In the last year, hearing care professionals have dramatically increased their dispensing of digital hearing aids, witnessed a large decrease in first-time customers, and the majority (about three-quarters) have managed to weather the storm of both the economy and a lackluster dispensing climate to realize modest gross revenue increases or at least tread water in that regard. These are some of the results of this year’s HR Dispenser Survey which was sent randomly to 750 dispensing hearing health care offices that receive The Hearing Review magazine. About one-quarter (22.3%) of the questionnaires were returned (Figure 1), representing 167 hearing care offices/practices in 49 states, the District of Columbia, and Puerto Rico.

f02-fig01.gif (21016 bytes)

Editor’s Note: The Hearing Review thanks those hearing instrument specialists (HIS) and dispensing audiologists (DA) who took time out of their busy schedules to participate in this year’s survey. Without the valuable contributions of these respondents, this report would have been impossible. No incentives, other than helping other professionals better understand the market, were offered. The willingness of these individuals to share information about their businesses/practices provides information that all hearing care professionals can use in years to come in their business planning.

Survey Respondents
Respondents to the HR 2003 survey overwhelmingly (94%) had a stake in the dispensing office/practice they were reporting on, as 90% were owners and 4% were co-owners of the business (Figure 2). The responses were fairly evenly split between audiologists (45%) and hearing instrument specialists (55%). Thus, hearing instrument specialists are slightly over-represented in the survey. Although approximately 50 surveys were sent to the practices of dispensing MDs, no responses were received from this group. The average audiologist responding to the survey was a female (53%) between the ages of 41-50 years old who had been in practice for 18.6 years. The average hearing instrument specialist was a male (85%) between 51-60 years old who had a college or post-graduate degree (56%) and had been dispensing hearing aids for 19.8 years.

f02-fig02.gif (18393 bytes)

The greatest difference between the two professions were in age. Thirty-eight percent of hearing instrument specialists responding to the survey were over age 60, compared to only 4% of audiologists. In total, about two-thirds (68%) of the survey respondents were male, three-quarters (74%) held college and/or post-graduate degrees, and have been dispensing hearing aids for an average of almost two decades (19.3 years).

There were slightly more multi-offices represented in this year’s survey (Figure 3) compared to last year. Half (51%; HIS 46%, DA 58%) of survey responses came from single-office businesses, about one-quarter (27%, HIS 31%, DA 23%) came from 2-office businesses, and 12% (HIS 12%, DA 12%) came from 3-office businesses. An equal number of respondents reported working in or owning 4-5 offices (5%; HIS 6%, DA 5%) or more than 5 offices (5%; HIS 6%, DA 3%). The great majority of these offices/practices were located in a private practice setting (75%; HIS 61%, DA 88%), while others were located in retail locations (21%; HIS 34%, DA 5%), medical settings (4%; HIS 2%, DA 6%), and in physicians’ offices (2%; HIS 2%, DA 2%).

f02-fig03-04.gif (10597 bytes)

Major changes in the last 5 years have occurred relative to dispensing businesses becoming affiliated with network/corporate retail and independent networks. However, the office affiliations in this year’s survey were quite similar to those of last year, with 50% of all dispensing professionals (HIS 54%, DA 45%) reporting no affiliation to a corporate retailer/network or buying group (Figure 4). Last year’s survey1 reported 45% of dispensing professionals being in this category. About one-fifth of respondents (21%; HIS 13%, DA 31%) said they belong to a national independent network or co-op buying group (eg, AHAA, Hear for You, Marcon, AuDNet, etc), while roughly equal numbers (13%; HIS 19%, DA 5%) reported being affiliated with a traditional manufacturer network (eg, Beltone, Miracle Ear, Audibel, etc) or affiliated with, but not owned by, a corporate retailer (16%; HIS 14%, DA 19%). No dispensing practice in this year’s survey reported being owned by a corporate retailer, nor did any report being part of a non-profit organization (these categories made up 1% respectively of last year’s survey respondents).

Dispensing Hearing Aids
Units dispensed remain flat. Major changes have also been taking place in hearing instrument dispensing since the widespread availability of digital devices about 7 years ago. However, in terms of unit volumes dispensed, both HR dispenser surveys in recent years and statistics from the Hearing Industries Association (HIA)2 suggest that sales remain in the doldrums. In general, it can be seen that the number of offices dispensing 20 or fewer units increased from 1997-2000 (Figure 5), but in the last 2 years this trend appears to have reversed itself slightly. Today, more than half (52%) of all offices dispense 20 or fewer hearing instrument units; 2 in 5 (43%) dispense 21-60 units; and 5% dispense more than 60 units.

f02-fig05.gif (14548 bytes)

Thirty units dispensed per month has traditionally been considered a “general benchmark” for a thriving private practice, and this year’s survey indicates that the typical dispensing office in 2002 dispensed an average of 30 hearing instrument units per month (Figure 6); however, the median unit volume was 20 units. Offices run by hearing instrument specialists averaged 34 units per month with a median of 25 units. By comparison, dispensing audiologists’ offices dispensed about 5 fewer aids, averaging 25 units with a median of 20 units.

f02-fig06.gif (5346 bytes)

MarkeTrak VI3 showed that 65.0% of all hearing instruments purchased by consumers in Y2000 came from DA offices versus 28.8% HIS offices. The trend in the last 10 years has been toward more offices owned by dispensing audiologist, and it’s possible that this may also partially explain slower sales growth (eg, some DA offices may focus more on the diagnostic aspects rather than on dispensing hearing aids).

