Why Can't Industry Design an Affordable Hearing Aid?

Hugh Pickens writes "Tricia Romano writes in the NY Times that over the last 10 years, purchasing a hearing aid had become even more difficult and confusing than buying a new car — and almost as expensive. 'I visited Hearx, the national chain where I had bought my previous aids. There, a fastidious young man spread out a brochure for my preferred brand, Siemens, and showed me three models. The cheapest, a Siemens Motion 300, started at $1,600. The top-of-the-line model was more than $2,000 — for one ear. I gasped.' A hearing aid is basically just a microphone and amplifier in your ear so it isn't clear why it costs thousands of dollars while other electronic equipment like cellphones, computers and televisions have gotten cheaper. Russ Apfel, an engineer who designed a technology now found in all hearing aids, says there is no good reason for the high prices. 'The hearing aid industry uses every new thing, like digital or a new algorithm, to raise prices,' says Apfel. 'The semiconductor industry traditionally reduces the cost of products by 10 to 15 percent a year,' he said, but 'hearing aids go up 8 percent a year annually' and have for the last 20 years."

Comments

three words, one hyphen:

[Black Parrot]

for-profit healthcare

Re:three words, one hyphen:

[Anonymous Coward]

very true. I wonder what the companies profit margins are.

Re:three words, one hyphen:

[malraid]

It's not only this. Insurance also drives prices up for regular consumer. If everyone paid out of pocket, I can assure you it would be way cheaper.

Re:three words, one hyphen:

[pixelpusher220]

and lots of people who need them wouldn't get them...

Re:three words, one hyphen:

[K. S. Kyosuke]

It's not only this. Insurance also drives prices up for regular consumer. If everyone paid out of pocket, I can assure you it would be way cheaper.

This stuff almost feels like defense contracts, actually. Easier to throw money around when it's someone else's money.

Re:three words, one hyphen:

[Volante3192]

http://www.nhs.uk/chq/Pages/894.aspx?CategoryID=68&SubCategoryID=157

NHS hearing aids and new batteries are free. If you lose your hearing aid or damage it, you may be asked to pay towards the cost of repairing or replacing it.

Re:three words, one hyphen:

[jmichaelg]

I'll see your three words and go in two; no hyphen: Regulatory Capture.

Healthcare is expensive because the government passes scores of rules that benefit the incumbents and keep out innovation. They pass those regulations because someone ends getting richer as a result.

  Ear Trumpet's developers received a cease and desist from the FDA after they published an iPhone App that tested your hearing and then loaded an equalizer to adapt playback response according to the test results. That's all they were selling - a test and an equalizer with presets. But you can't buy it anymore because the FDA objected.

Another case in point. One of my students' father was trained as an M.D. in China. The family emigrated to the U.S. and the father had to go through medical school all over just to prove he knew what he was doing. The only thing that improved in med school was his English. Were he, and hundreds of thousands other fully capable practitioners, able to come here and just hang out their shingle, you'd see health care costs plummet. But no. The medical profession protects its own from competition by convincing everyone they know best by limiting the number of doctors and med students.

Healthcare would be a hell of a lot cheaper if the government stayed the hell out of it.

Re:three words, one hyphen:

[Anonymous Coward]

Sorry, but you've been misinformed. If you have any medical procedure done, you can call them and ask for a discount because you are uninsured and paying out-of-pocket. Although they are not obligated to do so, they usually will, and you will often only have to pay 25%ish of the original costs.
If you think my surgeon would have made me come up with $16k (the amount they billed my insurance for) cash for my 1-hour procedure if I had no insurance, then you have a strong misunderstanding of how the healthcare industry works. I'd like to think I know at least a little bit about it. After all, I'm employed at a hospital.

Re:three words, one hyphen:

[MBCook]

How many people who need them now don't get them because they can't afford $2k+ when they should be paying maybe $250?

I know that's the case for at least two of my relatives.

Re:three words, one hyphen:

[narcc]

I haven't checked, but I'll bet they'd even make Apple blush...

Re:three words, one hyphen:

[Anonymous Coward]

One large player, Phonak, reported in 2004: "The gross margin reached 59.5% which is almost 500 basis points over the gross margin of 54.8% reported in the same period last year." They've improved that to 66% in 2011.

Certainly the free market isn't driving down the price...

Re:three words, one hyphen:

[LiquidLink57]

True, but it's even more nuanced than that.

