted for inflation, would
cost slightly more than $2,500 in 2010,
as indicated by the upward diagonal
black and white bar. In 2010, a more
technologically advanced hearing aid—
denoted by the solid-black bar—retails
for just over $1,900, or a savings of nearly
$600 to the potential user. This finding
suggests that contemporary hearing
aids—which are far more technologically
advanced than 1960s devices—cost less
than a traditional device when adjusted
for inflation.
Clearly, price is not the primary
barrier to adoption. In fact, today’s
hearing aids are technologically more
advanced and cost statistically the same
as in previous years, despite the rate at
which inflation has increased.
Pricing Strategy
Is it possible that adoption rates have
remained stagnant, in part, because of
the prevailing use of the bundled pricing
structure within the market? The answer
is yes, according to a recent study.
In the study that was previously cited
relative to technology,5 experienced and
inexperienced users of amplification
technology provided the retail price
they were willing to pay as a function
of whether pricing was bundled and
unbundled for the same technology. As
noted before, professional service was
framed in three different ways (vague
terms, industry terms, and layman’s
terms). Figure 6 shows that, when the
technology and professional service
provided were presented in an unbundled
format—regardless of how the technology
and service were framed—consumers
were willing to pay more compared
when prices were unbundled. It is also
worth noting that, when the technology
and service to be provided were framed
in a manner that supported evidence-
based benefits, such as the ability to hear
in the presence of background noise
and reduced whistling, respondents
were willing to pay more than when
technology was framed using both vague
and technical terms.
A post hoc analysis revealed that
willingness-to-pay in a given price
strategy was statistically influenced by
experience with amplification. As seen in
Figure 7, experienced hearing aid users
were willing to pay the retail price of
$1,531 for a hearing aid and professional
fees presented in the bundled format,
while inexperienced hearing aid users
were willing to pay $327 less for the same
product and service. Conversely, both
experienced and inexperienced users
were willing to pay a similar price for a
device and professional fees framed using
an unbundled strategy.
The latter finding is critical when one
considers that the bundled approach
creates a dichotomy between listeners
based on experience. Specifically,
experienced listeners were more
sensitive to technological aspects, while
inexperienced listeners were more
sensitive to rehabilitative services. The
use of an unbundled approach virtually
eliminates this dichotomy.
What Does This Imply for Over-
the-Counter Devices?
In order for the hearing aid market
to grow, it must improve the demand
function—or the behavioral relationship
between quantity and a consumer’s
maximum willingness-to-pay for
incremental increases in quantity. The
demand function within the hearing aid
market is inelastic,1,3,10,11 which is directly
correlated with adoption rate.3
The factor that has the greatest
influence on improving demand function
(ie, makes the inelastic market more
elastic) and, ultimately, adoption rate
is the availability of substitutes. At
present, the hearing aid market has few
substitutes, and those that are available
are more invasive and restricted to a
select population of hearing loss types.
Figure 6. Willingness-to-pay results by framing condition for the same hearing aid presented in a bundled
and unbundled pricing strategy.
Figure 7. Willingness-to-pay results by hearing aid experience for the same hearing aid presented in a
bundled and unbundled pricing format.
Pricing Strategy
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34 hearingreview.com MAY 2012
Research
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Examples of these substitutes include middle-ear implants,
bone anchored devices, and cochlear implants.
An alternative substitution to improving the adoption rate
is the introduction of over-the-counter (OTC) and direct-
to-consumer (DTC) devices. If promoted and distributed
correctly (admittedly, a big “if”), over-the-counter devices
could reduce stigma, increase awareness of hearing healthcare,
and improve adoption rates. Preliminary data from the
University of North Texas suggest that OTC/DTC devices
could potentially yield between 600,000 and 1 million
units sold in the first year, with the likelihood of nearly
40% of these purchases leading to sales of more permanent
amplification technology, based on the demand function of
-0.38 through the fourth quarter of 2011.
Conclusion
The growth in adopting amplification technology is highly
correlated with the data reporting of the industry and service
delivery model of the profession. This model, unfortunately, is
a primary reason for the stagnant growth recorded over the past
several decades. If the industry and profession are to flourish, at
least three changes are required:
1) Improved accuracy in reporting adoption rates will limit
the number of third-party distributors attempting to gain
phantom market share, as well as limit confusion as to
the need for professionals being the entry point of hearing
healthcare.
2) Promoting and providing rehabilitation services will
increase the adoption rate of first-time users; promoting
the evidence-based benefits of the technology in a
meaningful way will increase the adoption rate of
experienced users of amplification.
3) The unbundled pricing approach needs to supplant
the bundled pricing approach. Doing so appears to
increase the retail price potential users are willing to
pay, as well as limit the dichotomy in willingness-to-pay
between experienced and inexperienced consumers of
this technology.
Lastly, for the market to grow, at least some evidence
exists that introducing hearing aid substitutes—such as OTC
devices—is a worthwhile consideration. However, the manner
in which the substitute product is promoted, distributed, and
regulated is absolutely critical and must be carefully considered
(ie, see the previous article by Jerry Northern, PhD).
Evolving and improving the way our profession does
business will not only increase adoption rates, but also hearing
aid satisfaction among our patients. Importantly, it also will
keep the hearing care professional as the entry point to hearing
healthcare.
◗
References
References cited can be viewed in the online version of this article in
the May 2012 HR Archives at: www.hearingreview.com
Correspondence can be addressed to HR or Dr Amlani at:
amlaniam@unt.edu
Research
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