Part 2: Hearing aid styles and pricing, professional compensation, marketing, and procedures

Figure 1. Hearing Instrument Purchases Through a Buying Group

This is Part 2 of a 2-part report on a survey of 386 dispensing practices during 2011, which was commissioned by Phonak Hearing Systems and conducted by Customer Care Measurement and Consulting, LLC (CCMC). Part 1 of this article appears in the August 2012 edition of The Hearing Review, and reports on several benchmarks, including gross revenues, revenue sources, and patient demographics. Similar studies had been sponsored by Phonak in 2008, 2009, and 2010, with the latter being published in the June 2011 and July 2011 editions of HR.

Survey basics. This survey was designed to provide individual hearing practices with a benchmarking tool to compare their performance against industry standards. These statistics can be used as a basis for assessing and setting realistic, continuous, and fact-based improvement goals.

A Web-based survey methodology was utilized. Responses were collected in July and August 2011. There were 386 respondents to the 2011 survey. References to “2010 results” and “2009 results” reflect actual practice performance data for these years; references to “2011 study” and “2010 study” reflect practice characteristics/opinions in the years these studies were conducted (eg, “How many full-time and part-time office locations does the practice have?” asked in the 2011 study).

A section in the digital edition of this article at, labeled Practice Characteristics and Performance Worksheet, provides a summary of norms for the total hearing industry. Included are several key productivity measures discussed in Part 1 and 2 of this article.

Types of Instruments Dispensed

Figure 2. Styles of Hearing Instruments Dispensed

Buying group purchases. A total of 34% of hearing care practices reported that they were members of a buying group in 2011, compared to 44% in 2010 (Figure 1). Of those practices that were members, 34% said that they purchase between 96% and 100% of their hearing instruments through the buying group, a significant increase compared to 24% in 2010. Although fewer practices in 2011 participated in buying groups, those that did participate increased the percentage of their purchases through these groups.

Hearing aid pricing and styles. Hearing care professionals reported that an average of 41% of instruments sold had fitting fees (hearing aid plus professional fees) of under $2,000 (Table 1). The median fee was estimated to be $2,140. This was higher than the reported median instrument revenue per unit dispensed ($1,752, see Figure 8 in Part 1), suggesting some over-statement of the usage of higher-value products.

The survey also found limited variation in the price points of the instruments used by practice type. Multiple full-time-location practices reported a somewhat higher percentage of fittings with fees above or equal to $2,000, with 53% to 66% of hearing aids and associated services being purchased by patients for more than $2,000, depending on the practice type. The median revenue per unit was $1,712 for solo-professionals, $1,751 for practices with 2 or more full-time professionals, and $1,909 for multiple full-time locations.

Hearing care practices reported that an average of 20% of instruments dispensed during 2010 were custom in-the-ear (ITE) units, 34% were behind-the-ear (BTE) types, and 45% were receiver-in-the-canal (RIC) units (Figure 2). Instrument style usage did not vary significantly among practice types. There was a significant increase in the usage of RIC units from 2009 to 2010—from 38% to 45%. Not surprisingly, there was a corresponding decrease in the usage of BTE units from 2009 to 2010, from 40% to 34%.

Figure 3. Compensation Plans for Licensed Hearing Care Professionals (full & part-time)

Practices in the top 20% of the instrument revenue per unit dispensed quintile sold a higher proportion of RIC units and a smaller proportion of custom ITE units (Table 2).

Cost of goods. Hearing instrument purchases (cost-of-goods or COG) accounted for 34% of practice gross revenue in the median practice, with the COG being 37% for single-practice solo-professionals, 33% for single practices with two or more full-time professionals, and 30% for multiple-practice offices with one or more professionals. The COG ratio is calculated by dividing the total amount spent for hearing instruments by the total practice gross revenue for a specified period. The actual amount spent for hearing aids increased by 27% from 2009 to 2010. However, the COG percentage actually decreased by 2% in 2010, because, although the amount spent on hearing instrument purchases rose, gross revenue also increased (see Figure 1 in Part 1 of this article).

Gross profits and gross margin. The median hearing practice earned gross profit from fitting instruments of $271,277 during 2010, compared to a median of $152,500 in 2009. The median gross profit margin percentage for fitting hearing instruments in 2010 was 60%, representing a mark-up of 2.4 times wholesale cost, compared to a median gross profit margin percentage for fitting hearing instruments in 2009 of 55%, representing a mark-up of 2.1 times wholesale cost. Gross margin percentage is calculated by subtracting the wholesale cost of instruments from the gross revenue from instrument fitting fees to derive the gross profit, then dividing the resulting gross profit by gross fitting revenue.

Returns for credit and exchanges. A median of 10% of hearing instruments purchased were returned for credit or an exchange. In 2009, the results were the same.

