Dispensing professionals hear the question again, and again, and again: Why are hearing instruments so expensive? You hear it from consumers, from physicians, from parents, and from the adult children of hearing-impaired patients. In answering the question, one may be tempted to strike a diplomatic approach, only to be found later wandering around a labyrinth of explanations that might appear to the consumer to be half-hearted justifications.

The truth is that hearing aids are one of the “best bargains” around. This may be an unpopular position to hold, partly because it de-mythologizes a strong, generic idea that even we, as hearing care professionals, are sometimes guilty of propagating. However, it’s simply wrong to believe that hearing aids are overpriced or overly expensive. Additionally, it may even be wrong to believe that this is why we are having trouble boosting the market penetration of amplification devices.

The following discussion is not meant to imply that hearing aids are inexpensive. They’re not, and it’s likely they never have been. However, one can make a strong argument that hearing aids have not gone up in cost over the years when comparing appropriate technologies and styles.

One challenge in any historical analysis of hearing instrument pricing is that an “apples-to-apples” comparison is difficult to make because of the constantly changing technologies and dispensing practices. This article analyzes hearing aid pricing from 1980-2005. The reader should recognize that a host of innovations have occurred during this period that may have significantly influenced pricing, including the advent of programmable aids, widespread use of directional microphones, WDRC technology, in-the-canal (ITC) and completely-in-the-canal (CIC) devices, and digital hearing aids—to name only a few.

Placing Hearing Aid Pricing in Historical Perspective
Analog linear vs modern analog aids. Twenty-five years ago, in 1980, a pair of good-quality hearing aids had an average retail price of about $800 (Figure 1). This price is supported by Libby.1 Additionally, a one-year’s supply of batteries for those aids cost about $50 per year. So, a pair of hearing aids in 1980 cost $850 the first year, plus about $150 in years two through four (what might be viewed as the “average life expectancy” of those aids) for a total of about $1000. To calculate the costs further, four years is 1461 days. The cost was, therefore, the $1000 divided by 1461 days—or 68¢ per day for the pair of hearing aids over that four-year period. Using the Consumer Price Index2 (CPI) to correct for inflation, this would equate to $1.68 per day in 2004 dollars.

Chart
FIGURE 1. Average prices of all styles of linear non-programmable hearing instruments from 1980-2004, showing both the unadjusted (real) dollar amounts (blue diamonds) and these same prices corrected for inflation to 2005 figures using the Consumer Price Index (CPI, purple squares).2 The graph shows that prices for linear aids have remained relatively stable for 25 years. The increase in prices between 1993-1994 is a direct result of the introduction of completely-in-the-canal (CIC) hearing instruments. Editor’s Notes: 1) the HR survey began asking pricing information on CICs for the first time in 1994; 2) Prices in Figures 1 and 2 generally reflect the practice of “bundling” goods and services together and reporting them as the “hearing aid price.”

In 2004, the average price of an analog hearing instrument was $972.3 It is important to recognize that these analog hearing instruments differ substantially from their predecessors; they are “not your father’s” ITE/BTE/eyeglass hearing aids. In general, even linear aids are of greater value in 2004 than in 1980 for at least three important reasons:

n Miniaturization. CICs made up 6% and ITCs made up 14% of all analog non-programmable hearing aids in 2004. Neither ITCs nor CICs existed in 1980. These style options are generally more costly, both in terms of returns to the manufacturer and the likelihood of service problems for the dispensing professional. This is reflected in the average 2004 cost of linear ITCs ($985) and CICs ($1242) versus the easier-to-fit and maintain BTE ($896) and ITE ($959) styles.3

n Circuitry. The vast majority of analog hearing aids sold today are Class D circuits that conserve battery life, are more reliable, and generally have a greater service life. Additionally, a number of analog instruments dispensed today contain comfort circuits (eg, K-AMP) and other notable circuit enhancements. Additionally, options like telecoils, FM, etc, that benefit the consumer may be in greater use today than two decades ago, and some of these may help to inflate “average prices.”