When asked if their unit volumes increased, decreased, or remained the same in 2002 compared to 2001, responses were basically split. One-third (36%) of all dispensing offices/practices reported gains in hearing instrument unit sales (Figure 7) by an average of 14%. A similar percentage (35%) said that unit volumes stayed the same, while 29% said their unit sales fell by an average of -17%.

f02-fig07-8-9.gif (21746 bytes)

Dispensing audiologists reported a slightly better year in terms of unit volume increases than hearing instrument specialists (Figure 7). About 1 in 5 (42%) audiologist-owned practices reported an increase in unit sales by an average of 15%, while one-third (33%) experienced unit sales decreases averaging -16%, and one-quarter (25%) saw no change. By contrast, 1 in 3 (32%) offices owned by hearing instrument specialists saw unit volume gains averaging of 13%, a slightly smaller percentage (27%) of these offices saw unit sales fall by an average of -17%, while 1 in 5 (41%) reported no change in unit sales during 2002.

Binaural and BTE fittings increase. In 2002, more than three-quarters (78%) of all clients/patients seen by hearing care professionals were fitted with two (binaural) hearing instruments (Figure 8). It is interesting to note that, in 1983, binaural fittings made up only 27% of all fittings,4 and 10 years later they still made up only 55% of fittings.5 Much of the rapid unit volume growth during this period and through the early ‘90s can be accounted for by the increasing popularity of binaural fittings. However, the binaural hearing aid fitting rate is rapidly reaching a saturation point (probably somewhere between 80-85%). MarkeTrak VI3 reports that the binaural purchase rate in 2000 among bilateral loss consumers was 84.5%, and 74.2% among all hearing aid consumers.

Relative to the styles of hearing instruments, behind-the-ear (BTE) hearing aids continue to gain in popularity, accounting for 20% of all units sold in 2002 compared to only 16% in 2001 (Figure 9). Dispensing audiologists, in particular, appear to be responsible for this trend, as they report that BTEs made up 28% of their units sold in 2002 (DA ‘01 BTE usage was 20%). Correspondingly, in-the-canal (ITC) use by dispensing audiologists fell by 7% in 2002 to 21%. Hearing instrument specialists have increased their BTE usage by 1% in each of the last three years, and in 2002, BTEs made up 14% of all the hearing aids they dispensed. HIA statistics2 support this data, indicating that 23% of all hearing instruments dispensed are BTEs. The increasing use of BTEs has been predicted by HR6 and several others due to the rapidly gaining popularity (and benefits) of directional instruments and the advantages that BTEs may offer when working with directional microphones—as well as additional features that might be gained by utilizing larger package sizes (eg, telecoil, FM capabilities, array mics, improved battery life, and durability issues, etc). BTEs are also the least expensive style of instrument in all four of the technology categories discussed below (ie, digital, programmable, non-programmable non-linear, and non-programmable linear).

It should be noted, however, that unit sales by hearing instrument styles is one of the few areas in which HR survey statistics and HIA statistics do not correlate well. For the year 2002, HIA reported market shares of 22% for ITCs, 14% for CICs, 11% for half-shell ITEs, 28% for full-shell ITEs, and 9% for other ITEs.

f02-fig10-11.gif (13330 bytes)

The digital revolution. The rapid acceptance and use of digital signal processing (DSP) hearing instruments during the last 4 years has been nothing short of phenomenal (Figure 10). This year’s survey respondents reported that 58% of the units they dispensed in 2002 were digital—a huge increase of 19 percentage points over 2001. Since 1998, DSP aids have risen in market penetration from less than 1 in 7 aids (13%) dispensed to more than 1 in 2 aids (58%). Dispensing audiologists reported that two-thirds (66%) of all the aids they dispense were digital (Figure 11), while hearing instrument specialists reported a DSP usage rate of 52%. Meanwhile, the usage rates of programmable aids (19%) fell by 10 points, which lends credence to the predictions of those who have maintained that programmable aids are a “technological bridge” to digital instruments and may eventually die out altogether as a technology class.7,8 Traditional analog (non-programmable linear) aids fell in usage (15%) by 6 points in 2002 (vs 2001), and non-programmable non-linear aid (eg, K-AMPs, etc) usage declined by 3 points.

