Article preview reprinted from Medtech Insight - February 2010
Medtech Insight -- Competition is spurring innovation in the hearing aid market and providers are excited at the prospect of adopting new products that can improve on existing treatments. The hottest area at the moment is implantable hearing aid devices. It's not a new concept, but it's one that many believe will command a significant share of the market. Read more...
A Boom in Devices for the Hearing Impaired
Article preview reprinted from Medtech Insight - February 2010
Competition is one of the best ways to spur innovation, and that is certainly the case in the hearing aid market, where recent technological developments are noticeably exciting some providers, who believe the activity will lead to new or improved products. Audiologists and physicians that treat patients with minor to severe hearing loss are very receptive to adopting new products that can improve upon existing treatments. Additionally, the market for such devices is quite large, which can make business endeavors in this area very attractive to manufacturers. However, it is important to understand that hearing specialists are very knowledgeable about the causes of hearing loss, and a product truly has to be innovative with the proper science behind it to gain traction. The area that is currently garnering strong industry attention is implantable hearing aid devices, not a new concept, but one that some believe is set to grow into a larger option for a significant segment of the market.
Unique Challenges in an Underserved Market
Understanding the potential in this area also means understanding some of the unique characteristics of the market, including the struggle for payor reimbursement. Medicare and private insurers currently offer a mixed and limited selection of coverage for conventional hearing aids, with only 15 states requiring coverage for the devices and only for children or young adults. As a result, consumer out-of-pocket payments are estimated to account for more than 70% of hearing aid purchases in the US, and that is the backdrop against which more advanced hearing technology must operate.
Prices for a typical hearing aid range from around $1,500 to $3,500, and costs can more than double if the device is a deluxe model with special features. If payors are having a hard time justifying coverage for conventional hearing aids, then the prospect for the emerging implantable market could be much more difficult, because prices for these high-tech devices, which are just beginning to reach the market, are expected to be more than 10 times greater than conventional products. St. Paul, MN based, Envoy Medical Corp., for example, is hoping to launch its Esteem Hearing Implant device later this year with a purchase price that could be in the neighborhood of $30,000. However, Envoy's CEO Patrick Spearman says the demographics of the hearing market provide ample opportunities, and third-party reimbursement is not a concern to Envoy at this time.
What Spearman and others in the market have noted is the presence of a large and growing population of individuals who could benefit from a hearing device, but who do not use one now. According to the latest data from the Better Hearing Institute's MarkeTrak VIII national survey, the prevalence of hearing loss reported per 1000 US households grew from 271 in 1997 to 295 in 2008. And that number is expected to expand further in the years ahead, driven by an influx of aging Baby Boomers paying the price for their rock-concert filled youths.
Over 34 million Americans currently report some degree of hearing impairment, up from about 25 million two decades ago. According to the survey, the age 85-plus hearing-impaired population is growing at nearly 12 times US population growth, and the number of hearing-impaired patients with a household income of $60,000 or more has grown at 10 times population growth. The MarkeTrak survey also revealed that while third-party payments for hearing aid purchases are on the rise, only about 30% of such purchases are covered to some degree by insurance (about 40% including VA purchases), and the average out-of-pocket cost to consumers remains high, at about $1,400 to $1,800, depending on the type of device purchased. Still, the hearing aid market has managed to weather the recent economic storm very well, suggesting that once the decision has been made to purchase a hearing aid, consumers view it as a necessity rather than a discretionary purchase. According to the Hearing Industries Association, US sales of hearing aids in 2009 increased 7% despite the economic downturn, due in part to a substantial increase in purchases for veterans by the VA, which accounted for about 18% of the domestic market in 2009. Total unit sales in 2009 were estimated at 2.6 million and reflected a recent shift toward more affordable models, particularly behind-the-ear devices, which now offer many advanced features previously reserved only for higher-end products, and interestingly, a corresponding move away from in-the-canal products.
- Robert Neil
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Companies mentioned in this article:
Advanced Bionics Corp.
Boston Scientific Corp.
Cochlear Ltd.
Envoy Medical Inc.
Louisiana State University
Medtronic Inc.
Otologics LLC
Sonova Holding AG
InSound Medical Inc.
St. Jude Medical Inc.
Vibrant Med-El Hearing Technology GMBH
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