from the article:
This good news comes in a fascinating article by a venture capitalist published at VentureBeat just last month. The author, who invests in health technology ventures, sketches out the economics of the hearing-aid industry. It has been high margin and low volume. Traditionally, the manufacturer would sell a pair of hearing aids to an audiologist for $1,000, earning a gross margin of 43 percent. At a retail price of $3,000, after buying the device and incurring sales and other costs, the audiologist’s gross margin has been 55 percent. On the other hand, the average audiologist only sells 16 pairs a month.
But that is all changing. Not only are online vendors and innovating hearing-aid manufacturers cutting costs and improving quality and service times, but digital developers are offering online hearing apps via iTunes and other virtual stores for as little as $3.99. (Yes: There is a decimal after that 3.)
It has taken a long time, but the price of hearing aids is in the process of falling dramatically. How has this happened? Technological innovation, of course, but there is more. There’s no shortage of technological innovation in U.S. health care. However, because third-party payers, that is, health insurers and governments, determine prices, there is no mechanism for customers to signal value to providers.
This is not the case for hearing aids: Although some states have mandated insurance coverage for hearing aids, this is usually limited to disabled children. The big market for hearing aids is seniors, and Medicare does not cover hearing aids.
This good news comes in a fascinating article by a venture capitalist published at VentureBeat just
last month. The author, who invests in health technology ventures,
sketches out the economics of the hearing-aid industry. It has been high
margin and low volume. Traditionally, the manufacturer would sell a
pair of hearing aids to an audiologist for $1,000, earning a gross
margin of 43 percent. At a retail price of $3,000, after buying the
device and incurring sales and other costs, the audiologist’s gross
margin has been 55 percent. On the other hand, the average audiologist
only sells 16 pairs a month.
But that is all changing. Not only are online vendors and innovating hearing-aid manufacturers cutting costs and improving quality and service times, but digital developers are offering online hearing apps via iTunes and other virtual stores for as little as $3.99. (Yes: There is a decimal after that 3.)
It has taken a long time, but the price of hearing aids is in the process of falling dramatically. How has this happened? Technological innovation, of course, but there is more. There’s no shortage of technological innovation in U.S. health care. However, because third-party payers, that is, health insurers and governments, determine prices, there is no mechanism for customers to signal value to providers.
This is not the case for hearing aids: Although some states have mandated insurance coverage for hearing aids, this is usually limited to disabled children. The big market for hearing aids is seniors, and Medicare does not cover hearing aids.
- See more at: http://healthblog.ncpa.org/can-you-hear-me-now-another-health-market-that-really-works/#sthash.q9ONWsvB.dpuf
Source: John Grantham, "Can You Hear Me Now? Another Health Market the Really Works, John Goodman's Health Policy Blog, Nobember, 20, 2013 But that is all changing. Not only are online vendors and innovating hearing-aid manufacturers cutting costs and improving quality and service times, but digital developers are offering online hearing apps via iTunes and other virtual stores for as little as $3.99. (Yes: There is a decimal after that 3.)
It has taken a long time, but the price of hearing aids is in the process of falling dramatically. How has this happened? Technological innovation, of course, but there is more. There’s no shortage of technological innovation in U.S. health care. However, because third-party payers, that is, health insurers and governments, determine prices, there is no mechanism for customers to signal value to providers.
This is not the case for hearing aids: Although some states have mandated insurance coverage for hearing aids, this is usually limited to disabled children. The big market for hearing aids is seniors, and Medicare does not cover hearing aids.
- See more at: http://healthblog.ncpa.org/can-you-hear-me-now-another-health-market-that-really-works/#sthash.q9ONWsvB.dpuf
Another HeCan You Hear Me Now? Another Health Market that Really Works
By John R. Graham Filed under Health Alerts on November 20, 2013
- See more at: http://healthblog.ncpa.org/can-you-hear-me-now-another-health-market-that-really-works/#sthash.q9ONWsvB.dpufCan You Hear Me Now? Another Health Market that Really Works
By John R. Graham Filed under Health Alerts on November 20, 2013
- See more at: http://healthblog.ncpa.org/can-you-hear-me-now-another-health-market-that-really-works/#sthash.q9ONWsvB.dpufCan You Hear Me Now? Another Health Market that Really Works
By John R. Graham Filed under Health Alerts on November 20, 2013
- See more at: http://healthblog.ncpa.org/can-you-hear-me-now-another-health-market-that-really-works/#sthash.Go7oya3W.dpufCan You Hear Me Now? Another Health Market that Really Works
By John R. Graham Filed under Health Alerts on November 20, 2013
- See more at: http://healthblog.ncpa.org/can-you-hear-me-now-another-health-market-that-really-works/#sthash.Go7oya3W.dpuf
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