n Testing and fitting services. In fields like dentistry, optometry and hearing health care, the costs of services largely govern the final “selling price” of the hearing aid. In fact, Libby4 compared average wholesale prices of three similar health care fields in 1976 (Table 1), and showed that professional services were generally the largest portion of the “average retail price” of dentures, eyeglasses, and hearing aids. The same holds true today; these devices are inherently costly to make, fit, dispense, and service. In hearing care, the number of available tests and services—as well as the professional training of hearing care professionals and required hearing care office equipment—have increased considerably during the last 20 years. Many of today’s most relied-upon fitting and counseling tools (eg, NAL-NL1, HINT, COSI, APHAB, etc) did not exist in the 1980s.5 Hearing care services represent an important “value added” feature that have kept improving but are not typically thought of as a part of the “hearing instrument price.”

Avg wholesale cost Avg retail cost
Dentures $100-150    $400-600
Eyeglasses $20-30 $60-100
Hearing Aids $100-175 $350-400

The above technological and service enhancements would help to inflate the price of today’s analog hearing aids, making an “apples-to-apples” comparison with the linear aids of 1980 difficult or impossible. However, ignoring these substantial differences in technologies, styles, and services, a pair of binaural analog hearing aids in 2004 would cost the consumer an average of $1944 (eg, $972 x 2). Due to advancements in zinc-air battery technology and more efficient hearing aid circuits, the cost of batteries has actually stayed about the same in real dollars (eg, gone down when adjusting for inflation). If the average hearing aid consumer purchases 96 batteries per year,6 they would spend about $60 per year to use their aids. Thus, today’s average analog hearing aid purchaser spends $2004 for the first year and another $180 for years two through four for a total of $2184. This amounts to about $1.50 per day—or an 18¢ per day (10.7%) decrease compared to 1980.

Figure 1 shows that the price of analog hearing instruments has remained fairly stable during the last 25 years, with the exception of a rise in prices due to the 1994 introduction of CICs (see editor’s note in caption). Further, following 1994, the overall cost of analog aids leveled off as CICs became more familiar to dispensing professionals and as they decreased in market share relative to linear aids. When looking at all technology types (eg, analog, programmable, and DSP), CIC market penetration increased from 5% in 1994 to a current level of about 14%. The average price of a third-party analog aid in 1980 was $370 ($940 in 2005 $US) and a regular-priced aid was about $4001 ($1016 in 2005 $US); when considering all analog hearing aid styles in 2004 at the private dispensing level, the average price was $972 ($998 in 2005 $US).

Analog aids circa 1980 vs modern DSP aids. Analog hearing instruments are now fulfilling a smaller niche in the hearing instrument market, as digital hearing instruments have come to dominate. According to Hearing Industries Association (HIA) statistics, digital hearing instrument market share has grown from 45% in 2002 to 88% in 2005. Add in programmable analog technology and well over 90% of all hearing aids dispensed today are non-linear programmable devices. Digital and analog programmable hearing aids are 2-3 times more expensive than analog linear aids, so it stands to reason that the average price of hearing aids has risen fairly rapidly in recent years. The average price of all digital hearing instruments in 2004 was $2066, but there are also a lot of choices available in digital technology: average digital prices ranged from $1250 for an economy digital ITE hearing instrument to $2842 for a premium digital CIC.3

Today, about a decade after digital aids were first introduced and about 6 years since they’ve enjoyed significant market share (eg, above 20%), no one really knows how long these devices will last because no one has ever “outlived” one. The best estimates are up to 10 years—or 3650 days! It is a fairly simple task for a consumer to find a pair of economy digital instruments for $3050. For the sake of argument, we could throw in another $600 for battery consumption over 10 years. That makes the numbers come out to $3650—or $1.00 per day.