HIA reported that digital aids made up 44.6% of the total hearing instrument market in 2002, compared to 27.2% in 2001.2 Similarly, HIA fourth-quarter statistics indicated that 53% of all hearing instruments dispensed were digital compared to only 37% in the fourth quarter of 2001.

Directional and telecoil technology. An even more positive sign that effective technological innovations are beginning to win widespread acceptance among dispensing professionals and consumers is that hearing instruments with directional microphone technology made up more than one-quarter (29%) of all the hearing aids dispensed in 2002 (Figure 12). This represents a 7 percentage point rise over 2001. Nearly all of the increase can be attributed to offices of dispensing audiologists who report that 44% of their hearing aids feature directional technology. Unfortunately, hearing instrument specialists are lagging in the adoption of this important technology with a 17% directional technology implementation rate—the same percentage as in 2001. Directional technology remains the best and most effective means in which to reduce background noise and increase customer satisfaction relative to hearing in noisy environments. Sergei Kochkin, in a recent HR article,9 showed that it was possible for directional programmable hearing instruments to attain satisfaction levels (81%) on par with consumer electronics, automobiles and even beer.

f02-fig12-14.gif (13620 bytes)

Telecoil (or audiocoil) technology was reportedly implemented in slightly fewer than 2-in-5 (37%) hearing aids during 2002 (Figure 13). Dispensing audiologists provided telecoils with their hearing instruments in 44% of fittings, compared to 30% of fittings by hearing instrument specialists. The telecoil, as its name implies, not only has utility in telephone applications, but can also be essential for use with personal listening systems (eg, TV/stereo listening), large-group induction loops,10-11 and is even becoming a necessary component for some auxiliary hearing instrument applications (eg, Etymotic Research’s Link-it array microphone system12).

Non-custom devices and fitting greater numbers with mild losses. As with the question on telecoil technology, this year’s survey also queried respondents for the first time on their use of non-custom and/or instant-fit hearing aids (eg, Sonic Innovation’s Conforma, SeboTek’s PAC, A&M’s Hear & Go, Audina’s Easy Ear, etc) (Figure 14). In total, dispensing professionals reported that 2% of the aids dispensed (HIS 3%, DA 2%) were of the non-custom/instant fit (non-disposable) variety. (Editor’s Note: Several respondents [both HIS and DA] to this question indicated that 100% of the hearing instruments dispensed were non-custom or instant fit aids. Because this seems highly unlikely, these answers were thrown out; however, if these actually were valid answers, then non-custom/instant-fit devices would constitute 5% of both HIS and DA unit sales.) Survey respondents also indicated that less than 1% (HIS 0%, DA 1%) of the hearing aids they dispensed in 2002 were disposable.

In the last two HR Surveys, respondents reported fitting hearing instruments on greater numbers of clients/patients with mild (<40 dB HL) hearing losses. In 2002, clients with mild losses accounted for 26% (HIS 22%, DA 30%) of those fit with hearing instruments, while clients with moderate losses (ie, 40-70 dB HL) accounted for 55% (HIS 58%, DA 52%), and those with severe losses (>70 dB HL) accounted for 19% (HIS 20%, DA 18%). By contrast, only 3 years earlier in 2000, clients with mild losses made up only 17% of those fit with hearing aids, while 56% and 27% of clients fit with hearing aids had moderate or severe losses respectively.

Reliance on technology platforms continues to narrow. As hearing instruments become more complex (or, at least, more sophisticated and flexible) and one’s familiarity with a particular company’s fitting philosophy and software becomes more important (along with volume discounts), it makes sense that the offices of dispensing professionals may start placing tighter limits on the number of brands that are carried. Indeed, HR Surveys in the last 3 years suggest this has been occurring. In 2002, 88% of survey respondents said they carried 6 or fewer brands of hearing aids in 2002 (Figure 15) compared to 79% in 2000. Most striking was the decline in those offices offering more than 10 brands—only 1% of respondents in this year’s survey compared to 9% in the 2001 survey. Should this trend continue, it’s possible that manufacturers with the deepest product offerings might gain more dispensing patrons, and it’s even possible this could prompt another wave of consolidation. In general, offices owned by dispensing audiologists offered slightly more brand choice than hearing instrument specialist-owned offices. About 3 in 5 (61%) DA offices offered 5-10 brands, while 4 in 5 (81%) HIS offices offered 2-6 brands.

f02-fig15.gif (11109 bytes)

In spite of the above, the percentage of hearing instruments dispensed from an office’s most-popular (ie, most-dispensed) brand has remained mostly unchanged for 3 years (Figure 16). This suggests that a choice between technologies is still clearly desirable. In 2002, slightly fewer than three-quarters (72%) of all the hearing instrument units dispensed from a given office were from one brand. Hearing instrument specialists reported dispensing 77% of their aids from a single brand, while audiologists reported dispensing 66% of their aids from a single brand.

