Hansaton's AQ Hearing Aids Get An Overnight Charge For All-Day Power

If you can recharge your cell phone once and it will work for several days, why can’t you do the same thing with your hearing aids? Jerry L. Yanz of Hansaton will tell anyone within earshot why. More important, he will tell you how yesterday’s inadequate rechargeable hearing aids are being replaced by new rechargeables that actually work the way you do–all day long.

Until recently, the few rechargeable hearing aids on the market had significant limitations. Often their charge lasted less than a full day, so if you depended on them from morning to night, you were out of luck.

Many first-generation rechargeable hearing aids also suffered from the problem you had with early cell phone batteries — if you recharged them before they were completely empty, they would run out of gas quicker and quicker after each charge.

As a result, most hearing aids today still require non-rechargeable, disposable batteries. The batteries last a few days or, if you’re lucky, more than a week. But no matter how energy-efficient your hearing aids are, you end up buying dozens of batteries a year at up to a dollar a piece. It’s expensive, and disposing of so many dead batteries is wasteful and bad for the environment.

But there’s good news: Hansaton solved the problems of first-generation rechargeables to many users’ satisfaction more than a year ago when it introduced its new AQ 2G hearing aids featuring the AQ Custom ITE (in-the-ear) and AQ X-Mini RIC (receiver-in-the-canal) models. Jerry Yanz, PhD and director of audiology at Hansaton Acoustics, is a long-time hearing-industry evangelist who has been banging the drum for rechargeable hearing aids as a solution whose time has finally come. He recently co-authored an article in the Hearing Review telling you everything you need to know about the new rechargeable hearing aids.

The new Hansaton hearing aids keep their charge for 20 hours or longer and fully recharge in less than eight hours. Unless you sleep with your hearing aids turned on, you get to use them during all your waking hours. If you wear contact lenses and take them out only when you go to bed and pop them back in when you wake up, now you can follow the same routine with your hearing aids.

Other manufacturers with rechargeables already on the market as well as new entrants will be racing to catch up to with new rechargeables that deliver the mainstream features that Hansaton is promoting. When they do, customers will have a choice of fully functional rechargeables to compare against traditional hearing aids requiring disposable batteries.

If you are shopping for rechargeable hearing aids, Yanz and his co-authors suggest asking questions such as: How long will the charge last? Will the power really last all day? How long do they take to to recharge? Will they be fully charged even after a short night’s sleep? How long will the rechargeable batteries last before I have to replace them? Will the manufacturer replace them for me? And how convenient and easy is the recharging system?

When multiple manufacturers along with Hansaton are able to come up with satisfactory answers to all those questions, we may see the day when rechargeable hearing aids are as familiar as our rechargeable cell phones.

But ever since I’ve been involved with the hearing aid industry, I’ve seen a different side of the high-tech equation — companies and employees united by a mission and common social purpose.

The hearing aid industry is loaded with as much technology as any of the fast-moving hardware and software companies in Silicon Valley, and it’s got its share of die-hard competitors. Nevertheless, job satisfaction is generally very high.

If you want to know why, you should read the press release Unitron put out this month on being named one of Canada’s 50 Best Small and Medium Employers for the third year in a row:

“It is a terrific reflection of the spirit of the people who work at Unitron and the culture we collectively foster,” says Jan Metzdorff, President, Unitron. “We have the great privilege to work on products and technologies that make a real difference in lives of people with hearing loss. The highly personal nature of what we do gives our employees a shared purpose and common goal, which we see reflected in our survey results and in our ranking as a top 50 employer.”

The competitive study by Queen’s School of Business, Queen’s Centre for Business Venturing and Aon Hewitt, identified 21 key drivers influencing employee perceptions of their work experience, including people, work/motivation, opportunities, procedures, total rewards, quality of life/values, and corporate and social responsibility.

Among other things, the award recognizes Unitron’s recent investment in corporate social responsibility programs, including the Unitron Community Connection, an employee-led charity which has donated thousands of hearing aids to children around the world and raised more than $100,000 to provide hearing dog guides through the Lions Foundation of Canada.

The parent of GN ReSound hearing aids and GN Netcom headsets will get 550 million Euros (approximately $530 million US) after prevailing in a long-standing civil dispute with Poland’s largest telecommunications company. In the Bloomberg News summary of the settlement, GN Store Nord executives indicated they will use the money primarily to make further investments in its ReSound hearing aid business, including potential acquisitions.