In truth, there are no reliable statistics on how long digital instrument users keep their hearing aids before updating them. Unlike traditional linear aids, it is possible to reprogram digital instruments to fit a patient’s changing hearing needs. Past surveys have indicated that the average consumer in 2002—a time when DSP aids constituted only 45% and linear programmable aids constituted 26% of the market—updated their hearing aids once every 5 years. Thus, over the course of 5 years, a pair of $3050 digital aids (with $300 worth of batteries) cost the consumer $3350 to operate. This translates to $1.84 per day, or 34¢ per day more than current analog aids, and about 16¢ per day more than basic linear hearing aids of 1980.

The average dispensing professional who owns and runs a dispensing practice has been in business for about 20 years3—just long enough to remember hearing aids circa 1980. As someone who has been dispensing hearing aids since the late-1970s, I believe that most of my colleagues would agree this represents money well spent. In fact, it is a value that continues to improve as digital and directional technology continue to evolve.3

Analog hearing aids in 1980 vs all hearing aids in 2004. It is because of this overwhelming movement to digital—as well as the introduction of CICs and analog programmable instruments—that the average price of hearing aids has increased significantly in the last 10 years (Figure 2). The overall average price of a hearing aid in 2004 was $1893, a 5% increase over 2003 and a 86% increase over 1980. However, as in previous years, the average price of hearing aids did not rise due to higher prices charged by dispensing professionals; rather, the prices increased due to the vast numbers of consumers opting for more expensive DSP products over the traditional technologies.

Chart
FIGURE 2. Average inflation-adjusted prices (in 2005 $US)2 of all styles and all technology types of hearing instruments from 1980-2004, as reported by Hearing Instruments or The Hearing Review magazines (HI/HR $US, blue squares) and HIA/MarkeTrak surveys (MTrak, purple squares). As shown in Figure 1, prices started increasing in 2004 as a direct result of the introduction of CICs, but overall prices during this period were also influenced by the growing popularity of more expensive programmable aids. Programmable hearing aid market penetration grew from 5% in 1994 to 32% in 2001. Similarly, the higher-priced DSP instrument market grew from an estimated 7% in 1998 to its current level of 88% (Q2 2005), further increasing average prices during this period. MarkeTrak pricing figures are lower than HI/HR figures in later years probably due to the influence of VA dispensing activity, free/discounted and third-party hearing aids, as well as Internet sales, all of which are generally not reflected in HR statistics.

Additional Evidence
Lundeen7 has shown that, when one examines the manufacturer’s suggested retail prices (MSRP) of hearing instruments over time (roughly 1910-present), an average historical price range from $244-$1932 (Y2000 $US) emerges. Lundeen is careful to point out that MSRPs are just that: suggested retail prices that may not reflect the actual market prices. However, acknowledged as such, they should reflect general trends in the retail price. Lundeen concludes that “when the effects of inflation are accounted for, hearing aid prices have changed only slightly since the time of Alexander Graham Bell” and are consistent with historical values.7

The average price of all hearing instrument technologies, styles, etc, was reported by HR in 2004 to be $18933 ($1751 in Y2000 $US). Although this is on the “high side” in terms of Lundeen’s historical norms, it should be pointed out that we are still in the early years of digital instrument adoption, and there are strong signs that digital hearing instrument prices are declining gradually (eg, DSP prices were reduced 4% in 2004 compared to 2003).3 When viewing Lundeen’s figures, one can see that prices tend to be higher in the early years of key innovations (eg, the transition from vacuum-tube to transistor-type hearing aids, etc).7

Value is usually defined as cost divided by benefit, and there is fairly conclusive evidence that the use of hearing instruments improves quality of life. Although this topic exceeds the scope of this paper, two recent related articles in the literature include Yeuh et al8 in JAMA and the National Council on the Aging (NCOA) study9 published in HR. Both point to amplification as a means for improving general wellness in the population. A study by the Veterans Administration, funded by the National Institutes of Health (NIH), has shown emphatically that even basic (non-DSP) hearing instruments provide substantial speech intelligibility and benefit in both quiet and noise—and unpublished data from this same study suggest this also applies to long-term hearing aid use (eg, about 6-7 years after the aids are dispensed).10 MarkeTrak VII12 shows that 77.5% of wearers of new hearing aids (eg, hearing aids less than one year old) are satisfied with their devices, placing hearing instruments in the top-third of customer satisfaction ratings for products and services in the US.