Return rates edge downward. This year’s HR Survey suggests that, as dispensing professionals are becoming more familiar with high performance instruments, the return for credit (RFC) rate on these hearing aids is shrinking (Figure 17). In almost all categories queried, return rates were lower than reported in last year’s survey. Six percent (HIS 6%, DA 7%) of all hearing instruments dispensed were returned to the manufacturer for credit, according to survey respondents. For the typically difficult-to-fit instrument types, DSP aids were returned for credit 11% of the time (HIS 10%, DA 12%), CICs were returned 9% of the time (HIS 9%, DA 10%), and programmable aids were returned 7% (HIS 7%, DA 8%).

f02-fig17-18.gif (13761 bytes)

It should be noted that dispensing professionals and manufacturers tend to define a “return” quite differently. The manufacturers report any instrument that requires replacement as a “return for credit,” and this includes exchanged instruments, remakes, and those aids that cannot be repaired. Dispensing professionals, by contrast, tend to consider a return as any set of hearing aids that were returned by the client because they chose not to purchase them or because the instrument had some type of gross defect (eg, transducer, etc). Certain dispensing methods, such as letting a potential customer “try out” several aids—a practice highly discouraged due to the fact that it greatly increases costs for other consumers—can also greatly inflate manufacturer RFC rates relative to dispenser-reported RFC rates.

The HIA-reported RFC rate in the fourth quarter of 2002 was 13.3% for DSP aids, 17.3% for programmables, and 16.6% for linear non-programmables.2 When considering all the above technology types, the HIA-reported RFC rate was 12.1% for CICs; 13.5% for ITCs; and 14.5% for full-shell ITEs. The overall return rate during the fourth quarter of 2002 was 14.5%.

Testing and Diagnostics
Testing equipment and hearing assessment. The special equipment found in the offices/practices of dispensing professionals has changed only moderately in the last 5 years (Figure 18). The one ubiquitous piece of equipment is the audiometer, which was essentially found in all offices. Likewise, 4 in 5 offices have soundbooths (HIS 73%, DA 95%). Three-quarters (77%) of offices now have a video otoscope, which have moved up to the third most-popular equipment type in the survey. VO’s had a remarkable increase in hearing instrument specialist offices in this year’s survey (89% compared to 72% the previous year), and they were found in close to two-thirds (61%) of dispensing audiologist offices. Similarly, hearing aid analyzers (69%; HIS 64%, DA 74%) or real ear measurement (63%; HIS 54%, DA 74%) devices are found in two-thirds of all dispensing offices. Test equipment for impedance was found in nearly all (95%) dispensing audiologist offices but in only one-fifth (21%) of offices owned by hearing instrument specialists. More specialized equipment like OAE devices are now found in nearly one-third (32%) of dispensing audiologist’s offices, and about one-fifth of DA offices have ENG (17%) and ABR (17%) equipment.

Reflecting much of the above data, when asked what tests they perform during a routine hearing assessment (Figure 19), almost all hearing care professionals reported conducting air and bone thresholds (100%), word recognition testing (95%; HIS 93%, DA 98%), speech reception thresholds (91%; HIS 89%, DA 94%), and speech UCL/MCL (83%; HIS 88%, DA 76%). There were two routine tests in which the responses by dispensing audiologists and hearing instrument specialists diverged widely: 4 in 5 (81%) hearing instrument specialist offices conduct routine video otoscopy (compared to 36% of DAs), and a similar number (82%) of dispensing audiologist offices conduct routine tympanometry (compared to 17% of HIS). Tone UCL/MCLs are routinely obtained by about half (52%) of HIS-owned offices and about one-third (35%) of DA-owned offices. Acoustic reflexes are routinely assessed in one-fifth (20%; HIS 4%, DA 41%) of all offices, and acoustic reflex decay is assessed routinely in 8% of all offices (HIS 4%, DA 14%). A patient’s OAEs are tested routinely in 9% of DA-owned offices (no HIS-owned offices tested OAEs as part of a routine hearing assessment).

f02-fig19-20.gif (16846 bytes)

Speech in noise testing. With the number new digital, directional, and other unique approaches to improving signal-to-noise ratio (SNRs)—and potentially increasing the utility of hearing aids in a variety of listening environments—it may be increasingly important for hearing care professionals to test aided and unaided hearing in noise capabilities. Forty-two percent (42%; HIS 30%, DA 56%) of dispensing professionals said they conduct speech-in-noise testing on their patients/clients (Figure 20). Of those who conduct this testing, the preferred method is the Speech in Noise (SIN) test or the Quick-SIN test, which was cited by 39% of dispensing professionals. In particular, this test was the overwhelmingly favorite among hearing instrument specialists (53%, compared to 27% for DAs). Dispensing audiologists were slightly more inclined to use “other” tests, which generally consisted of various recorded speech at different SNR levels or IEEE sentences in surround sound (30%, compared to 27% for HIS). About 1 in 5 offices/practices (19%; HIS 12%, DA 24%) used the Speech Perception in Noise (SPIN) test, while about 1 in 7 (14%; HIS 8%, DA 19%) used the Hearing in Noise Test (HINT).

