MarkeTrak VIII: 25 Year Trends in the Hearing Health Market How do we get on the fast track?

1
MarkeTrak VIII 25 Year Trends in the Hearing
Health MarketHow do we get on the fast track?

• Sergei Kochkin, Ph.D.

2
Agenda

• Review MarkeTrak VIII findings
• 25 year trends in the hearing health market
  (2008)
• Customer satisfaction with hearing aids (2009)
• Impact of HHP on consumer success with hearing
  aids (2010)
• General observations on why the hearing aid
  industry is underperforming.
• As we review this data ask how can I turn this
  problem, obstacle, misinformation, consumer
  disappointment, etc into an opportunity? Focus on
  why we all work in an under-performing industry.

3
Other planned publications in the MarkeTrak VIII
series

• Impact of hearing loss on job effectiveness (2nd
  edition).
• Customer satisfaction with on-the-ear (open fit)
  hearing aids compared to traditional style HA
• Prevalence of tinnitus and efficacy of treatment
  modalities
• Sources of noise which most impact satisfaction
  with hearing aids
• Perceptions of benefit and changes in quality of
  life due to hearing aids.
• Impact of hearing loss on traffic accidents

4
Other planned publications in the MarkeTrak VIII
series

• Use of assistive listening devices
• Use of inexpensive listening devices (lt50) in
  lieu of hearing aid adoption.
• Factors which would influence hearing-impaired
  non-adopters to purchase and use hearing aids.
• Comparison of customer satisfaction in other
  professions and with products and services in
  other industries (non-adopter population only).
• Media habits of the hearing-impaired populations
  (owners and non-adopters).
• Reasons for hearing aid returns

5
25 Year Trends in The Hearing Aid Market

• October 2009
• Hearing Review

6
Are we really on the fast track?

• Original cover for the first MarkeTrak VIII
  publication
• Changed to Headed for the Fast Track?

7
Led to funny editorialor Slow Train Coming?
and some alternate titles

• Are we on the right track?
• Are we on the track at all?
• Are we headed for derailment?
• Throw Mama on the train!
• Why isn't there anyone under 70 on this train?
• The train has left the station leaving behind
  three-quarters of its passengers
• People are in denial about their need to get on
  the train it takes them 3 to 8 years just to get
  aboard
• Why are train rides so expensive? Why can't we
  deduct them from our taxes?
• Some still believe the train is too big and
  noisyand the whistle drives them crazy!
• My family doctor told me trains don't work
• One of my friends told me that the train ride
  stinks

8
MarkeTrak Methodology
9
Method

• National family opinion panel
• 80,000 households
• Balanced to 9 key census variables
• Used since 1984 starting with HIA survey.
• Does not include institutional settings.
• Screening questionsPhase I(11-12 /2008)
• Hearing loss
• Hearing aids
• Tinnitus
• Physician screening for hearing loss
• Detailed employment status beyond NFO panel data
• Traffic accident data

10
Method

• Screening survey
• Returns 46,843 households
• Identified 14,623 people with hearing loss and or
  tinnitus
• Response rate 59
• Detailed survey - Phase II (1/2009)
• 7 page legal size survey
• 3,779 hearing aid owners (total population)
• 5,500 adult non-owners (random sample)
• Response rate 84 79 respectively
• 1 incentive

11
The Hearing Loss Population
12
Incidence of hearing loss per thousand
householdsThere is no hearing loss epidemic only
the aging of America
13
For more than a generation the incidence of HL
has been about one in 10 people
HIA
Adjusted by .7 to account for multiple
hearing-impaired per household
14
Physician screening for hearing loss has
increased primarily among younger segments when
you include paper and pencil screening
15
Key HL population data

• Incidence of HL in U.S. population 11.3
• Up from 10.7 (2004)
• Admitted HL population 34.25 million people
• Up from 31.5 million people (2004)
• 6 out of 10 are male
• 60 are below retirement age

16
The Hearing Aid Market
17
Key hearing aid owner population data

• Current hearing aid owners 8.41 million people
• Up from 7.8 million (2004)

18
Hearing aid adoption rates are now one in four
people with admitted hearing lossGrowth
primarily VA and direct mail
19
Binaural rates continue to grow impressively
20
Evidence for growth in third-party payment
21
Sources of third-party payment.Average third
party payment discount achieved 84
Note Total percent greater than 100 since
respondents indicated they received financial
help from multiple sources.
22
Average out-of-pocket retail price paid by
consumer increased 17 (includes free, direct
mail hearing aids, all third-party discounts
but excludes VA fittings)
23
Audiologists fit nearly two out of three hearing
aids
24
The average age of hearing aids has dropped to
4.1 years
Mean age of hearing aids 1991 3.1 yrs 1994
3.7 yrs 1997 3.8 yrs 2000 3.8 yrs 2004 4.5
yrs 2008 4.1 yrs
25
New user rate()We are unable to attract new
users to the market
26
Average age of new hearing aid usersWe have not
tapped into the younger markets
27
The typical HA purchaser has an average household
income of 54,000 their modal income is 125,000
28
Whats the REAL market for hearing aids?

