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.

The Massachusetts company calls its product “the world’s first intra-aural 3D scanning device.” It is a direct, digital, 3D scanner capable of measuring ear canal shape and tissue compliance to produce a highly accurate map of the ear canal. It will eliminate the uncertainties associated with manual fits, greatly improving the performance of custom made ear products across a wide variety of markets ranging from hearing aids, to headsets and earphones for iPods, MP3 players and high-end audio applications, and industrial hearing protection.

Starkey's New Xperia Hearing Aids Resemble Bluetooth Earpieces And Integrate Complete Wireless Capabilities

Sources at the Starkey Laboratories 2012 Hearing Innovations Expo in Las Vegas report that company representatives today provided a glimpse of a new Xperia brand of “Instant-Fit Custom Hearing Aids” that will integrate Starkey’s popular Wi-Series wireless technologies featuring Bluetooth phone connectivity, TV audio and MP3 streaming, and other communication direct into the hearing aids.

The new hearing aids feature an innovative in-the-canal (ITC) design which has a removable earbud that fits in the ear canal, with a housing for the processor unit that sits in the concha of the outer ear.

The unit looks like a custom hearing aid but can be fitted for most ears. And, rather than an old-fashioned half-shell or full-shell design, it bears more of a resemblance to a contemporary Bluetooth earpiece or high-tech earphones.

Xperia Hearing Aids Feature An Innovative "Instant-Fit Custom" Design With Removable Earbud

A big selling point apparently will be the same Starkey wireless capabilities now found in company’s very popular open-fit on-the-ear Wi series, including pairing with the Starkey Surflink remote streamer for communication direct to the hearing aids with multiple peripheral devices and binaural wireless communication between the left and right hearing aids.

There was also talk of a broader line of in-the-ear products to come, including a completely-in-the-canal (CIC) SecretEar hearing aid with the same complete wireless feature set.

Starkey has raced to compete with other major manufacturers in delivering wireless functionality following major announcements over the past two years by Widex, ReSound, Oticon, Phonak and others. Starkey sources say the Wi Series wireless feature set has proven highly popular with audiologists, who have asked for the same functionality in more form factors, especially in-the-ear custom-style products.

Chart 1: Invisibility Is A Key Factor In Hearing Aid Purchase Decision (Click On Chart For Enlarged Version)

According to new market research, “invisibility” is one of the top five factors customers consider when buying a hearing aid, according to a presentation by a senior Starkey Laboratories executive yesterday at the 2012 Starkey Hearing Innovations Expo in Las Vegas. The research (Chart 1) reveals that consumers are less interested in what brand of hearing aid they are buying than other factors such as: 1) price; 2) sound quality; 3) form factor; 4) visibility/invisibility; and 5) customer service.

More than most other major global hearing aid manufacturers, Starkey Labs has focused development and marketing resources on the invisible hearing aid market over the past two years. Now the presentation by Dennis Van Vliet, Au.D., Starkey’s Senior Director of Professional Relations, explains why: the prized Baby Boomer market segment is far more receptive to “invisible” high-tech solutions than the previous generation of hearing aid users. In addition to the cosmetic appeal of a hearing aid no one knows you are wearing, today’s techno-savvy Boomers, who are attracted to high-tech gadgetry in general, are fascinated by the tiny new hearing systems that can pack more power and performance into a tiny package that sits deep within your ear canal than the huge behind-the-ear models that were the norm only a few years ago.

Chart 2: Baby Boomers Are More Receptive To High Tech Hearing Solutions Than The Previous Generation (Click On Chart For Larger Version)

I’m not at the conference but received a copy of the presentation, which is packed with interesting new information, including a fascinating comparison (Chart 2) between consumers above 65 years old, who are generally averse to technology and less interested in fashion and an active lifestyle, versus Baby-Boom generation consumers aged 41 to 64 who are overwhelmingly interested in new tech solutions that fit in with an active lifestyle. My take on the data is that the Boomers are not put off by the “stigma” of being seen wearing hearing aids so much as attracted to slick new well-designed products that combine superior form with high-tech function.

Starkey’s “invisible” product line now includes the entry-level AMP hearing aids and its high-performance Soundlens products, both of which sit deep within the ear canal. Starkey’s Xino product family is a on open-fit, behind-the-ear, receiver in the canal (RIC) product that is so tiny it is also marketed in the “invisible” category. Starkey has marketed the AMP system aggressively as a first-time solution for users who would not otherwise want to wear hearing aids.

I’ve gotten comments on my previous posts about Starkey’s invisible hearing aid marketing campaigns from readers who say the company is playing into stereotypes about hearing aids as something to be ashamed of and something to hide from others. I’m sure there are plenty of consumers out there worried about the lingering stigma of having to use hearing aids, but I think something else is going on in the market as well. I like to think tech-savvy Baby-Boom consumers are attracted more to the positive aspects of well-designed hearing products that push the limits of miniaturization and performance than to the fact that they are afraid of being seen wearing hearing aids.