f02-fig21.gif (8081 bytes)

Verification of benefit. When asked if they use follow-up tools to verify the benefit of hearing instrument fittings, more than two-thirds (68%) of dispensing professionals indicated doing so (Figure 21). The survey results indicate that 45% (HIS 55%, DA 33%) of all offices use a self-generated survey or questionnaire; 25% (HIS 13%, DA 38%) use the Client Oriented Scale of Improvement (COSI); 10% (HIS 3%, DA 19%) use the Abbreviated Profile of Hearing Aid Benefit (APHAB), and 4% of dispensing audiologists use the Hearing Handicap Inventory for the Elderly/Adults (HHIE/HHIE-S/HHIA). The Hearing Aid Performance Inventory (HAPI) and Hearing Performance Inventory (HPI self-assessment) were each used by 2% of the offices owned by dispensing audiologists. Eight percent of respondents (HIS 7%, DA 10%) reported using other verification measures.

f02-fig22.gif (5969 bytes)

When a hearing aid just isn’t enough. Most hearing instrument users can benefit greatly from assistive listening devices, hearing conservation products, and/or alerting devices (Figure 22). About three-quarters of dispensing professionals (76%; HIS 64%, DA 91%) offer hearing protection (eg, earplugs and musicians’ plugs). Two-thirds of all dispensing offices provide amplified telephones and/or telephone accessories (69%; HIS 64%, 76%) and television/stereo listening systems (67%; HIS 62%, DA 73%). About half of all dispensing offices offer FM systems (48%; HIS 30%, DA 70%) and alerting devices like door knockers, special alarm clocks and fire alarms (46%; HIS 37%, DA 58%). Devices designed to alleviate and/or mask tinnitus are provided in one-third of dispensing offices (33%; HIS 26%, DA 41%).

Hearing Instrument Pricing
Bundled vs itemized billing. The vast majority (85%, HIS 92%, DA 77%) of hearing care professionals continue to “bundle” the prices of their goods and services (Figure 23). This percentage has remained roughly the same for over 5 years. Many believe that separating hearing aid costs and testing/service fees is beneficial to the hearing care field for several reasons, not the least of which is that itemized billing assigns value to the myriad services—which in many cases are considered necessities to quality hearing care (eg, hearing healthcare counseling/aural rehab)—that dispensing professionals routinely perform. Additionally, as Internet hearing instruments and other distribution outlets avail themselves to consumers, it may be incumbent for dispensing professionals to be able to offer their services apart from a comprehensive care strategy, and help “fix” the mistakes that can arise when consumers decide to “go it alone” without professional assistance.

f02-fig23-24.gif (22113 bytes)

Prices of the predominant hearing instrument types decrease for second consecutive year. (Editor’s Note: The prices in this section, in most cases, reflect the bundling of hearing aid costs and testing/fitting/follow-up service fees. See section above on bundled vs itemized billing.) With the possible exception of analog BTE and ITE hearing aids, the average prices of hearing instruments decreased—and, in some cases, decreased significantly. This was especially the case for DSP and programmable aids. Figure 24 provides a side-by-side comparison of the average prices charged in 2002 (vs 2001, shown in parenthesis) for various hearing aid styles and technologies. In the average hearing care office during 2002, HR estimates that DSP hearing aids accounted for 62% of the gross revenues derived by hearing instrument sales.13 When looking down the DSP instrument column in Figure 24, it can be seen that prices have decreased in one year’s time by over $300 in some of the ITC and CIC categories. This is a reflection of the rapid maturation of the DSP market and the many new economy digital offerings that have been introduced in the last two years.

Figure 25 takes the prices found in Figure 23 and weights them using HIA 2002 sales statistics2 by instrument type and technology, yielding average prices for the various instrument classes shown. Similarly, Figure 26 shows a 4-year progression of these average prices. In 2002, the average price of a digital hearing aid (across all instrument styles) was $2159, which represents a 10% decrease from 2001 prices. Likewise, the average price of a programmable analog instrument in 2002 was $1432, which also represents a 10% decrease from 2001 prices. In the analog non-programmable technology class, CIC prices fell by 4%; ITC prices fell by 1%; ITE prices increased by 8%, and BTE prices remained the same.

f02-fig25-26.gif (15699 bytes)

While lower prices may sound like trouble for the industry and dispensing professionals alike, the large numbers of clients/patients who are choosing digital aids or switching over to DSP technology are still serving to effectively buffer this trend—at least for now. Remember, this year’s HR Survey indicates that 58% of all the instruments dispensed in 2002 were digital compared to only 39% digital in 2001 (Figures 10-11). Similarly, HIA 2002 fourth-quarter statistics indicate that 53% of all hearing instruments dispensed were digital compared to only 37% in the fourth quarter of 2001.2 So, although the average retail price of hearing aids went down, once the large volumes of the more expensive high-tech (digital) aids are considered, the average price of a hearing instrument in 2002 was $1730 (not considering free or discounted aids). This represents a $210 increase (13.8%) over the 2001 average price of $1520. Again, this is not because the price of hearing instruments is getting more expensive (on the contrary, most models are getting less expensive); it’s because so many more consumers are opting for digital technology.