That amount of new money unleashed on a global industry that is less than $20 billion in total sales could have a major impact. But if GN ReSound just acquires another hearing-aid company, it won’t be the game-changer everyone is waiting for in a global industry that’s been stuck with less than five percent annual growth for the past decade. Here are some other areas where serious investment could get the hearing aid industry growing faster:

1. Develop More Affordable Hearing Aids: Most of the recent innovation by the global market leaders in the hearing aid business has been in the high end of the market, providing expensive features such as wireless communication to their highest paying customers. It would be great to see one of the five global leaders come up with a high-quality hearing aid for entry level users that retails for less than $1,000. Component prices are low enough to get there, but such a low price point will also require innovation and investment in the retail channel to speed up and lower the cost of fitting the hearing aids while maintaining high levels of customer service.
2. Streamline the Fitting Process: Making it faster and easier for audiologists and dispensers to fit hearing aids will enable them to serve more customers and offer lower prices, making up a lower profit margin with a higher volume of sales. Sonova’s Sona hearing aid brand is an attempt to lower stocking costs with an upgradeable product platform to accelerate the fitting process for customers with mild hearing loss, but so far it hasn’t had a huge impact on the overall market. Others are working on faster, easier and less invasive hearing tests that would provide better results than today’s lengthy procedure while lowering costs and making it easier to attract more hearing-aid users, especially at the entry level of the market. The industry could use a lot more investment in those kinds of experiments. But until they result in higher sales volumes, these experiments require long-term investment.
3. Integrate Seamlessly With Third-Party Peripherals: The major recent investments by the top hearing aid companies in wireless communication with peripherals to hook up your hearing aids with your Bluetooth phone or your TV audio have not yet delivered affordable solutions. Many of the wireless communications schemes are proprietary, locking the user into one manufacturer’s brand of hearing aids and commanding premium prices. More compatibility with industry standards and more integration with third-party peripherals and assistive listening devices will expand the market by serving more customers at more affordable prices. But it requires an investment in innovations that will lower costs, not just provide new or higher performance.

Those are only three areas where even a fraction of a half-billion-dollar investment could be a game changer for the hearing aid industry. Unfortunately, all those investments require a long-term focus and staying power, because results won’t be obvious overnight. So don’t be surprised if we see the kind of short-term investment activity that gets immediate results and keeps shareholders happy instead. A couple of quick acquisitions of smaller hearing aid companies could reduce overall back office costs, enlarge share of market, and improve profits in short order.

But if acquisitions and other short-term investments don’t result in new products, new thinking, or new ways of reaching and serving new market segments–especially the millions of entry-level consumers with mild untreated hearing loss–then we’ll see more of the same in the hearing aid industry. Big players will continue to get bigger by serving the high end of the market. Only by taking the risk to invest in new products and services that could broaden the market with more affordable solutions will we see a step increase in growth rates in the global hearing aid industry.

In recent years, Starkey has emerged as one of the top five global hearing aid companies, with nearly a billion dollars of sales from a broad line of products that meet consumers’ entire range of hearing needs. Its five hearing aid brands–Audibel, AudioSync, NuEar, MicroTech and the original Starkey brand–are increasingly driven by a common platform of new technologies in digital signal processing, sound processing, miniaturization, wireless connectivity to your phone, TV and other devices, and wireless binaural communication between hearing aids for a more natural balanced sound.

“Over the past decade, we have gone from a manufacturing company to a global technology company,” Jerry Ruzicka, President of Starkey Hearing Technologies, said in a news release. “The name change better aligns with both who we are as an organization, as well as our focus on innovation, technology and the diverse customers we serve.”

Starkey was founded in Minnesota by William Austin, who has devoted more time in recent years to philanthropy. His Starkey Hearing Foundation to date has given away more than 500,000 hearing aids to people in need in the U.S. and around the world, with a commitment to giving away more than 100,000 hearing aids annually and a goal of one million more this decade. In the meantime, Starkey’s new generation of operating leadership has poured money into R&D and new-product development, and the results are starting to make a big impact on hearing-industry markets.

Once known more for its sales strength than leadership in innovation, in recent years Starkey caught up to and in many instances surpassed other leading hearing-aid manufacturers in developing and promoting hot new technologies. Just this week the company’s new AMP “invisible” hearing aid is being honored at the International Consumer Electronics Show with a 2012 Innovations Design and Engineering Award.