• Used subjective measures to segment market
• Number of ears impaired
• Subjective view of HL
• Gallaudet scale
• BHI quick hearing check (based on revised AAO-HNS
  5 minute hearing loss screener)
• Difficulty hearing in noise
• Created single HL index (factor analysis)
• Divided total HL population into 10 HL segments
  called deciles
• Decile 1 Lower 10 of HL mild
• Decile 10 Top 10 of HL severe to profound

29
Hearing aid adoption heavily dependent on degree
of hearing loss
Decile 5-10 83 hearing aid owners 43
non-adopters
30
Hearing aid opportunity by age group. The viable
hearing aid market in the U.S. is about 11
million more people with untreated hearing loss
Deciles 5-10 6.98 Mil. HA owners 11.1 Mil.
non-adopters
31
Hearing aid adoption rates redefined

• One in four people with admitted hearing loss own
  hearing aids.
• 40 of people with moderate to severe hearing
  loss
• 9 of people with milder hearing losses

32
We are at the right place at the right time

• The hearing loss population is growing at the
  rate of 1.6 times the general population growth
  primarily aging population.
• Digital technology and the supporting software is
  superb and it will get better.
• We have the capability of meeting the needs of
  the vast majority of people with hearing loss.

33
So why are we on a such a slow moving train?

• Explore customer satisfaction with hearing aids
• Explore HA fitters role in user success
• Summarize with other observations

34
Customer Satisfaction with Hearing Aids 2008

• January 2010
• Hearing Journal

35
Key HA satisfaction measures
36
Satisfied very satisfied customers have not
grown during the digital revolution
37
Dissatisfaction has dropped to 14 but. 8 of
new hearing aids are in the drawer
38
More than half of hearing aids in the drawer are
lt/ 5 years of age
39
Hearing aids in the drawer

• Has varied between 11.7 and 17.9 historically.
• Current rate 12.4
• New hearing aids (lt/4 years) 7.5
• Brand new HA 5.2
• 1,040,000 customers never use their hearing aids.
• Why do so many people spend 2000-6000 for a
  product that does not meet their needs?

40
Hearing aid usage patterns virtually unchanged
41
30 of new user fittings are probable failures
42
Causes for hearing aids in drawer

• Poor benefit
• Poor fit and comfort
• Poor performance in noise

43
We have failed to improve positive word of mouth
advertising and brand loyalty
44
Customer satisfaction with hearing aid product
features hearing aids are lt 4 years old.
45
Customer satisfaction with hearing aid signal
processing and sound quality hearing aids are lt
4 years old.
46
Customer satisfaction with hearing aids in
various listening situations hearing aids are
lt 4 years old.
47
Customer satisfaction with hearing aids in
various listening situations (continued)
hearing aids are lt 4 years old.
48
Hearing aid multiple environment listening
utility (MELU) is not impressive.
49
Multiple environment listening utility (MELU) is
highly related to brand repurchase and positive
word of mouth advertising.
50
Satisfaction with benefit is highly dependent on
the number of listening situations hearing aids
workand Somewhat satisfied is hardly an
endorsement
51
Changes since MarkeTrak VII (2004)

• Practical (at least 5 point increase) and
  statistically significant improvements
• Whistling and feedback (12 points, plt0.0001)
• Sound of chewing and swallowing (9 points,
  plt0.0001)
• Wind noise (7 points, plt0.0004)
• Use in noisy situations (7 points, plt0.0001)
• Comfort with loud sounds (5 points, plt0.001)

52
The Impact of the Hearing Health Professional on
Hearing Aid User Success

• April 2010 Hearing Review

53
Co-authors Reviewers

• Co-authors
• Sergei Kochkin, PhD (BHI)
• Douglas L. Beck, AuD (Oticon)
• Laurel A. Christensen, PhD (GN ReSound)
• Cynthia Compton-Conley (Gallaudet U)
• Brian J. Fligor, ScD (Harvard)
• Pat B. Kricos, PhD (U of Florida)
• Jay McSpaden, PhD (Retired audiologist - Oregon)
• H. Gustav Mueller, PhD (Vanderbilt)
• Michael Nilsson, PhD (Sonic Innovations)
• Jerry Northern, PhD (Starkey)