In most cases, there are only minor differences (ie, <5%) in prices between hearing instrument specialists and dispensing audiologists relative to the different styles and technologies of hearing aids. However, dispensing audiologists are often charging $200-300 more for digital ITE, ITC, and CICs. It is possible that this difference can be explained by dispensing audiologists’ greater reliance of directional microphones, telecoils, as well as perhaps a broader range of testing procedures.

The Hearing Instrument Purchaser
Number of first-time users in sharp decline. By far, the most alarming information in this year’s HR Survey concerns the percentage of patients/clients who are first-time users of hearing instruments (Figure 27). Survey respondents reported that only 41% of the clients/patients who come into their offices are first-time customers. Hearing instrument specialists, in particular, reported that only slightly more than one-third (37%) of their customers were first-timers in 2002—down 7 percentage points from 2001. Dispensing audiologists reported that 47% of the customers they saw during 2002 were first-time users, down only 1% from 2001. First-time user rates have fallen precipitously since the late-80s (Figure 28). This continued decline is one of the most disconcerting trends for the hearing health care field, and needs to be addressed by both the industry and the related professional and consumer organizations. Of the potential first-time users that visit an office, dispensing professionals say that 14% are found not to be candidates for hearing aids (HIS 11%, DA 18%).

f02-fig27-28.gif (11332 bytes)

Almost half (46%) of the customers who come into an office do so in response to customer referrals or word-of-mouth advertising (HIS 46%, DA 45%), according to survey respondents. Advertising accounts for about one-third (32%; HIS 39%, DA 22%) of new customers, while medical referrals (13%; HIS 7%, DA 21%), HMOs and managed care (4%; HIS 3%, DA 6%), hearing aid manufacturers or dispensing networks (1%; HIS 1%, DA 2%), and “other” sources (5%; HIS 5%, DA 5%) were attributed as the sources for new customers coming into an office/practice.

Of the potential customers who come into an office, diagnosed with a hearing problem, and recommended to be fit with hearing instruments, survey respondents said that two-thirds (67%; HIS 65%, DA 70%) commit to purchasing a hearing instrument on their first visit (Figure 29). Another 10% of clients/patients (HIS 11%, DA 9%) will take up to one month before deciding to purchase an aid, and 7% of the clients/patients need up to a year to decide. Dispensing professionals report that 6% of potential clients (HIS 6%, DA 5%) decide to procure hearing aids after 1 year has elapsed, and they estimate that 10% (HIS 11%, DA 9%) decide not to purchasing a hearing aid. On average, 5 years elapses between the purchase of hearing instruments, according to survey respondents.

f02-fig29-30.gif (13396 bytes)

Customer ages. Senior adults ages 65-84 make up 3 in 5 of the clients/patients (60%; HIS 65%, DA 53%) seen by the average dispensing professional (Figure 30). Those adults ages 85 and older accounted for 14% of the customers in an average office (HIS 15%, DA 13%). When these two age groups are combined, the HR Survey suggests that 4 in 5 (80%) hearing instrument specialists’ clients, and 2 in 3 (66%) dispensing audiologists’ clients are age 65 or older. One-fifth (20%) of dispensing audiologists’ clients are 45-65 years old, compared with 15% of hearing instrument specialists’ customers. As might be expected, audiologists see slightly larger numbers of younger people who have hearing impairment. In total, people ages 30-44 account for 5% of all dispensing activities (HIS 4%, DA 7%), people ages 18-29 account for 2% (HIS 1%, DA 3%), and minors ages 18 and under account for 2% (HIS 0%, DA 4%).

The Typical Dispensing Office/Practice
Staffing, hiring, and compensation. The typical dispensing office has two hearing care professionals (Figure 31), with about 1 in 6 offices (15.2%) having both hearing instrument specialists and dispensing audiologists working together in the same setting (Figure 32). About 1 in 5 (18.5%) offices owned by a dispensing audiologist employs a hearing instrument specialist, and about 1 in 8 (12.8%) offices owned by a hearing instrument specialist employs an audiologist. It appears that medical doctors are becoming more common-place in dispensing offices (Figure 31). Physicians were reported working in 5.8% of offices run by hearing instrument specialists, and in 4.6% of the offices run by dispensing audiologists. Recall from the beginning of this article that a total of 6% of offices were located in either a medical setting (4%; HIS 2%, DA 6%) or a physicians’ office (2%; HIS 2%, DA 2%). In some cases, as many as 5 MDs were reported working in an office owned or co-owned by a dispensing professional.

f02-fig31-33.gif (14899 bytes)

When asked if they planned on hiring a hearing care professional in the next year, one-fifth (20%; HIS 22%, DA 17%) of dispensing professionals responded positively, compared to one-quarter (24%) in last year’s survey (Figure 33). When asked if they planned to hire a hearing care professional in the next 3 years, about one-third (36%) of dispensing audiologists responded positively, compared to two-fifths (41%) of hearing instrument specialists. Despite the economy, it appears that there is plenty of opportunity available for anyone interested in assessing hearing loss and dispensing hearing instruments.