But the newly named Starkey Hearing Technologies won’t be able to rest on its laurels, or its name change, to continue competing successfully in the increasingly competitive global high-end hearing technology industry, where all the leaders are driving the advanced technologies in their hearing aids into consumer products for markets such as high-tend audio, Bluetooth phones, headsets and earphones, and wireless devices.

Industry leader Sonova Group, whose Phonak brand has been both a technology and a marketing leader for years, has continued to drive innovation in sound processing and wireless technologies. GN Store Nord, parent of ReSound hearing aids, also has a Netcom headset division that is driving into industrial hearing protection and consumer markets for earphones and headsets including the popular Jabra bluetooth phone earpieces. And Oticon hearing-aid parent William Demant’s similar push into consumer hearing technologies is led by its high-end Sennheiser headsets and other well-known audio brands.

1. Wireless Technologies: In 2011, all the major hearing-aid companies introduced one form or another of wireless communication between assistive listening devices and their hearing aids. Big announcements included streamers for broadcasting TV directly into receivers in your hearing aids, and synching Bluetooth receivers in your hearing aids with your cellphone. Wireless communication between your left and right hearing aids, to provide better stereophonic left-right balance and better location of sound, was also a big feature that the majors started to introduce. I’m expecting more of the same in 2012, along with the first reports of user experiences with these new technologies. Questions to be answered: Is their very high cost worth the benefit you get from them? Are they as easy to use as the manufacturers claim? Are they so much better than earlier, simpler, t-coil based solutions that they will find a big market in 2012?
2. Big Manufacturers Get Bigger: The big manufacturers–Sonova Group, William Demant Holdings, Siemens Hearing Instruments, GN Store Nord, and Starkey Laboratories–all seemed to be growing faster than the industry average in 2012. Those who were required to report their financial results were bullish about organic growth driven by new product introductions. In the global hearing industry we have a lot of vertical integration, with manufacturers controlling the design, development, manufacturing and distribution of their products, nearly to the point of sale, where they move their products mainly through networks of audiologists who usually resell no more than one or two brands, and who are very brand-loyal. The big players serve the top end of the market where customers can afford the multi-thousand-dollar price tag of a pair of hearing aids, and they are able to generate strong enough profits to continue funding development work that keeps them at the cutting edge of technology with leadership products. Expect more strengthening of the majors in 2012, with some interesting new high-end products and technologies.
3. Upstarts Challenge the Status Quo: While the big players at the high end of the market should continue to consolidate their positions, 2012 should also see many new upstarts with new technologies entering the mid- and entry-levels of the market with more affordable hearing-assistance products. Off-the-shelf DSPs (digital signal processors) and sound processing software are available, as are other components required to build hearing aids. In fact, the total cost of parts and basic software required to build a set of high-quality hearing aids runs into the hundreds, not thousands, of dollars. So there is room for new ventures with new product ideas to meet the huge unmet need for hearing assistance. I will be following and writing about as many of these interesting new ventures as I can.
4. Internet Hearing Aid Sales: There are already a number of companies selling programmable hearing aids direct from the manufacturer over the internet–Audicus, Audiotoniq, America Hears, HearSource, DIY Hearing Aids, hi HealthInnovations, and MD Hearing Aid are just a few. These vendors ask customers for a recent hearing test that will enable them to program the hearing aids to your profile before they ship them to you.  However, most consumers don’t already have a hearing test, and when they do get a hearing test it’s usually from an audiologist or dispenser ready to sell them a new set of hearing aids then and there. So the internet providers usually reach a small, discriminating market of experienced hearing-aid users who already have a copy of a recent hearing test, who know exactly what they want and, with the proper research, understand they can get quality hearing aids programmed and shipped directly from the manufacturer. But this small market segment may heat up in 2012. The reeason is that hi HealthInnovations, a subsidiary of UnitedHealth Group insurance company, is a new 800-pound gorilla in this marketplace who may change the competitive dynamics dramatically. Stay tuned.
5. Do-It-Yourself Hearing Tests: hi HealthInnovations asks consumers to take a web-based test that screens them for hearing loss. The test can show if some hearing assistance would be of help, and it also says it will let you know if your hearing is so bad you should head straight to an audiologist for a full personal workup. A number of other manufacturers provide hearing screening tests and there are even half a dozen hearing-test apps in the Apple iPhone store. But so far these are extremely rudimentary, and when asked, those offering the tests will tell you that if you suspect any serious issues with your hearing, you should schedule an appointment right away with a doctor, ENT, and/or audiologist. But there’s no reason that more sophisticated do-it-yourself hearing tests can’t be developed. Software on your personal computer is powerful enough and noise cancelling headphones can go a way toward replicating the silence of the padded booth in your audiologist’s office. I expect to see more sophisticated self-screening tests for hearing in 2012. While it will be many years before they can substitute for a full workup, I’m expecting they will help consumers know if any of the the growing number of off-the-shelf personal sound amplification products (PSAPs) now available on the market would provide the right level of amplification for their hearing loss. Which brings us to….