• Co-authors (cont.)
• Thomas A. Powers, PhD (Siemens)
• Robert W. Sweetow, PhD (U of C)
• Brian Taylor, AuD (Unitron)
• Robert G. Turner, PhD (LSU)
• Reviewers
• Harvey B. Abrams, PhD (VA)
• Ruth Bentler, PhD (U of Iowa)
• Vic S. Gladstone, PhD (ASHA)
• Larry Humes, PhD (Indiana U)
• Michael Valente, PhD (Washington U)

54
Top 10 mistakes of cliniciansChristensen Groth
(AAA)

• Failing to use new tests to help with selection,
  fitting and counseling,
• assuming that automatic environmental steering
  programs are accurate and that the hearing aids
  switch appropriately,
• fitting a hearing aid without buy-in from the
  patient,
• using first time, new user, or inexperienced user
  gain settings and not revisiting the settings
  over time,
• not doing the appropriate counseling,
• not performing appropriate validation measures,
• not taking manual dexterity into account when
  selecting the hearing aids,
• assuming the manufacturer defaults are right for
  every patient,
• not understanding when to use an open fitting and
  when not to,
• failing to verify the fitting with probe tube
  measurements.

55
THESISThe HHP has direct control over hearing
aid user success

• Hearing aid quality control prior to fit
• Fit and comfort of hearing aid
• Verification of fit
• Validation of fit
• Optimal amplification of the residual auditory
  area of the consumer
• Vast array of counseling tools
• Measureable BENEFIT GUARANTEE
• And a money back guarantee

56
Method

• Measured 17 items of the hearing aid fitting
  protocol.
• Measured 7 real-world success measures
• Related use of protocol items to real-world
  success.
• Related total weighted protocol to success
• Related unweighted protocol to success (e.g.
  simple counting of steps performed)

57
Protocol items measured

• Hearing tested in sound booth
• Real ear measurement verification
• Subjective benefit measurement
• Objective benefit measurement
• Patient satisfaction measurement
• Loudness discomfort measurement
• Auditory retraining software therapy
• Aural rehabilitation group
• Received self-help book
• Received self-help video
• Referred to self-help group

58
Protocol items measured

• Fit and comfort of the hearing aid (single Likert
  scale item)
• Achieved Sound quality
• clearness of tone/sound
• whistling and feedback
• use in noisy situations
• natural sounding
• sound of voice
• ability to hear soft sounds
• comfort with loud sounds
• single index from Factor analysis. Proxy for
• Optimal amplification of residual auditory area
  of patient
• Functionality of hearing aid (quality control
  pre-fit)

59
Protocol items measured

• Attributes of the hearing healthcare
  professional
• knowledge
• professionalism
• empathy
• creation of realistic expectations
• explained care and maintenance of hearing aids
• quality of service during the fitting process
• quality of service after the hearing aid fitting
• all measured on a 7 point Likert scale
• single index from Factor analysis

60
Protocol items measured

• Attributes of the hearing healthcare office
• front office staff
• hours of operation
• attractiveness and comfort of the office
• ease of access to the office
• convenient location
• all measured on a 7 point Likert scale
• single index from Factor analysis.

61
Protocol items measured

• Counseling
• the amount of time spent in hours explaining care
  and maintenance of the hearing aids and
• the hours spent in aural rehabilitation
• total counseling hours spent in the first 2
  months of the new hearing aid fitting.
• The number of visits to get the hearing aid
  working just right for the patient.

62
Success measures

• Hearing aids in the drawer and hearing aid usage
  in hours.
• Benefit.
• Satisfaction with benefit (7 point Likert scale)
• Perception of hearing handicap reduction in 10
  listening situations.
• Multiple Environmental Listening Utility (MELU).
  The percent of 19 listening situations in which
  the patient was satisfied or very satisfied.
• Quantified Client Oriented Scale of Improvement
  (COSI) measure.
• Only situations for which patient had need to
  hear.

63
Success measures

• Patient recommendations
• Would recommend the hearing healthcare
  professional
• Would recommend hearing aids to friends
• Would repurchase current hearing aid brand
• Overall success.
• A composite measure of success derived from
  factor analyzing the above variables
• Converting to factor scores and standardizing to
  a mean of 5 and standard deviation of 2 (stanine
  scores).