Compensation for hearing care professionals is shown in Figure 34, and both the average and median is shown because there were a minority of owners who owned large dispensing operations and reported relatively large salaries (eg, >$250,000) that skewed the statistical averages. Owners of dispensing offices/practices have an average annual salary of $94,081 (HIS $88,633, DA $100,061) with a median salary of $75,000 (HIS $65,000, DA $80,000). The average salary of a hearing instrument specialist working in an HIS-owned office was $50,813 (median: $50,000). Dispensing audiologists working in HIS-owned offices had salaries averaging $47,000 (median: $50,000). In DA-owned offices, the average salary of a dispensing audiologist was $54,605 (median: 50,000), and the average salary of a hearing instrument specialist was $32,000 (median: $40,000). Many part-time employees were reported to make between $15,000-$35,000, with salaries depending primarily on their professional experience and the number of days per week in which they worked. (Editor’s note: Due to its personal nature, only about half of returned surveys contained information on salaries. Due to this smaller sample size, some care should be taken when considering these figures.)

f02-fig34-35.gif (13786 bytes)

About an equal percentage of dispensing offices pay their employees through fixed salaries (44%; HIS 36%, DA 54%) and through salary-plus-commission arrangements (43%; HIS 44%, DA 42%) (Figure 34). Fifteen percent of offices pay their employees by commission only (HIS 20%, DA 8%), and only 3% by commission-plus-expenses (HIS 3%, DA 2%). (There were multiple responses on this question, so percentages do not add up to 100%.) The method of compensation is becoming an increasing focus of some professional organizations that are advocating the use of fixed salaries only in an effort to do away with any real or perceived conflict of interest problems relative to dispensing and the best interests of the client/patient.

Gross revenues and profits. More than half of dispensing offices reported gross revenues of $251,000-$500,000 (34%; HIS 31%, DA 37%) or $100,000-$250,000 (22%; HIS 20%, DA 24%) (Figure 35). About one-third (32%) of dispensing offices reported gross revenues in excess of a half-million dollars, with 11% reporting $501,000-$750,000 (HIS 10%, DA 13%), 10% reporting $751,000-$1 million (HIS 14%, DA 5%), and 11% reporting over $1 million (HIS 8%, DA 15%). In contrast, 12% of offices/practices reported gross revenues of less than $100,000, and a majority of these offices were owned by hearing instrument specialists (HIS 17%, DA 6%).

f02-fig36.gif (9409 bytes)

When comparing 2002 gross revenues to those of 2001 (Figure 36), about half (48%) of all offices/practices reported increases by an average of 14%, while 27% of offices saw their gross revenues dwindle by an average of 16%, and a similar percentage (25%) had gross revenues remain the same as 2001. Fifty-eight percent, or about 3 in 5, dispensing audiologist offices saw increases in gross revenues that averaged 15%, while 27% experienced an average decrease of 15%, and 15% saw their gross revenues remain the same. When looking at HIS-owned offices, 40% reported increases in gross revenues by an average of 13%, 32% reported no gains/losses in gross revenues, and 28% reported decreases by an average of 16%. Figure 37 displays the reported increases/decreases in hearing care office gross revenues during the past 7 years. During the last two years, roughly half of the dispensing offices have reported increasing gross revenues, while half reported decreases or stagnation in gross revenues. However one looks at it, Figure 37 shows that solid revenue growth has become tougher to achieve than in previous years. This may also be a reflection of the generally reduced prices in hearing instruments during 2001 and 2002 (see Figures 24-26).

f02-fig37.gif (10819 bytes)

Over half (54%) of dispensing offices reported net profits between $26,000-$100,000 (Figure 38), with 19% reporting net profits of $26,000-$50,000 (HIS 19%, DA 21%), and 35% reporting net profits of $51,000-$100,000 (HIS 33%, DA 36%). About 1-in-5 offices had net profits under $25,000 (HIS 21%, DA 16%). Fifteen percent of dispensing offices reported net profits of $101,000-$250,000 (HIS 17%, DA 13%); 9% reported $251,000-$500,000 (HIS 8%, DA 10%), and 3% reported net profits in excess of a half million dollars (HIS 3%, DA 3%).