Professional Compensation

Compensation plans. Of practices that employed full-time or part-time licensed hearing professionals, 40% compensated professionals with salaries and commissions, 26% paid salary only, 21% paid salary plus bonus, and 13% paid commission only (Figure 3). In the survey, there was a significant reduction from 2010 to 2011 in the percent of professionals paid only a salary, and corresponding increases in the percent of professionals paid with a salary plus bonus, and in the percent of professionals paid by commission only. A total of 57% of these practices provided health insurance to professionals. This was significantly lower than in 2010, when two-thirds of these practices provided health insurance to professionals.

Compensation by title. The median compensation received by practice owners in 2010 was $87,500 (including benefits) (Table 3). Directors of Audiology and employees received median compensation of $62,500 (Table 4). Fringe benefits represent 7% of total compensation (Table 5).

Practice owners in multiple full-time-location practices earned significantly higher compensation than did owners of single full-time-location practices. However, owner compensation in multiple full-time locations was half the percentage of practice gross revenue (12%) of single full-time location/solo professional practices (24%). Within single full-time-location practices, owner compensation was the same whether one hearing professional was employed or two or more hearing professionals were employed.

The median total compensation in 2010 was $100,000, compared to a median of $135,000 in 2009 (Table 5). One key reason total compensation went down in 2010 was a significant reduction in the amount of dollars spent on fringe benefits for full-time/part-time hearing professionals, from a median of $15,000 in 2009 down to $7,000 in 2010.

A new question in the 2011 survey asked respondents to provide their total expenses for 2010. Expenses included “salary/draws (and) benefits” as well as “taxes and operating expenses.” The median total practice expenses were $346,744.

Practice Marketing

The median hearing practice spent 4.4% of gross revenue for marketing, or a median of $20,000 annually (Table 6), compared to a median of 4.8% of gross revenue spent for marketing in 2009 ($15,000 annually). Although marketing expenses increased in 2010, their percentage of gross practice revenue decreased when compared to 2009 due to an increase in overall 2010 gross practice revenue. The amount of marketing expenses subsidized by suppliers also increased, from a median of 0% of marketing spending in 2009 to 10% in 2010, and from a median of $0 to $660. For practices that actually received supplier subsidies for marketing (ie, excluding those practices that said they received 0% supplier support), the median was 20% of spending, with a median amount of $7,825.

More aggressive marketers (top 20% of practices on the basis of marketing spending ratio) spent 16.2% of gross revenue on marketing (Table 7). Multi-full-time-location practices spent the most on marketing during 2010 (Table 8). The percentage of gross revenue that a practice spends on marketing can be affected by a number of variables, including the level of physician referrals, practice setting, and the particular goals of the practice.

Marketing plans. A total of 44% of practices reported that they had developed a marketing budget before the start of each year, and 49% had developed a marketing calendar (Table 9). Although over half of practices apparently made ad hoc decisions about marketing tactics during the year, the largest practices were more likely to have developed marketing budgets/calendars.

Marketing tactics employed. The most commonly used forms of marketing included newspaper advertising and direct mail (Table 10). Among those practices that used newspaper advertising (excluding practices that did not use newspaper advertising), the average amount of the marketing budget spent on newspapers was 36%, while practices that used direct mail (excluding practices that did not use direct mail) spent an average of 32% of their marketing budget on this activity. About half (47%) of practices spent some of their marketing budget on Web site development, and 42% of practices used patient referral programs.

Smaller numbers of practices used broadcast advertising, radio spots, or e-mail campaigns to attract new patients. Usage of marketing tactics does vary somewhat by practice type and practice size. Multi-full-time-location and larger practices are more likely to use direct-mail programs and newspaper ads than single full-time-location and smaller practices.

The percentage of practices using newspaper ads increased from 65% in 2009 to 72% in 2010. There was also an increase in usage of social media campaigns/programs, from 4% in 2009 to 10% in 2010. While overall spending increased in 2010, there was a decrease in the amount spent on TV advertisements for those practices that used this medium, from $14,107 in 2009 to $9,988 in 2010.

Figure 4. Overall Marketing Program Effectiveness Rating

Effectiveness of marketing. A majority of hearing practices (51%) rated their 2010 marketing program as only somewhat effective, indicating an opportunity for many practices to improve their marketing efforts (Figure 4). The percent of practices that rated their marketing program as very/somewhat effective decreased from 75% in 2009 to 69% in 2010. There was a corresponding increase in the percent of practices that felt their marketing programs were somewhat/very ineffective, from 10% in 2009 to 15% in 2010.

Practices spending the lowest ratio of gross revenue for marketing rated the effectiveness of their programs lower than other practices (Table 11). This was also true in 2009; however, in 2009 the effectiveness rating given by this group was 52%, versus 35% in 2010—a significant decrease.