Right now, the government gives tax incentives for an employee to get health insurance from their employer. So if my regular income is taxed at, say, 25%, I could either receive $10,000 worth of health care benefits from my employer tax free, or cash, which would mean I would only receive $7,500. So I'd be a fool to not get my health insurance through my employer. So the employee has a government created incentive to favor getting insurance over money. And the more medical prices rise, the "better" it is for me to choose to get the health insurance.

With a huge amount of people incentivized to get this health insurance, and use it as the way to pay for every single medical treatment they receive, and not just insurance against catastrophic accidents (a certain amount of coverage will be mandated under the Affordable Care Act) the more people completely disregard the cost of the care they receive. Do you ever see a list of services and prices posted at a hospital? They're not paying for it, so what do they care what anything costs? If they don't pay (beyond maybe a deductible) why is it worth it for them to price shop? Insurance companies can attempt to do this to a degree by restricting where people can get care or choose not to cover certain things. But these choices are being legislated away as well, and force insurance companies to cover certain things free of charge, hugely distorting the market even more.

Imagine if we bought food like we bought health care. Instead of getting cash, we'd have a government incentive to instead receive an all-you-can-eat grocery card from our employers. We'd walk into a grocery store, and there would be no prices posted, because the shoppers wouldn't care because they aren't paying anyway. Naturally prices would skyrocket as consumers no longer consider price. The government then would come in, point out the skyrocketing price of food, declare a "food crisis," and take over the whole industry. Having caused the problems in the first place.

Look at areas of medical treatment in which the government is not involved. Sadly there are very few of those, but take for example Lasik surgery. Prices for that drop every single year. Why? Because of natural market pressures. People usually pay for that out of pocket, so they naturally price- and quality shop. Lasik establishments are incented to reduce costs and improve quality. And they do.

The problem is not that it's "for profit." The computer industry is hugely profit-driven, and advances in manufacturing and assembly efficiencies drive down costs a huge amount. McDonald's prices don't skyrocket because they're for-profit. The reason problems get solved and consumers get what they want is because people can make profits providing what they want at a price they want, without government intervention. But parent is right. The problem isn't "greedy capitalism." The problem is that we have gotten so far from real capitalism, though we still think that's what we've got, and whenever something like this happens, someone points out capitalism and greed as the problem and insert even more damaging bureaucracy.

Re:three words, one hyphen:

[budgenator]

If you don't mind a behind the ear design, there's plenty of hearing aid work-alikes out there. Hearing aids are FDA medical devices that must be custom fitted and adjusted for the individual by order of a licensed professional, but if you look in the back of the AARP, or the American Legion magazines you'll find consumer devices that look a lot like hearing aids, work like hearing aids, but aren't.

Re:three words, one hyphen:

[Chuckstar]

Healthcare would be a hell of a lot cheaper if the government stayed the hell out of it.

It would also be much less effective and much less safe.

The free market doesn't fix everything. In fact, the basis of the current regulatory regime regarding new drugs was originally put in place because a bunch of consumers were killed by a bad drug... with especially painful-sounding deaths... the company never performed any testing with the formulation... and should have known there was a problem in the first place. The story is: Massengil used diethylene glycol as a solvent for dissolving sulfanilamide into an elixir format. Diethylene glycol was a known poison, but the company's chemist wasn't aware of that. Even very simple animal testing would have found the problem.

So how about instead of ridiculing every action the government takes, we all get together and try to limit the useless actions and focus government on the useful ones? Requiring drugs to be tested and shown to be safe and effective is a Good ThingTM. Whether in the U.S. or in countries with weaker regulatory regimes, we've seen time and time again that the free market is simply not up to the task of keeping ineffective or even dangerous drugs from being peddled to consumers. However, some of the detail of how the FDA reviews drugs might be amenable to streamlining (I don't know enough detail to suggest how, but it seems almost certainly probable).

On the other hand, your description of Ear Trumpet's experience with the FDA seems like a Bad ThingTM.

I'll bet if you got 10 Republican and 10 Democratic congressmen together (and could somehow figure out a way of making them ignore the fact they were working together), you could find 20 ways that everyone would agree would streamline the FDA without materially affecting the quality of health care. In decades past I would have said the biggest impediment to such agreements was that no one in Washington really cares to put such effort into low-profile results. That still might be a problem today, but the bigger problem in Washington today is the part I put in parenthesis above -- not only is there a divide that makes it hard to work together, congressmen are actively disincentivized from working across the aisle, in spite of rhetoric to the contrary.