New Panasonic R1-W Hearing Aids Come With Remote Volume Control And A Wireless 'Hearing Hub'

The Panasonic Healthcare Group has expanded its hearing-aid product line with the new R1-W Series of receiver-in-the-canal (RIC) hearing instruments that moves the company closer to the top ranks of global hearing-system manufacturers.

Among other things, the new product line features a Hearing Hub offering wireless connectivity with peripherals including Bluetooth phones and a transmitter that sends TV audio signals directly into the hearing aids.

Panasonic, which has been selling hearing aids in Japan for decades, only recently entered the North American market with its 4 Series and JZ Series open-fit and body-worn hearing aids. The new R1-W Series provides more power to address a broader range of users’ hearing problems including moderate-to-severe hearing loss. In addition to the wireless peripherals, other new features such include remote volume control and the ability to record voice memos such as personal reminders and phone numbers that can be played back through the hearing aids.

Although Panasonic is still playing catch-up to the world’s largest hearing-aid brands such as Phonak, Oticon, Widex, Starkey and ReSound, the new more powerful hearing aids plus wireless peripherals are a big step toward more parity with competitors who have made wireless communication a key selling point in their new products over the past year.

“With the new R1-W series, Panasonic has introduced a line of hearing instruments with sound quality design that equals or exceeds anything we have seen in the industry,” said Delain D. Wright, Director of Sales, Panasonic Healthcare Group, who called the R1-W series “the next phase” of Panasonic’s long-term plan to establish a major presence in the global hearing-aid market.

The Hearing Hub allows users to wirelessly connect the hearing instrument to Bluetooth®-compatible* mobile phones, landlines and a Panasonic Audio Transmitter, which plugs into a television’s audio-output port to transmit sound wirelessly into the R1-W Series hearing aids. And the remote control allows users to easily and discreetly adjust the volume level and programs of their hearing instruments.

“As a new player in the US hearing market and with our brand strength, we are finding that professionals are embracing our vision to deliver meaningful solutions to a broad segment of people who want to hear better,” Wright said.

The 2012 International Consumer Electronics Show (CES) Starts January 10 In Las Vegas

As hearing-aid technologies go mainstream, more traditional niche manufacturers are making a leap and attending the Consumer Electronics Show (CES), the monster trade show held in Las Vegas every January that displays the wares of thousands of consumer brands. In 2012, I’ll be looking for examples of new Personal Sound Amplification Products (PSAPs), which are just like hearing aids, but sold over the counter without a prescription.

In January 2011 we saw a range of hearing-related companies at the show, including VOXX International (formerly Audiovox) subsidiaries RCA and Acoustic Research, which introduced their own new PSAPs. Hamilton CapTel and TV Ears also got together at CES 2011 to offer a range of assistive listening devices for hard-of-hearing consumers. Traditional hearing-aid manufacturers Starkey Laboratories and Beltone earned CES Innovation Honors for their new products. And Etymotic Research won a 2011 CES Innovation award for new high-tech ear plugs that protect soldiers’ hearing in war zones.

At the January 2012 CES show I am betting we will see more PSAPs. It’s simply too easy a market to enter for mainstream consumer electronics companies. And even if the PSAP remains a niche or specialty product, I expect to see more of them in the big consumer electronics retail chains in 2012, with more news like the October 26 announcement by RCA that its Symphonix PSAP will be available in more than 2,000 Radio Shack stores. So I’d love to hear from any readers who hear about other PSAPs that will be introduced or demonstrated at CES 2012.

The Pansonic JZ Power System Provides High-Tech Hearing Assistance In An Apple iPod-Like Package

Panasonic has given new life to a very old idea–”body-worn” hearing aids–with the new Panasonic JZ Power hearing system. But the new Panasonic product is unlike those original hearing aids of more than 50 years ago, which required a cumbersome sound processing unit hanging from the neck, wired to bulky, unattractive hearing aids that by today’s standards provided no more than very simple linear amplification.

The Panasonic JZ Power system is more like a sleek Apple iPod, with a nice set of high-tech ear buds that provide stereo sound amplified to your exact hearing profile. The next step up from the original Panasonic JZ hearing system, the Panasonic JZ Power has five channels instead of three and a frequency range from 200 to 6400 Hz, a major expansion in fitting range over the original JZ’s 220 t0 4300 Hz range.

Available in blue, black and silver, the Panasonic JZ Power is a palm-sized unit featuring an LCD screen, noise reduction, wind noise management, feedback management, left-right balance, a slide power switch and easily accessible volume control, and four “Scene Selector” program settings for standard, music, party and indoors listening environments. The stereo binaural headset (earphone with microphones) is designed to comfortably fit into the ear canal and stay in place for long hours of wear. The JZ Power also includes a rechargeable battery with a charging cradle for the main unit, which can also use commercial AAA alkaline batteries.

“Panasonic is committed to a series of unique hearing solutions using the JZ form factor,” said Delain D. Wright, Director of Sales, Panasonic Corporation of North America, Healthcare Group. “With the new JZ Power Panasonic can help an even broader segment of the hearing impaired who are challenged by the difficulty of managing traditional hearing instruments.”

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.