6. Over-the-Counter Hearing Aids/PSAPs: Since the FDA in the U.S. published guidelines for the sale of over-the-counter hearing aids that provide basic amplification, without requiring a hearing test, there have been a number of new entrants in the new market for Personal Sound Amplification Products (PSAPs). It’s been a slow build, because many of the new players are small and without any brand name recognition. Plus many of the products are built with inexpensive components and provide poor audio quality. But you can expect this picture to change in 2012, with the introduction of increasingly sophisticated PSAPs at a variety of price points. Look at my recent post on PSAP products introduced at the annual Consumer Electronics Show (CES) from big-name consumer audio companies like RCA and Acoustic Research, and you’ll get a glimpse of more to come.
7. Big-Box Retail: The “big box” stores such as Costco, Walmart, Sam’s Clubs, Sears and others have been selling hearing aids for quite a while. We didn’t see much news from this segment in the past year, and I suspect it’s because the product quality wasn’t superior. Very often the big box stores end up selling earlier generations of major manufacturers’ products, plus in the past support and fitting services could be spotty. I expect all this to continue changing for the better in 2012, as the stores upgrade their product lines and services, including in-house audiologists and/or more experienced dispenser/fitters, as well as the potential for private-label products that are just as good as the major hearing-aid brands, but at lower big-box-store prices. If Walmart, Costco and others get the product and service equation down correctly, they could bust open the mid-level of the market by providing excellent hearing aids for far less than the $2,000-3,000 per hearing aid price you often have to pay when you buy a major brand from an independent audiologist.
8. High-End Retail: When are we going to see hearing stores in high-end malls? Or name-brand hearing stores in downtown locations or small-town suburbs. There’s room for a retail option between the independent audiologist’s office and the big-box stores. I’d like to see an audiologist office with an attractive selection of hearing aids, headphones, assistive listening devices and other high-end hearing products under a glass counter in a store in the mall right next to my favorite supplier of eyeglasses. Will we see a major push into high-end retail in 2012? Don’t count on it. In 2010/2011 we saw HearUSA and the HearRX retail brand get swallowed up by Siemens Hearing Instruments when it failed to make timely payments on a line of credit. So the big money may stay on the sidelines when it comes to high-end hearing-aid retail ventures in 2012. But I’m leaving it on the list because, well, darn it, it’s an idea whose time has certainly come. So why not in 2012?
9. Induction Loops: 2012 may well be the Year of the Hearing Induction Loop. Or so thinks The New York Times. Its story last October on the proliferation of hearing loops in public auditoriums and other public spaces was definitive. Induction loop technology is based on the decades-old technology of induction through telecoils. It’s very simple and easy to install. However, while it’s cost-effective, it’s not inexpensive, and given that the hearing aid population is still smaller than it should be, and that not all hearing aids are equipped with telecoils, hearing loops haven’t yet taken the world by storm. There are a lot more of them in Europe than in the U.S., though, and according to the New York Times it’s only a matter of time before hearing loops become common throughout North America. So we can expect to hear more about this highly effective technology in 2012.
10. Invisible Hearing Aids: In 2010/2011 there was a lot of action in the “invisible hearing aid” market segment, and we’ll continue to see more. My personal feeling is, why make tradeoffs for the cosmetic appeal of hiding your hearing loss, when a visible open-fit BTE or other solution can do more and better for you? But it’s been so long since I worried about the cosmetics of the big hearing aids I use for my severe hearing loss that I’ve become somewhat insensitive to consumers’ concerns about the continuing stigma of wearing hearing aids. So I believe the manufacturers have been smart to market an “invisible” opiton to consumers who would not otherwise even consider hearing aids. At the same time, while I believe these invisible aids will grow into a strong market segment, I’m predicting you will see many consumers quickly get over the stigma of hearing assistance once they see what a positive difference it makes in their lives, and step up from invisible aids to open fit BTE’s that provide more functionality, such as wireless linking with their Bluetooth phones. So I’ll be writing more about “invisible hearing aids” in 2012.
11. Implants: Okay, this is an 11th bonus trend. Surgical hearing-assistance implants are becoming big business globally, and while they won’t replace hearing aids, they will certainly gain in the marketplace. Cochlear implant maker Applied Bionics had its share of problems in 2010/2011, with a broad product recall taking it out of the market for a time and reducing the number of global competitors in the cochlear implant market from three to two. But #2 AB is back, and following its acquisition by Sonova Group, it has the financial resources to compete toe-t0-toe with global leader Cochlear Limited. CI’s continue to improve, in the processing power of the behind-the-ear sound processors, in the software used to drive them, and in the number of electrodes stuffed into the implants themselves. So we can expect a lot of competition and innovation in this market in 2012. At the same time, we’ll see a lot of action in the bone-anchored hearing-aid (BAHA) market, to treat single-sided deafness. And we’ll see startups with unique middle-ear hearing-aid implants–including Envoy Medical’s Esteem implant and an interesting new implant on the wall of the cochlea from Otokinetics–continue to gain traction in the market.