It's too bad, because there are plenty of opportunities to streamline government. Only the Republicans think streamlining is bad because it gives the new streamlined regulations more validity -- "we don't want better regulations, we want NO regulations". Democrats think streamlining is bad because simpler regulations can have larger loopholes -- "regulations should be intricately taylored to each situation so that big business can't slip anything (no matter how immaterial) through the loopholes."

As far as the MD trained in China... the problem with just letting foreign doctors practice here is that the quality of training varies dramatically overseas. The doctors in China who went to better universities and trained in better hospitals are probably on par with U.S. doctors. The ones who went to smaller, regional universities and trained in rural hospitals may not be qualified to practice in the U.S. A written exam wouldn't be able to distinguish, but maybe there's a middle-ground where a few U.S. institutions would be qualified to run 2-year residency programs where foreign doctors' skills are put to the test. The ones that pass get full MD privileges. The ones that don't get kicked down to medical school to start again.

See? There are possible compromises to these things. We really, really don't want a free-for-all in the healthcare system, though. It would be monetarily cheaper, but at what cost in lives?

Re:three words, one hyphen:

[Arthur B.]

for-profit healthcare

Right, because every other electronic device - the prices of which keep falling - are produced by not-for profits.

Among many reasons are the high costs of medical regulation, liability insurance, the fact that paying with insurance seriously blunts the pressure on prices. But no, let's just say it's "greed" and feel self-content with a non explanation.

Re:three words, one hyphen:

[tburkhol]

If it were individual, it would be like a car salesman... attempting to charge the highest price, ask you to take out a loan and pay it.

Yes, but if you don't like the car salesman's deal, you have to take the bus. If you don't like the hearing aid salesman's price, you're deaf. If you don't like the surgeon's price, you're dead.

You can't negotiate healthcare on a level playing field, regardless of who writes the check.

Re:three words, one hyphen:

[Imrik]

How would those few thousand deaths compare to the lives saved by proper medical care as a result of lower prices?

Re:three words, one hyphen:

[AthanasiusKircher]

When you have products that are highly desirable (and if you're hearing-impaired, a hearing aid is highly desirable) then prices will stay as high as people are willing to pay.

Unless a reliable competitor emerges with a similar product and is willing to make profits off of selling volume rather than hiking the price exponentially.

I frankly don't know what is possible for hearing aids, but I do know, for example, that a medication a friend needed to buy supposedly cost $170 at retail for a 90-day supply, and he was asked to pay $45 for a copay for that medication by his insurance. One day when he moved, he decided to transfer pharmacies and went to a local grocery store with a pharmacy. He didn't have insurance at the time, so he expected to have to shell out a lot of money. But, only with the free savings card from the grocery store, he got the 90-day supply for $10, less than 1/4 of his copay with a premium insurance plan! This was for the same generic drug in both cases -- but in the first case an insurance company, a drug manufacturer, and a pharmacy were obviously in collusion, while in the grocery store, the pharmacy had an incentive to sell cheap drugs to uninsured people, so it made a deal with the manufacturer. The grocery store pharmacist didn't even ask for insurance information, because he knew he could give a price better than any copay required on a normal insurance plan.

This is for a "highly desirable" product (in this case, blood pressure medication).

For another example outside of medicine, there was a regional grocery store chain where I used to live whose prices were consistently about 40% off of all major competing grocery stores in the area. I'm not talking about generic items: I'm talking an average of 40% off for the same name brand grocery items. They had only one store in the metropolitan area where I lived, but the aisles were packed almost from 7am-9pm. It wasn't convenient to public transport, but I saw poorer folks taking cabs to get there all the time, because they saved so much, it more than paid for the cab.

You can't get more "highly desirable" than basic food. The other supermarkets in the area counted on the fact that they were more convenient to public transport or that people just wouldn't bother to look at the other store or that people would assume it was the place "poor people shopped." Quite a few people who never shopped there told me that they heard it was "dirty." Yet the opposite was the case -- produce and meat flew off the shelves and was much fresher than any other supermarket in the area. I never saw evidence of dirt or vermin there, but I heard a couple different friends report that they saw mice at one of the "premium" supermarkets near there, and one who reported the mice saw that the food which had been eaten into was not removed from the shelves when she was back there a couple days later. After all, the "premium" supermarkets were always like ghost towns, except for a few hours right after standard work hours, so most people wouldn't even notice.

