Market Overview for Technology for Aging in Place

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Boston, MA - The market for hearing aids is broken. The average cost of a set of two hearing aids today is more than $5,000 and is rarely covered by insurance. Not only do audiologists have a monopoly on hearing aids, but audiology practices are also inefficient brick & mortar businesses with profit motives and high overheads, and they are forced to charge exorbitant prices just to stay in business. But in an era where highly complex smartphones are available for under $500, hearing aids simply should not cost thousands of dollars, and Embrace Hearing is looking to change that.

Purchasing hearing aids traditionally is a singularly confusing, expensive and frustrating experience – and it’s no wonder that only 25% of Americans who would benefit from hearing aids actually wear them. The true manufacturing cost of most hearing aids is a few hundred dollars, meaning that everyone should have a right to get a hearing aid at a reasonable price. Instead, many people are left unable to afford hearing aids.

Additionally, the hearing aid marketplace is intentionally kept opaque. Manufacturers develop different names for identical features, making it impossible to compare the aids side-by-side. Manufacturers often purchase or enter into exclusive agreements with audiology practices, creating skewed incentives for audiologists to favor a single product at the expense of true transparency to the consumer.

The high price for hearing aids from audiologists is due to the fact that they force the customer to purchase a bundle comprised of the hearing aids and an unlimited services contract, masking the true price of the hearing aids. By selling directly to the consumer online, Embrace Hearing, a startup at the Harvard Business School’s Innovation Lab, is exposing “unbundling” into the marketplace by taking the “amount of service” choice away from the audiologist and giving it to the consumer, who is now free to pay for follow-up service on a pay-as-you go basis. Because of this, Embrace Hearing is able to provide low hearing aid prices.

The justification the audiologist typically provides when requiring an unlimited service package is that “you never know how many return visits you’ll need for adjustments, so you can think of the ‘bundled package’ as a type of insurance.” However, most audiologists know that their customers won’t be back for that many appointments. In fact, the average number of follow-up visits in the year after purchase is just under three. This makes the average cost of an appointment around $500. But the adjustments are not worth that much, since audiologists provide adjustment services to people who already have hearing aids, purchased elsewhere, for only $50-75. Therefore, the consumers who truly benefit from bundled pricing are few and far between.

Embrace Hearing is the solution to these issues. An audiologist is still needed to provide an audiogram test for a customer, but patients who need a hearing device can then place an order for hearing aids on the website and send in their hearing test. Embrace Hearing’s audioprosthologists then program the hearing aids, which are sent directly to the customer.


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If you’d like more information about this topic, or to schedule an interview with Ross Porter, you may reach him at or  (917) 830-HEAR (4327).

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Monday, July 1, 2013

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