I could easily add another 10 or 20 more items to this list of trends, but taken together, the 11 I’ve covered here will be enough to generate some real excitement in the global hearing-technology business in 2012. And with luck, we’ll see one or more hit the jackpot and start to find some big user acceptance and drive some substantial growth in the industry in 2012.

Westone Laboratories Is Developing Hearing Assistance And Protection Products For Consumer Markets

Now that private equity firm CID Capital has made a major investment in Westone Laboratories, watch for the Colorado company turn on the burners with a further expansion of its hearing-assistance products into new consumer markets beyond the hearing-aid industry.

Not that long ago, Westone was little more than a staid maker of ugly but essential custom ear molds for hearing aids.  But in recent years the company has introduced a slew of new products including earpieces for professional musicians, custom earplugs for swimmers, hearing-protection technologies for military and industrial applications, assistive listening products for hard-of-hearing consumers, and more. If you’ve been to AudiologyNOW or one of the other big hearing-aid conventions, you’ve probably enjoyed Westone’s product demonstrations where you can hear live musicians perform as you listen through the same kinds of headphones and custom earpieces professionals use on stage.

Westone CEO Lynn Kehler says the private equity investment will enable the current management team “to rapidly accelerate new product development, aggressively expand distribution and pursue potential acquisition opportunities. We also have a unique opportunity to leverage our extensive hearing healthcare and professional audio music background to offer the same premium quality products and listening experience to the broader consumer earphone market.”

All of which is music to my ears, as I continue to look for examples of companies born in the hearing aid business that are willing to commit management energy and financial capital to delivering great technology and products to a much broader base of consumers. Westone was founded in 1959 and prospered under several generations of Morgan family leadership. But several years ago the family owners named Kehler CEO. A professional manager who had previously been CFO of Westone, Kehler led the expansion drive while seeking a way to provide liquidity for the family. According to the news release from Westone and CID Capital, the investment “will allow the Westone management team to continue to build the company with a new investment partner while allowing members of the family that founded Westone to diversify and pursue personal interests.”

An Indianapolis investment firm with deep Midwest roots, CID Capital takes majority positions in small firms and often helps family-owned companies transition to professional management while providing the financial backing management needs to invest in growth over the long term. While the parties didn’t disclose the size of the investment, the Westone deal appears to be a great marriage of an investor with deep pockets and staying power with a management team committed to a long-term strategy to create new markets with new products and technologies.

Rather than trying to go public or being acquired by a much larger company, staying independent with the backing of an equity partner is a great strategy for success in the hearing-technology business. More innovation is needed and markets need to be created and given time to build, and patient capital is just what the doctor would prescribe for a management team that’s on a roll and only in need of some financial backing to move ahead with its long-term strategy.

All too often a private equity investment foreshadows major negative changes. When the equity firm finances its investment with debt to be repaid through the company’s current cash flow, management often needs to cut overhead dramatically, selling off lower-profit lines of business, and milking the cash-cow profit lines to pay off the debt. With short-term increases in profit margins, the company may increase in value, and the equity firm can make a quick killing by taking the company public or selling off what’s left. But if the company fails to increase in value quickly, the venture can lose market share and gradually waste away. In either case, lines of business with great long-term prospects but low current profits are often simply shuttered and employees with irreplaceable experience cast aside.

