SAN DIEGO-Hearing aids can become a reliable source of ancillary income for otolaryngologists, according to four speakers in the miniseminar, Hearing Aids: The Dollars and Cents of Dispensing, presented at the annual meeting of the American Academy of Otolaryngology-Head and Neck Surgery (AAO-HNS). The key, said panelists, is to adopt a medical model for prescribing hearing aids, and pair that with an organized business and marketing plan.
Untapped Market
Would a dispensing service be a good addition to your practice? Tabulating the number of your patients diagnosed with sensorineural hearing loss is one way to gauge the potential market, said the session’s first presenter, Brad H. Volkmer, MBA, President, CEO, and Founder of EPIC (Ear Professionals International Corporation) Hearing Healthcare.
Hearing aids constitute the most significant intervention for the 85% to 90% of patients whose hearing impairment is sensorineural in nature, and yet only 20% of the estimated 34 million Americans with hearing impairment have hearing aids. Although hearing impairment is often associated with older adults, the boomer population comprises another sizable untapped market, said Mr. Volkmer. These are people who, for the most part, tend to embrace medical technology. Pointing to widespread use of hands-free mobile devices, he noted, It’s not a stigma anymore to have something in your ear.
Advantages of Physician-Managed Dispensing
Patients trust their physicians to make appropriate treatment recommendations, so this lends credibility to the audiologist and/or dispensing technician employed in the otolaryngologist’s practice. When hearing aids are presented correctly-as an effective intervention for the medical disease of sensorineural hearing loss-60% to 70% of patients will follow through with a purchase, said Mr. Volkmer.
The main advantage of a dispensing service, he continued, is that hearing aids are a cash and carry business. Despite inventory costs and regulatory and personnel requirements, the average profit margin can be 15% to 20%. And, he added, dispensing does not come out of your time. Compare this to a stapedectomy, which requires your presence and is reimbursed by Medicare in the range of $870 to $1530-with the requisite wait time of 90 to 180 days for payment.
Necessary Infrastructure
Preparation for instituting hearing aid sales includes knowledge of your state’s licensing and regulatory requirements; decisions about location of the testing booth; investment in the appropriate testing software; training staff to receive and handle products; and decisions about hiring ancillary personnel. If patient volumes justify it, you may want to hire both an audiologist and an instrument specialist. There are many payment models (base pay; base plus commission; commission only), said Mr. Volkmer, and no one sacred way to structure payments to audiologists and hearing aid dispensers. Both the American Speech-Language-Hearing Association (www.asha.org ) and the American Academy of Audiology (www.audiology.org ) publish salary surveys, which can help determine pay structures.
Neil Giddings, MD, a neurotologist with Spokane Ear, Nose and Throat Clinic, a 12-physician group practice in eastern Washington, said it may be wise to assign sales duties to dispensing technicians. Dr. Giddings observed that although audiologists are excellent diagnosticians, they often receive little sales training and are less comfortable in the salesperson role. However, each practice needs to evaluate its personnel for the role of salesperson, he said.
Practical Matters
Success in selling hearing aids is related to skilled audiology, pricing, collections policy, cash management, and managing costs through such structures as buying cooperatives, said Mr. Volkmer. If physicians decide to bring testing in-house, they should be prepared to dedicate 300 to 750 square feet for the testing and dispensing. Dispensing equipment can run $16,000 to $20,000; and there will be at least $2500 in other expendables such as wipes, swabs, and the like, said Mr. Volkmer. The average hearing aid costs from $1000 to $3000, and sale of ancillary products (such as hearing aid batteries) can also add to the bottom line (as long as inventory is managed correctly).
Select manufacturers that offer hearing aids appropriate for your patient demographics, and, cautioned Mr. Volkmer, Don’t become a lending institution for your patients. Practices should collect the full price of hearing aids up front. In that way, the return visit can be focused on correct adjustment of the equipment and not payment issues.
Mr. Volkmer demonstrated several net profit models. Dr. Giddings contributed the experience of Spokane Ear, Nose and Throat, which, in addition to its office practice, has a separate hearing aid dispensing division called Columbia Hearing Centers. With four offices and a rural visiting service in eastern Washington, Columbia reported a $100,000 profit in the first quarter of this year.
Reaching Potential Customers
It is often a well-kept secret that the local otolaryngology practice dispenses hearing aids. Otolaryngologists can remedy this low public profile and add to their bottom line-if they market their service correctly. The key message is, if you’re going to sell hearing aids, you need to be willing to market, counseled speaker J. Douglas Green, MD, MS, of Jacksonville Hearing and Balance Institute (JHBI) in Florida.
At the House Ear Clinic in Los Angeles, marketing campaigns are often tied to the debut of new technology, said otolaryngologist and neurotologist William M. Luxford, MD. Partnering with hearing aid manufacturers to market new technology accomplishes several goals: sharing costs of direct mail and other advertising; training your staff with the new technology; and demonstrating your practice as a technology leader in your local market.
If you offer a great product, at a reasonable price, with excellent service, you don’t have to be afraid of Costco, Wal-Mart, or Sears.-Neil Giddings, MD
Dr. Luxford offered a few caveats on using direct mail: Key the mailing to a defined window of time, such as two weeks ahead; carefully parse your mailing list to avoid mailings to patients within your practice who have purchased hearing aids within the last one or two years; and make sure that you route calls from phone numbers printed in advertising pieces to a real person, not a phone tree. The people who are calling have a hearing impairment, he reminded his audience, so it’s important that they do not get lost in the shuffle. At the House Ear Clinic, partnering with manufacturers has been helpful (the first mailing of 27,500 pieces garnered 155 appointments and the sale of 129 hearing aids, for a net profit of 17% to 20%). However, Dr. Luxford advised otolaryngologists to use a variety of marketing methods.
‘Connect Emotionally’
The best advertising for hearing aids creates an emotional connection with the patient and/or family decision maker, said Dr. Green. One popular ad carries the tagline Don’t be left out of the picture. JHBI often ties in discount coupon offers with Better Hearing Month in May of each year. Wives and spouses tend to be the decision makers and frequently are the ones most affected, since there is a greater prevalence of hearing loss in males, he said.
The key message is, if you’re going to sell hearing aids, you need to be willing to market.-J. Douglas Green, MD, MS
Columbia Hearing Centers, said Dr. Giddings, saw a big return on investment for a weekly newspaper ad with a $100 off coupon. The ad ran for a year, at a cost of $50,000 -and brought in $400,000 in hearing aid sales. With methods such as these, it’s easy to track and measure results. Less difficult to quantify are other brand recognition marketing methods, said Dr. Giddings. Columbia’s hearing aid dispenser in rural eastern Washington travels to sites in a compact car painted bright yellow and sporting the company logo. Columbia Hearing Centers also provides free hearing assistive devices for patrons of Spokane Civic Theater, and the two entities share the cost for television advertising about the service.
Some audience members expressed trepidation about competing with the growing number of low-cost dispensers, such as Costco or Wal-Mart. Dr. Giddings emphasized that otolaryngology practices can have an advantage when it comes to service. If you offer a great product, at a reasonable price, with excellent service, you don’t have to be afraid of Costco, Wal-Mart, or Sears, he said.
Dr. Green reaffirmed that using a medical approach (emphasizing hearing loss as a medical disease), and then leveraging one’s professional expertise to bring patients in, can confer a definite marketing advantage. It is also important, he said, to take a long-term approach to marketing. Finally, Mr. Volkmer urged his audience to formulate a written plan; talk to colleagues about what has and has not worked; and track their data and measure results.
©2009 The Triological Society