Basically, if there is a market where people will shop around, some businesses may take advantage of that market by providing a cheaper product. If few consumers actually have a real transaction to buy a product and instead go through an intermediary like an insurance company, there is little incentive for anyone to provide lower prices. In fact, if there is a situation such as in the current national health care bill where insurance companies will be limited to 15% of billed costs toward "administrative fees" (i.e., where the profits come from), there is actually an incentive for insurance companies to drive costs UP, since that's the only way they can skim more money off the top.

Re:three words, one hyphen:

[AlphaWolf_HK]

Or perhaps, it's just "hip" to buy an iphone, and the high price is why people want them.

When Gucci lowered the prices on their designer clothing, their sales volume dropped. Were talking volume here, not profit. By raising the prices again, they actually sold more clothing.

When you put a high price on something, in many cases it can make people desire it more. I guarantee that if apple dropped their prices, they would probably sell less as well because it wouldn't be this trendy thing that only the "hip" or
"sophisticated" people have any more.

Anyways, over 500 years of market history will tell you that supply and demand isn't fiction. Only a die hard communist chooses to ignore that.

Re:three words, one hyphen:

[tmosley]

That's like saying that pilots break the law of gravity. The laws of economics aren't enforced by policemen, they are a result of natural human interactions.

Funny how you attribute the perverse behaviors of individuals under the influence of government imposed regulations and incentives to the "free market". If a farmer in a free market burned his crops, he would drive the price up for all the other sellers of that crop, and he would lose market share. Anyone who did this regularly would go out of business. You need to stop confusing commodities like food crops with brands like Apple.

Because it's a medical device.

[josiahgould]

Regulations, testing, etc, will all drive the price of the unit up. But in the end it's because the manufacturers have figured out what the highest price an average insurance company will pay, and put it right at that point.

clones?

[etash]

I remember seeing at least a couple of exactly the same articles on slashdot the past years...

http://science.slashdot.org/story/11/09/09/2346233/is-there-a-hearing-aid-price-bubble

http://ask.slashdot.org/story/10/03/13/1916203/why-are-digital-hearing-aids-so-expensive

has a slashdot staff a sensitivity towards the issue or something ?

Re:clones?

[Cryacin]

Guess nobody heard the last time.

Ripe for competition?

[cgenman]

Why hasn't anyone kickstartered a competitor?

Try looking at this here . . .

[PolygamousRanchKid]

http://ask.slashdot.org/story/12/06/13/1828232/ask-slashdot-why-are-hearing-aids-so-expensive

For-profit system

[bowens]

My significant other is a speech pathologist and she went to school with a bunch of audiologists. While they were in school the audiology students were able to attend several lavish conferences, fully paid for (travel and hotel). Who paid for them? The hearing aid companies. They were given tickets to hockey games (yes this is Canada) and even jewelry. She asked her audiologist classmates if they felt it was a conflict of interest that they were accepting these gifts from the hearing aid companies. Most shrugged it off and said it wouldn't affect their opinions of the products. But how could it not? A few products then get recommended to patients, the companies can jack up the prices, and of course the audiologist will sell you the most expensive one because that is the one the companies are pushing as the best in the market. Review your hearing aid options online and take the audiologists word on a product with a grain of salt.

Re:It isn't just about insurance companies

[Anonymous Coward]

that isn't sophisiticated in the least. It's called an equalizer and it's extraodinarily easy to implement.

they know what the market will bear and are charging every cent of it.

there's clearly no competition, the question everyone should be asking is, why not ?

You can have 2: cheap, realtime, or resolution.

[Miamicanes]

Hearing aids are unique among consumer electronic items, because they have almost zero tolerance for latency. If the media stream coming from your entertainment device is delayed by 12ms, you'll never notice the difference. If the sound coming out of your hearing aids is delayed by 12ms, your ability to locate items by sound and react to them is going to be completely borked. At best, you'll be stressed out and irritated. At worst, you'll feel disoriented and confused.

The problem is, all of the cheap ways to do digital signal processing add intolerable amounts of latency, so hearing aids are stuck with hybrid analog+digital designs that try to keep their filtering problems in the domian where they can be resolved the fastest. With digital designs, you can get away with sloppy designs that have corners cut and mostly get away with it if premature failure is OK as an option. With analog designs, every penny you shave off is going to have consequences, and those consequences add up quickly. Mixed-signal designs are the worst of both worlds -- you have to use premium-quality components and be aware of analog signal behavior every step of the way, then turn around and try to fix the noise and artifacts introduced by the digital part as well.