But CID Capital appears to be anything but a Wall Street slash-and-burn private equity player. It’s nice to see a private equity deal that rewards family owners for their years of hard work, leaves a strong current management team in place, and provides incentives for a good company to make an even bigger mark on a business that is positioned to drive positive change for an entire industry. Especially when it’s a company doing interesting new things in the hearing assistance business. Let’s keep an eye on Westone Laboratories.

Danish Design Firm AIAIAI's Expertise Bubbles Up From The Global Hearing Aid Industry Business Cluster In And Around Copenhagen

Ever since my years in Silicon Valley, I’ve been fascinated by “business clusters,” regional locations where a critical mass of skills, technology, capital, and other factors combine to create world-leading expertise in a specific product, service, market or technology. For the hearing aid business, the area surrounding Copenhagen is one such cluster, home to three of the world’s five top hearing aid manufacturers.

So here’s my question: Is Denmark the “Silicon Valley of Sound”? Or is it Minnesota, home to Starkey Laboratories, another of the big five and a regional center that has spun off and still supports multiple hearing aid and hearing technology companies? Or perhaps it is Northern New Jersey, another U.S. location where multiple global hearing aid companies have set up shop.

The question hit me this past weekend as we explored the upscale Central West End in St. Louis and wandered into 10denza, a fashion-forward retail outlet “where pop culture, modern city style, music and media converge.” My wife Barbara and I were immediately drawn to a display of fashionable headphones and ear buds. There was some funky hip-hop head ware, but two understated products from Danish manufacturer AIAIAI caught my eye. The ear buds were sleek but simple, and the lightweight Tracks headphones were minimalist to the extreme. When Barbara tried them out, the sound quality blew her away. Sure enough, when I looked at the fine print on the Apple-quality packaging, I saw they were designed in Denmark.

AIAIAI’s web site provides as good a definition of a business/design cluster as any academic treatise I’ve read on the subject:

Headquartered in Copenhagen, AIAIAI is proud to contribute to Denmark’s worldwide reputation as leader in acoustic and electro- acoustic design and engineering. Informed by a heritage of Scandinavian design, AIAIAI strives to create high quality, accessible audio products that deliver value far beyond trend-driven aesthetics. AIAIAI boasts a world-renowned network of industrial designers, audio technicians and DJs as part of its unique and highly collaborative development process. Exploratory and experimental, the process enables AIAIAI to develop new products on the leading edge, independent of current market trends.

Here we have a small, high-tech, high-fashion product designer based in Copenhagen extolling the virtues of Denmark’s leadership in acoustic and electro-acoustic design and engineering, something that springs directly from the local hearing aid industry. It’s a perfect example of the combination of creativity and product quality that bubbles up from the entrepreneurial cauldron of a successful business cluster. The picture of their design studio made me think of Frog Design, the small Silicon Valley studio that Steve Jobs and Apple put on the map years ago. The key is the phrase “delivering value beyond trend-driven esthetics.” Making a beautiful form convey superior function is what great design is all about, and you can’t get there unless it’s based on great technology.

The three Danish hearing aid companies driving the audio technology innovation are Widex, a venerable family-owned hearing aid company; the William Demant Holding Group, parent of Oticon and Bernafon hearing-aid brands as well as the Sennheiser high-tech headphone manufacturer; and GN Store Nord, parent of global hearing aid manufacturer GN ReSound and headset manufacturer GN Netcom, maker of the popular Jabra Bluetooth headsets and other consumer-tech audio products. Together they have created a critical mass of expertise in sound engineering that is starting to drive the regional economy along with the success of consumer electronics companies like AIAIAI and another well-known high-end consumer audio company, Bang & Olufsen.

Are there other regions around the world worthy of wearing the “Silicon Valley of Sound” crown? Minnesota, home to Starkey Laboratories and numerous other high-tech audio companies, is one. And Northern New Jersey is home to the U.S. headquarters of Siemens Hearing Instruments, to the U.S. operations of Oticon, and to the global sales and marketing operations of Panasonic Hearing Aids. In North America, where less than a third of the market of more than 35-million consumers who need hearing aids have purchased them so far, you may someday see such a boom in market demand that either of those locations will become the new Silicon Valley of Sound. And you can’t count out Stafa Switzerland, home of the largest hearing-aid manufacturing holding company in the world, Sonova Group, either.

For the time being, however, my vote is for Denmark as the official Silicon Valley of Sound. What’s yours?