f02-fig38.gif (5051 bytes)

Predictions for 2003
Less optimism than in past, but half still predicting good year. Despite the flat market and poor economic conditions, nearly half (47%) of both hearing instrument specialists and dispensing audiologists predicted that their businesses would experience gains relative to hearing aid unit volume during 2003 (gains by an average of 11% for HIS and 12% for DA)(Figure 39). Slightly more than one-third (36%, HIS 38%, DA 34%) of all dispensers predicted that their businesses would see the same level of unit volume, while 17% predicted unit volume losses by an average of 11% (15% of HIS predicted decreases by an average of 14%; 19% of DAs predicted decreases by an average of 7%).

f02-fig39-40.gif (17261 bytes)

Similarly, about half (49%) of survey respondents predicted that their gross revenues would increase by an average of 15%, one-third believed their revenues would remain at 2002 levels, and 15% believed their revenues would decrease by an average of 15% (Figure 40). In terms of predictions about gross revenues, hearing instrument specialists and dispensing audiologists’ answers matched closely.

Key Findings
• About 3 in 5 people (59%) who purchased hearing aids in 2002 already owned one (Figure 27). Only 41% of hearing aid purchasers were first-time users. This is in marked contrast to the early ‘80s when about three-quarters of all customers were first-time users. By far, this constitutes the hearing care field’s greatest problem: How do we appeal to the first-time user and encourage more people to seek hearing help?

• Survey respondents reported that, in 2002, they used digital technology for a whopping 58% of fittings (compared to 39% in 2001) and programmable technology for 19% of their clients/patients’ fittings (compared to 29% in 2001) (Figures 10-11).

• As in 2001, the average price of most styles and technologies of hearing instruments decreased during 2002 (Figure 24-26)—particularly in the all-important area of digital aids where prices fell by as much as $300 for some hearing aid styles. However, the average price of a hearing instrument in 2002 rose by 13.8% due to burgeoning use of digital instruments. The average price of a hearing instrument in 2002 was $1730, a $210 increase over the 2001.

• After leveling off in 2001, the trend of increased binaural fittings is moved forward yet again. In 2002, 78% of all hearing aid fittings were binaural (Figure 8).

• Only 36% of all dispensing professionals said their unit sales increased in 2002 (Figure 7). Almost an equal number (35%) said their unit volumes stayed the same, while 25% reported a decrease in units dispensed. Meanwhile, about half (48%) of all dispensing professionals said their gross revenues increased in 2001, while equal numbers said that their revenues stayed the same or decreased (27% and 25% respectively) (Figure 36). Compared to previous years, it was clearly more difficult in 2002 to post gains in units dispensed and gross revenues. w

The editor extends thanks to Christina Jackson, an accountant in Two Harbors, Minn, for her herculean efforts in tabulating the survey questionnaires and formatting the data in this survey.

Correspondence can be addressed to Karl Strom, Hearing Review, 4131 East Superior Street, Duluth, MN 55804; email: [email protected].

1. Strom KE. The 2002 dispenser survey. Hearing Review 2002; 9(6):14-32.
2. Hearing Industries Association. Quarterly statistics report for the fourth quarter 2002. Alexandria, Va: HIA; 2003.
3. Kochkin S. MarkeTrak VI: The VA and direct mail sales spark growth in hearing aid market. Hearing Review. 2001;8(12):16-24, 63-65.
4. Cranmer KS. Hearing instrument dispensing—1983. Hear Instrum. 1983;34(5):9-12.
5. Grahl C. A dispenser yardstick: How to measure your 1992 performance. Hear Instrum. 1993;44(6):4-13.
6. Strom KE. An industry in transformation. Hearing Review. 2001;8(3):28-44, 87.
7. Strom KE. The dawning of a new millennium: Researchers’ views. Hearing Review. 2000; 7(3):42-50,81.
8. Strom KE. Slouching into the new millennium: 2001 brings little market growth to the hearing industry. Hearing Review. 2002;9(3):14-22.
9. Kochkin S. MarkeTrak VI: On the issue of value: Hearing aid benefit, price, satisfaction and brand repurchase rates. Hearing Review. 2003; 10(2):12-26.
10. Ross M. Telecoils: The powerful assistive device. Hearing Review. 2002; 9(9):22-26,57.
11. Myers D. The coming audiocoil revolution. Hearing Review. 2002; 9(9):28-31.
12. Christensen LA, Helmink D, Soede W, Killion MC. Complaints about hearing in noise: A new answer. Hearing Review. 2002; 9(6):34-36.
13. Strom KE. Looking back to move forward: The hearing instrument market in the new digital age. Hearing Review. 2003; 10(3):25.
14. Cranmer KS. Hearing instrument market analysis. Hear Instrum. 1990; 41(5):6-10.
15. Skafte MD. The 1998 hearing instrument market—the dispenser’s perspective. Hearing Review. 1999;6(6):6-32.