Yes, a hearing aid that simply amplifies sound through some cheap analog means, maybe with simple filtering, would be very cheap to make. However, for most users, that kind of hearing aid would be about as useful as a pair of drugstore reading glasses for somebody who has astigmatism. For profound hearing loss, making speech recognizable is about as hard as trying to fix botched laser surgery that's left somebody with higher-order optical aberrations that simply can't be fixed by a simple symmetric lens.

God/Nature/the Univrese has a cruel sense of humor, and here's an example that will make sense to people who had high-end car stereos at some point in the past. Remember what happened when you ran your stereo's line-level signal through a low-pass filter to separate out the bass channel? It flipped the phase, and made it lag. At the time, you probably dreamed of the day when you could use a DSP to implement an infinite-slope crossover that fixed both problems. Then, years later, you learned the cruel truth: in order to implement such a filter, you had to wait until you had a few thousand samples to analyze and work on... and the time you had to wait until you had a big enough window of samples to analyze ended up being almost exactly the same amount of time that the analog low-pass filter delayed the bass. The digital breakthrough is that if you don't have to do that analysis in realtime, and you have enough storage space to analyze the music offline, then re-sync everything up and store all the individual tracks separately, you can achieve the flawless perfection you always sought as a teenager with laggy bass. It's now cheap and easy to do, because you can take a whole CD, rip it to raw PCM, analyze it with your PC into separate 16-bit audio tracks for every single speaker element in your car, tweak their phase relationships to your heart's content, then write it all to a microSD card & have room to do the exact same thing to a few dozen more CDs.

The problem is, hearing aids don't have that luxury. They're one of the hardest-core realtime applications out there. You can't sample the sound, recursively process it, then go back and remix it at your leisure until it's *exactly* right, then play it over and over again thereafter. You have roughly half of a millisecond to do what you're going to do and send it to the transducer in the user's ear canal.

Of course, there's a big gray area of users whose hearing problems wouldn't be solved by cheap analog hearing aids, but like someone who's got a diopter of astigmatism and moderate far-sightedness, a pair of $12 reading glasses from the rack at the drug store would probably be better than nothing at all. But make no mistake... even if you could embrace the hacker/maker ethic, buy your own best-of-breed he

One word reply

[Sycraft-fu]

Canada.

Check on hearing aid costs in Canada. You will discover they are very high there as well.

Re:Simple

[CrudPuppy]

A couple other points:

We deafies want to change our batteries every week or more, not every day. Have you seen the tiny size of current batteries? You must squeeze every last bit of efficiency out of the hardware possible.

The receivers (aka speakers that go in the ear) must be versatile enough to produce extremely loud sounds across the range of at least 500Hz --> 4KHz with no perceptible distortion. Distortion is the #1 enemy of deafies, and means the difference between "how are you today sir?" and "ajksdhv sdjkch asdkjhvkkf sjk?"

Oh, did I mention the receivers that must be as awesome as above, must also be able to survive something like 18,000 hours in a moist environment? (4 years, 12 hours a day)

The OS and DSP cannot even introduce milliseconds of delay while deciding what is "noise" to be filtered, what is "too loud" and should be compressed, and what was really soft but important enough to amplify even more than normal.

I don't like paying thousands of dollars for my aids, but neither do I believe they can sell for $400.

WTF Again?

[Osgeld]

http://ask.slashdot.org/story/12/06/13/1828232/ask-slashdot-why-are-hearing-aids-so-expensive
http://science.slashdot.org/story/11/09/09/2346233/is-there-a-hearing-aid-price-bubble
http://ask.slashdot.org/story/10/03/13/1916203/why-are-digital-hearing-aids-so-expensive

simple:
insurance
medical device
niche market

just because you are deaf, it doesn't mean that you are too blind, stupid and lazy to look at the last 3 years of the same fucking article with the exact same answers.

Two words: dumb customers

[ShanghaiBill]

Certainly the free market isn't driving down the price...

The free market only works if customers aren't stupid. The guy in TFA goes to one reseller, and looks at hearing aids from one manufacturer. Yet even he admits that he could get one for far less "on-line", but for some reason he doesn't fee that is an option. Why not?

Two months ago I bought a hearing aid for my father-in-law from Amazon for $329. He describes it as "fantastic". So TFA's claims that nothing is available for less than $2000 is clearly nonsense.

Royalties

[Roger W Moore]

I'm not sure, perhaps the cost is due to the royalties they have to pay in order to be able to reproduce copyrighted songs.