As it happens, unbundling is a hot topic in the hearing aid business right now. With consumers and hearing-loss support associations advocating for more transparency in the hearing aid sales process, audiologists are looking for new approaches to fitting hearing aids and providing follow-up service. But breaking new ground by moving from the older tried-and-true approach can be a challenging and confusing task, especially as more hearing aid brands come on the market and patients start asking for more information about the differences.

“Unbundling…is not straightforward and interfaces with many other challenges in health care,” one audiologist wrote me. “There are many models, and many of us are going nuts trying to figure it out!”

The problem for the audiologist is getting paid for all the amount of care required in the fitting and follow-up. Charging one price for an expensive pair of hearing aids and providing comprehensive service before, during and after the fitting is an attractive model.

With bundled sales and service, the hearing aid manufacturer sells the hearing aids to the audiologist at a wholesale price, and the audiologist marks up the retail price to compensate for extensive service. The process is simple for consumers, who just have to pay for the hearing aids — when the process works well they get all the service they need. The downside, however, is that consumers don’t know exactly what they are paying for. They don’t know how much the hearing exam costs, how much the fitting costs, how much the earmolds (if needed) cost, and how much the hearing aids themselves cost. Very often the consumer can’t even name the brand or manufacturer of the hearing aids they are wearing, other than to say “They’re what my audiologist gave me.” It makes comparison shopping difficult.

Not knowing exactly what you are paying for is a common problem in healthcare generally. When your cardiologists says you need a stent, do you ask him what brand will be used? If health insurance pays part or all of the cost, do you ask what the cardiologist will charge, what the anesthesiologist will charge, or what your general practitioner charged for the referral? When consumers aren’t educated and fail to ask questions, it’s less likely there will be the kinds of comparisons that lead to more choice and lower prices.

With most hearing aids not covered by insurance, and with demand growing from aging baby boomers losing their hearing at a predictable rate, audiologists are hearing a lot more of these kinds of questions. And many are starting to respond.

One audiology practice, the UNC Hearing and Communications Center at the University of North Carolina, is pioneering the new practice of completely unbundled hearing aid fitting, service and sales, with as much transparency in pricing as possible. Two audiologists from the Center, Barbara Winslow Warren, Au.D., and Stephanie Sjoblad, Au.D., wrote an excellent article about their approach for HLAA’s Hearing Loss Magazine. It’s a must-read for anyone trying to understand the ins and outs of unbundling. Click here–Unbundling of Hearing Aid Costs– to download it.

As with all markets, caveat emptor — buyer beware — should be the watchword for anyone embarking on the quest for better hearing. Perhaps the best advice I got among the emails that came in was from Dennis Hampton, Ph.D., editor of Hearing HealthCare News:

I think it’s a good idea to remember that a person with a hearing loss should be “shopping” for someone who will be their hearing care provider, not for hearing aids.  Follow-up care is the critical factor in coping with hearing loss….  There are excellent hearing aid products out there (many with far more technology and bells/whistles than are necessary), and the top products are more similar than different.  But the range of professionalism and quality of follow-up care is far greater—and that is what makes the difference.

I couldn’t agree more that anyone who fears they have suffered some hearing loss should get a good evaluation from a certified hearing health care profesional. And I also couldn’t agree more that it’s in your interest to get a second, third, and even fourth opinion, when you are deciding what kind of help to get for your hearing–and from whom. And finally, the more you know about what products are out there, and which brands and manufacturers have products with the features and performance you need, the better prepared you will be to ask the right questions.

As the old saying goes, “An educated consumer is the best customer.”

But because in nearly all cases hearing exams and other audiologists’ services are bundled with the end sale of a pair of hearing aids, the hearing test very often is the first step in a sales process that applies subtle pressure on the consumer to follow through with the purchase of a pair of expensive hearing aids from the provider administering the initial test. People buying hearing aids don’t try out as many brands as consumers in other markets, lessening competition that would otherwise drive product innovation, price competition, and faster market growth.

The process should be like getting your eyes checked by an ophthalmologist, who you pay for an exam and who then gives you a prescription for eyeglasses that you can use at any retailer stocking a variety of manufacturers’ eyeglasses to choose from. Instead, when you go to an audiologist, the usual process is to get your hearing test for free, then a prescription for the one brand of hearing aids that audiologist sells, with an immediate invitation to try and then buy those hearing aids. The difference is that with eyeglasses, exams and prescriptions are usually unbundled from the sale of the eyeglasses, whereas most audiologists bundle their professional services with the price of the hearing aids they sell.