64
Consumer perceptions of hearing aid fitting
protocol received comparing new and experienced
users.
65
Outcome measures comparing new and experienced
users
66
Summary of statistically significant
relationships between outcome measures and
protocol items for new and experienced users
67
High-low analysis

• Compare patients experiencing below average (-1
  std) and above average (1 std) real-world
  success.
• Lets look at the patients experience during the
  hearing aid fitting process!

68
A comparison of above average (1 std) and below
average (-1 std) hearing aid success as measured
by subjective real-world outcomes showing
protocol received based on consumer perceptions.
69
A comparison of above average (1 std) and below
average (-1 std) hearing aid success as measured
by subjective real-world outcomes showing
protocol received based on patient perceptions.
70
A comparison of above average (1 std) and below
average (-1 std) hearing aid success as measured
by subjective real-world outcomes showing
protocol received based on patient perceptions.
71
A comparison of above average (1 std) and below
average (-1 std) hearing aid success as measured
by subjective real-world outcomes showing
protocol received based on consumer perceptions.
lt--------Dispenser Attributes ------- gt
lt-------- Office Attributes ------- gt
72
A comparison of above average (1 std) and below
average (-1 std) hearing aid success as measured
by subjective real-world outcomes showing
protocol received based on consumer perceptions.
73
High-low analysis 2

• Use high/low difference scores from past analysis
  to weight protocol received.
• Sum weighted scores
• Compare top and bottom 15 weighted protocol
  scores.
• Now lets look at the patients real world
  outcome!

74
Impact of a weighted protocol comparing the top
and bottom 15 of consumers on hearing aid
success.
75
Total hearing aid user success achieved as a
function of a weighted fitting protocol (in
stanines, n1,613)Correlation .70
76
High-low analysis 3

• Simple count of protocol steps
• Collapsed counseling methods
• Compare minimum (0-2 items) to comprehensive
  protocols (10-12 items)
• Are protocols additive or multiplicative?
• Lets see how the patients did in the real world!

77
Impact of a protocol on hearing aid success
comparing a minimum protocol (0-2 items) to a
more comprehensive protocol (10-12 items).
78
Total hearing aid user success achieved as a
function of an additive hearing aid fitting
protocol (n1,613)Correlation .50
79
Other findings

• Factors explaining less than 1 of variance in
  the hearing aid fitting protocol
• Age of the patient
• Gender
• User (new versus experienced)
• Size of city (rural to metropolitan)
• Price of hearing aid
• Style of hearing aid
• Degree of hearing loss
• Occupation of person (Audiologist/HIS) fitting
  hearing aid explained lt ½ of 1 of the protocol
  used OR real-world hearing aid user success.
• Confirmed by the Hearing Industry Association
  Consumer Journey Study.
• Audiologists and HISs are equivalent in both
  protocol and ability to generate successful
  hearing aid users.

80
Conclusions

• What occurred in HHP offices has a very strong
  relationship to real-world success.
• Evidence that a weighted protocol is better
  predictor of success then simple count of steps
  performed.
• Variability of protocols performed and the
  distribution of patient success is massive in
  America.
• Consumer Reports estimates in a small scale study
  that 2 out of 3 hearing aids are misfit.
• Anecdotal reports from expert fitters indicate
  that many NEW hearing aids brought in to their
  practice were programmed incorrectly.

81
Conclusions

• Believe that the clinical laboratory is the real
  world and that we can get a handle on the degree
  of misfit hearing aids in America as well as
  quantify the relative importance of various
  aspects of the protocol.
• Further research needed
• What is the state of misfit hearing aids in the
  U.S?
• How many malfunctioning hearing aids are in
  patients ears?
• How much more benefit do patients experience when
  their residual auditory area is optimally
  amplified by experts given todays technology and
  software?
• How many patients are fit with inappropriate
  technology (e.g. a CIC or open fit when they need
  a power BTE or full-concha)?

82
Conclusions (Cont.)

• Can we reduce the number of hearing aids in the
  drawer?
• What is the relative importance of aspects of the
  protocol on real world success?
• How many patients have been inappropriately fit
  with hearing aids when they are not good
  candidates (e.g. motivation, acceptable noise
  level (ANL) exceptionally high)?
• When hearing aids are expertly fit what is the
  likelihood of improvements in positive-word-of-mou
  th advertising and brand loyalty?