Finally, ongoing analysis of MarkeTrak data by the Better Hearing Institute suggests that untreated hearing loss accounts for $100 billion in lost income each year in the US.11 The BHI found that, whether a person gets help for their hearing or not, that person is likely to have a lower income. However, for those who get treatment for their hearing loss, their income loss is cut in half compared to those who do not seek treatment. The data suggests that lost income ranges from about $1000 per year for mild losses to $12,000 per year for more severe hearing losses. The point is that hearing aid use, on average, boosts the pay of hearing-impaired workers.

Hearing Aids Are A Bargain
When examined in a historical context, hearing aids are not more expensive than they have been in the past. First, when comparing appropriate technology types to each other (eg, analog aids in 1980 vs 2004), one can show that hearing aid prices have actually decreased slightly relative to inflation. Second, the consumer has never received more benefit in the form of device performance, options, and pricing choices. Finally, there is abundant evidence to show that hearing aids improve quality of life, general wellness, and may even improve a person’s station in life.

Data in this article indicate that, in 1980, all linear hearing aids (ITEs and BTEs) cost about 68¢ per day, or $1.68 per day in 2004 dollars. In 2004, all linear non-programmable aids—including the more expensive ITCs and CICs that didn’t exist in 1980—cost only about $1.50 per day. However, the average price of all hearing aids has gone up rapidly in the last 10 years due to the vast majority of consumers (over 90%) choosing the more expensive CIC, programmable, and/or DSP technologies. The average hearing aid in 2004 cost $1893, or 86% more than the average hearing aid in 1980. However, the ability for the consumer to purchase less expensive hearing aids that offer far more features and benefits than circa 1980s hearing aids remains: An analog BTE and ITE averaged $896 and $988 respectively in 2004. Similarly, the price of a programmable BTE ($1164) was about $150 more expensive than a 1980 linear hearing aid when adjusting for inflation.

In the 25 years from 1980-2005, most non-medical consumer items have doubled or tripled in price: gasoline has gone from $0.89 to over $2.70 per gallon, a cup of “designer coffee” is over $1.50 per cup, and the Consumer Price Index has increased by more than 200%. Furthermore, if you look at the costs of health care services, medication/pharmaceuticals, and medical devices over these same 25 years, you will become an avid supporter of the idea that hearing aids are one of the best deals in town.

Hearing aids can be costly for the average consumer, and a dispensing professional would be foolish not to acknowledge this fact. Not many people wake up dreaming of paying $2000-$6000 for binaural aids they never really want to wear in the first place. To make matters worse, these expenses are not often covered under pension or health care plans. So, in no way am I suggesting that the price of hearing aids—even with the considerable advantages of hearing aid financing programs—do not present an economic hurdle for many people.

However, the fact remains that hearing instruments are a bargain relative to what they offer today’s consumer, and they are not overpriced when considering all the options available. In most cases, modern hearing instruments offer an amazing array of value-added features and benefits—at a price lower than, or consistent with, historical norms. w

Acknowledgements
The author and editor thank Marjorie D. Skafte for her assistance in gathering information on historical pricing. Additionally, information on historical pricing was taken from both Skafte’s and Karen Cranmer-Briskey’s annual surveys in Hearing Instruments and The Hearing Review.

 Jay B. McSpaden, PhD, BC-HIS, is an audiologist who retired from private practice and is currently practicing as a hearing instrument specialist in Jefferson, Ore.

Correspondence can be addressed to HR or Jay B. McSpaden, PhD, PO Box 1043, Jefferson, OR 97352; e-mail: [email protected]

References
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