Bundling services with product sales limits consumer choice because audiologists have a strong incentive to move the consumer quickly to purchase of the manufacturers’ hearing aids they stock. It’s uncomfortable for a consumer who has gotten a “free” hearing exam to stop the process then and there, ask for a copy of the results, and use the audiogram to shop around for the best aids they can find. So many consumers fail to try different brands of hearing aids, and competition in the market is constrained.

Therefore, unbundling of hearing health services from the sale of hearing aid products in the hearing-health supply chain would increase competition, opening the way for more product choice at a broader range of price points. As in other industries where competition increases, growth in the hearing device market would accelerate as more products, including lower priced products, reached a much larger available market of users.

Several forces are at work that may dramatically disrupt this status quo in the hearing aid supply chain. First, the Hearing Loss Association of America (HLAA) came out in favor of unbundling hearing aid sales from professional services as part of its Campaign to Make Hearing Aids Affordable. Meanwhile, there are a growing number of manufacturers offering lower priced hearing aids programmed at the factory to match audiograms sent in by users who got their hearing tested but did not buy their hearing aids from the professional who administered the exam. And third, hi HealthInnovations, a newly formed subsidiary of the huge UnitedHealth Group insurance company, has started selling more affordable hearing aids direct to consumers who take a simple test that’s available on the hi HealthInnovations web site. In the coming year, we may see a new distribution channel grow in the hearing aid industry, offering more a la carte services unbundled from the final sale of hearing aids.

As I embark on my shopping expedition for a new pair of hearing aids, I will be writing about my experiences with bundled and unbundled hearing aid sales. One way or the other, I plan to try out as many manufacturers’ hearing aid models as I can. And I’ll write about my experiences with both approaches to hearing aid sales and service.

Hearing Aid Manufacturers Avoid The Price-Cutting Madness Of The U.S. Black Friday Sales Holiday

Even as I get tired of all the hype about Black Friday, I wonder why the hearing aid industry is conspicuous by its absence on the biggest shopping day of the year in the U.S. Today is the big day, the day after the Thanksgiving holiday when shoppers flock to the malls as retailers cut their prices and offer the best price-cutting and one-day sales events of the year.

But while my email inbox is full of offers from every retailer and manufacturer I’ve had contact with in 2011, I haven’t heard a peep from the many hearing aid manufacturers and resellers that send me sales pitches on other days of the year.

But on reflection I realize it should be no surprise. Why? Because manufacturers only reduce prices and put their products on sale when demand is weak and there’s enough competition in their market to make them worry. A little price incentive, especially in the holiday selling season, can be a great way to win a point or two of market share in a hotly contested market.

But the hearing aid industry is more like an oligopoly. Each of the five or six major manufacturers has a comfortable market share, and price comparison shopping is a rarity. Instead, sales channels are limited mainly to audiologists and hearing-aid dispensers, each of whom often only carries one manufacturer’s product line. People shopping for hearing aids usually get a referral to a good audiologist, and if they engage and start the process of buying a hearing aid, they often simply stop shopping around.

Lack of price competition or active consumer product comparisons means the price reduction curve that we see in other industries, especially during slow economic times, is a lot less pronounced in the hearing aid business. Customers who can afford to buy hearing aids still pay many thousands of dollars, while those who can’t afford them spend what money they have looking for Black Friday deals on other less expensive goods.

I’m wondering if Black Friday in 2012 will be any different for the hearing aid industry. In 2011 we’ve seen a number of “over the counter” hearing aid manufacturers enter the market, including UnitedHealth Group insurance company’s hi HealthInnovations subsidiary. These vendors are bypassing the traditional audiology sales channel and selling direct to consumers over the internet. They are trying to reach the tens of millions of Americans with mild hearing loss that can be treated with open-fit hearing aids providing a modest degree of amplification. The new products are less expensive and easy to purchase.

Hearing aid industry groups and professional audiology groups are up in arms about the new competitors, saying that without a full hearing exam and professional fitting, hearing aids can often do more harm than good. But U.S. regulators, who several years ago gave a green light on the internet sale of Personal Sound Amplification Products (PSAPs) directly to consumers, may not be inclined to intervene.

So, don’t be surprised if on Black Friday 2012, your email inbox is full of offers not only from your favorite department stores, but also with offers from some new competitors in the staid old hearing aid industry.