83
Quality control at the point of sale is critical
to user success industry growth

• Not all consumers are tested in a sound booth.
• Many hearing aids are not tested for
  functionality prior to the fitting.
• The majority of dispensers fail to verify the
  hearing aid fitting with REM.
• Considered by the industry intelligentsia to be
  unethical and unprofessional
• Many dispensers do not validate the fitting
  pre/post with objective or subjective benefit
  measures.
• We just dont want to know (Ignorance is
  bliss!)
• What should we do if we cant find benefit
  refund the customers money? (greed and
  unethical)
• Ultimately we take the short term sale and
  sacrifice the long term growth and our reputation
  in our community.
• Aural rehabilitation is virtually non-existent.

84
Opportunities

• Establishment and enforcement of a standardized
  and comprehensive hearing aid fitting protocol
  (similar to Optometry) with a measureable benefit
  guarantee will result in
• Massive market share shifts
• More positive word-of-mouth advertising
• Tapping new markets
• Greater brand (hearing aid and distribution)
  loyalty.
• Transforming the lives of many more hard of
  hearing people, after all isnt this our REAL
  business?
• And believe it or not stigma will evaporate for
  most people when they achieve SUBSTANTIAL
  BENEFIT.
• ULTIMATELY QUALITY WILL WIN!

85
Some Additional Observations on the Hearing Aid
Market
86
Sales growth

• We are doomed to 2-3 growth unless we fix the
  hearing aid industry.
• This is roughly the growth rate of the elderly
  population.
• A key problem is quality control at the point of
  sale. The fitting process has not kept pace with
  technology.
• Improvements in technology are wasted if the
  hearing aid is inappropriately fit.

87
Our value proposition to society is inequitable

• We benefit () more than the consumer (the
  improvements in their life for which they are
  willing to pay)
• Estimated hearing handicap reduction
• 41 (Absolute benefit)/Unaided hearing problem
  (MarkeTrak VI)
• Current direct measure in MarkeTrak VIII 55

88
Customer satisfaction is highly related to
spent per 1 improvement in hearing
disabilitywhere change (benefit/unaided
APHAB)
89
Overall customer satisfaction is dependent on
price relative to hearing disability
improvement(Statistical Model)
Overall Customer Satisfaction ()
Price
Hearing disability improvement ()
R2.86
90
Negative word-of-mouth is severely depressing
throughput into HHP offices and therefore sales

• 19 of total adults with admitted hearing loss
  dont purchase because of other hearing aid
  owners telling them of their disappointment.
• Thats 4.4 million people
• Assuming 1.75 hearing aids each over 5 purchase
  cycles of 5 years (their average age is now 60)
• Assuming we cannot win them back
• Thats potentially 38,200,000 hearing aids not
  purchased over their lifetime
• Thats 19 years of lost sales for the whole US!
• Thats 69 billion in lost revenue!

91
The utility of hearing aids is poor

• With the exception of a handful of activists we
  have not made public places accessible to people
  with hearing loss as has been done in Europe.
• Inductive looping (until the real wireless
  revolution in the HA industry)
• Use of telecoil to double or triple functionality
  of hearing aid.
• Some HHP are now looping their patient homes and
  therefore creating real value.

92
Hearing aids and those who fit them have a
horrible reputation

• Typical 1st media question to me Why do so many
  people hate hearing aids?
• Need to demonstrate to non-adopters
• That hearing aids do indeed work
• That we can provide substantial benefit and
• Therefore that we can substantially improve their
  lives

93
We should leverage QOL research more in
marketing hearing aids

• Improvements in
• Earning power
• Communication in relationships
• Intimacy and warmth in family relationships
• Ease in communication
• Emotional stability
• Sense of control over life events
• Perception of mental functioning
• Physical health
• Group social participation
• Safety

94
We should leverage QOL research more in
marketing hearing aids

• Reductions in
• Discrimination toward the person with the hearing
  loss
• Hearing loss compensation behaviors (i.e.
  pretending you hear)
• Anger and frustration in relationships
• Depression and depressive symptoms
• Feelings of paranoia
• Anxiety
• Social phobias
• Self-criticism

95
Hearing aid returns are killing us

• Current rate 18.6
• Top reasons
• Benefit (51)
• Background noise (49)
• Whistling/feedback (38)
• Poor value (36)
• Poor fit and comfort (35)
• Nearly a completely solvable problem

96
Overall Conclusion

• Markets are perfect!
• If we do not adequately service people with
  hearing loss someone else will take away our
  business and do it better.
• We have a lot of baggage to overcome.
• Consumer stigma, while existent, is an industry
  scapegoat.