Marketing tactics that received the highest effectiveness ratings included patient referral programs, physician referral programs, open houses, direct mail, newsletters, education seminars, and newspaper ads (Table 12). But, with the exception of patient and physician referral programs, fewer than one-quarter of the surveyed practices judged any of these tactics as “very effective.” Although use of social media campaigns/programs went up in 2010, hearing practices viewed them as being less effective in 2010 than in 2009. In 2010, only 41% found social media to be very/somewhat effective, compared to 55% in 2009.

Referrals. Referrals are the major source of new patients for hearing practices, accounting for an average of 45% of new patients (Figure 5), followed by print/broadcast ads (13%) and direct-mailer programs (12%). Physicians produced an average of 27% of new patients; referrals from current patients produced an average of 18% of new patients. There were no significant differences from 2009 to 2010.

Primary care physicians accounted for an average of 29% of total referrals, and ENT specialists accounted for an average of 28%, far outpacing nursing homes (6%), senior center counselors (3%), and hospitals (2%).

Tracking marketing efforts. The majority of hearing care practices reported that they tracked the instruments sold and appointments. Just over half of practices said that they tracked calls. To track these metrics, 55% of practices reported that they used various office management systems, 47% said that they used Excel spreadsheets, and 43% percent reported that they used handwritten tracking forms.

Practice Web sites. About four-fifths (82%) of practices had a Web site, a 6 percentage-point increase from the 2010 survey (76%). A total of 73% of single full-time location/solo professional practices maintained Web sites, compared to 94% of the largest practices.

Figure 5. Source of New Patients

Nearly three-fourths (72%) of practice Web sites included hearing information archive functionality, and 60% of practice Web sites had a section to accept patient inquiries (Table 13); however, only one-third (33%) enabled appointment scheduling by patients. In 2011, 52% of practice Web sites included educational videos, compared to 39% in 2010, and patient testimonials were used in about half the sites (49%). A similar percentage (48%) used search engine optimization (SEO). There was an increased use of physician pages, from 18% in 2010 to 28% in 2011.

Practice Procedures

Patient surveys. About 2 in 5 (38%) practices regularly conducted patient satisfaction surveys. Most of those conducting such surveys shared the results with their staff. These findings were largely unchanged from 2010.

Testing and recall. A median of 75% of patients received a hearing aid demonstration as part of practice routine counseling services in 2011, compared to a median of 50% in 2010. This difference largely resulted from a significant increase in the percentage of practices that reported 100% of their patients received a hearing aid demonstration, from 15% in 2010 to 24% in 2011. The percentage of practices that reported 0% of their patients received a hearing aid demonstration also decreased significantly, from 12% in 2010 to 4% in 2011.

Figure 6. 2011 Hearing Instrument Fitting Testing Procedures

“Real ear measures,” “electroacoustics measures,” “speech in noise,” and “COSI” were used most often by the practices for the routine fitting and verification/validation of hearing instruments (Figure 6).

About four-fifths (81%) of hearing practices scheduled recalls for cleaning. These practices scheduled quarterly cleanings for an average of 37% of their patients, and scheduled cleanings on a semi-annual basis for 37% of their patients. Over three-quarters (77%) of hearing practices scheduled recalls for hearing tests, and these same practices scheduled annual hearing tests for an average of 71% of their patients.

Figure 7. Preferred Method of Obtaining Continuing Education


About 3-in-4 (74%) hearing practices attended a business or patient management education program in 2010. The most common topics covered in these programs were product fitting, technical patient counseling, marketing management, and service quality. Although overall participation in training programs went down from 79% in 2009 to 74% in 2010, there were increases in some of the types of participation (eg, technical patient counseling, service quality training, consultative selling, and office design). In other words, although fewer practices engaged in training, those that did were participating in more types of training.

Hearing practices received a median of 40 hours of training across the practice during 2010, the same number of hours as in 2009. An average of 46% of the training hours were spent on product fitting in 2010, compared to 50% in 2009.

Live education sessions (eg, lectures or seminars/meetings) were the preferred methods for hearing professionals to obtain continuing education (Figure 7). Nearly half of the hearing practices most preferred manufacturer sponsored training.

COMPARE YOUR BUSINESS metrics using the Practice Performance Comparison Worksheet at and the HR digital edition at:

CORRESPONDENCE can be addressed to HR or Kim Rawn at:

Benchmarking Your Practice

The information supplied in Part 1 and Part 2 of this article, as well as in the accompanying online Practice Performance Comparison Worksheet, is designed to supply HR readers with vital business/practice benchmarks. This worksheet provides practice owners with an opportunity to print out and fill in your own business metrics, then compare them directly with the metrics of similar practice types and sizes.

During the past 4 years in which Phonak has measured business metrics and shared the results with dispensing professionals, we’ve learned more about how these metrics can be used by practice owners and managers. Some of this can be as simple as reassurance that the practice is on the correct course. Others use the metrics in a more granular way to come up with informed answers about specific questions concerning office expansion, staffing, and workplace efficiency issues. Practice benchmarking can also help you understand where the practice should move in the future and supply solid numbers to your goal-setting and objectives.