- Hey guys, welcome back to the Dr. Cliff AuD vlog.
This is vlog number 125.
And today I'm gonna talk to you guys about why hearing aids
are about to get a whole lot more expensive.
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Now, if you guys missed my video
that I posted like late last night,
about Justin Bieber and his facial paralysis
that was kind of like an extra video
I just threw in this week,
because it was such a big news
that just came out like two days ago.
But with that out of the way, really appreciate it guys.
So let's talk about more of this inflation thing.
Now I know I talked about inflation a couple of weeks ago,
but there's been new stuff that's been happening
since I made that video.
So I felt like I need to kinda revisit
what's actually going on
inside of the hearing aid industry right now.
So back at the beginning of the year,
so beginning of 2022,
a lot of different hearing aid manufacturers,
some of the major hearing aid manufacturers
announced that they were going to be rolling out
a approximately 3% increase in cost of goods, right,
so like increasing the cost of the hearing aids
that my clinic would buy from the manufacturer.
And then from that point, you know,
I sell them or dispense them
to a patient in my clinic, right?
And we're like, "Oh, okay, like, you know,
that's, I mean, 3% a big deal."
I mean, when you purchase as many units,
or hearing aids from these manufacturers that we do,
a 3% increase is a pretty big increase
that definitely affects the profitability
of our particular clinic,
and of any clinic that's out there really.
Well, we just got word, like in the last two weeks,
that pricing was going up by another 6 1/2%,
here in basically July, and this is happening
from a lot of the big manufacturers out there as well.
So we're starting to see significant price increases
from this inflationary mess that we have on our hands
here in the United States.
And I believe that this is the same problem
around the world, and I would be surprised,
because a lot of these manufacturers do sell hearing aids
in different countries.
I would imagine that these price increases
are rolling out essentially all around the world
at this point.
But what that creates is basically we now have
almost a 10% increase in the cost of goods
for these hearing aids inside of our clinics.
Now I'm a part of a lot of different forums on Facebook,
and just online in general,
that are very specific to hearing care professionals,
and a lot of them being clinic owners.
You know, I'm a clinic owner myself,
and so a lot of us, you know, interact together,
and ask questions, and get advice and stuff like that.
And the thing that I'm noticing
is is that there's a lot of clinic owners that are like,
"We're pretty much screwed.
I mean, that almost erodes all of our profit margin
inside of the clinic."
And I'm just like, "Man, that is a really rough thing."
And you know, a lot of audiologists,
and a lot of hearing instrument specialists
and clinic owners and all that,
when this stuff is coming out, they're like,
"How am I gonna absorb this
so my patients don't have to feel the pain of it?"
And so that's kind of where we're all at right now.
I mean, when the 3% increase came out,
we did not increase our pricing at all.
We basically absorbed all of that.
Well now when we're getting hit
with another 6 1/2% increase,
the question becomes is how much of that
are we gonna have to pass on to our patients
once that increase actually occurs, right?
And I know that there's a lot of other clinics
that, you know, I hate to say it this way,
but there's a lot of clinics out there
who do not focus on a really high level
of quality of service and quality of care,
that don't charge a whole lot, right?
Like they're trying to serve a part of the community
that cannot afford going with a really high level clinic,
like my clinic, right,
where we perform best practices to a T,
it's a great patient experience
when you come into the clinic,
or at least that's what we attempt it to be,
and it costs us more money to give that type of experience.
But we can absorb that better than a clinic
that's really just trying to, you know,
provide a very basic level service for their patients.
And for them to absorb the entire amount,
that's just gonna be impossible.
They would go out of business
if they had to try to absorb
the entire amount of cost of goods.
Now, this is just from hearing aid manufacturers.
There's a bunch of other stuff that is going up in price
and is going up in price significantly.
And essentially what's going to happen here
is that I think that some clinics
will be able to absorb part of it.
I don't think that there's a clinic out there
that's going to be able to absorb
a full darn near 10% increase in cost of goods,
along with all the other increases that are gonna happen
with these clinics,
with all of this inflation that's going on.
But what I think's gonna happen
is that there is going to be a marked increase
in the cost of care
that individuals receive from a clinic,
and the cost of hearing aids in general
that individuals receive from a clinic.
And so here's kind of like my warning,
like at some point this year, when you buy hearing aids,
they are going to be more expensive
than what they are right now,
and potentially significantly more expensive,
because when you start looking at the pricing
inside of the hearing aid industry,
so there are some clinics that are entirely unbundled.
So what that means is that you go in,
and you're like, "Okay, you're recommending
hearing aids to me, I need to purchase those hearing aids,"
and you basically buy them for whatever that clinic
purchased them from the manufacturer for.
But literally everything else is an additional charge.
So like the testing's an additional charge,
the fitting of those hearing aids is an additional charge,
the servicing of those hearing aids is an additional charge
from now until forever, when you have those hearing aids.
And so what'll happen is
is that you are going to end up paying for the increase
in the cost of those devices,
and then there's probably gonna be another increase
added to all of those different services
to cover the other inflationary costs
that these clinics are having to go through,
and will be continuing to go through,
I'm guessing for the rest of this year,
and potentially beyond for another year, who knows, right?
And so that's one of them,
and the other one is bundled care.
So when you start looking at bundled care,
essentially what happens is these clinics
will purchase devices from manufacturers.
They'll add all the services into the cost of the device
that will make that price go up, that you have to pay,
but then all your services are kind of included
inside of that cost.
But a lot of these clinics,
they're going to increase
the entire cost of that by this 9.5%,
so it's gonna be a pretty substantial increase in the cost.
Now, of course, like I said before,
some of them might only increase it 3%, 5%, 6%, whatever.
But some are gonna increase it close to 10%.
And who knows, they may increase it even more
on top of that, to cover whatever other expenses
that they have.
And so, and then you have hybrid clinics
that kinda do a mix of both,
where they might have a little bit
of markup on the hearing aids,
they have bundled packages that you purchase,
and then you pay for them that way.
But no one is immune to this, right?
I mean, I don't care how your hearing care professional
chooses to dispense these devices,
things are going to start getting more expensive.
And just like anything,
when there's a significant price increase,
small business is who suffers, right?
And I know that there's a big contingent
of individuals out there who think
that all audiologists and hearing instrument specialists
that work inside of a private clinic
are all like con artists,
and they're just money hungry or whatnot,
but they are small business owners.
They are just trying to make an honest living
by serving a need that their community has, right?
I mean, there's not Costcos everywhere.
I mean, there's a lot of Costcos,
but there are a ton of places that are extremely rural,
or there's Costcos that are extremely busy,
that you just cannot get in to get care in a timely manner.
And, you know, there's people who need to get service
from these private practice clinics.
In fact, you know, private practice audiologic care
has been substantially increasing,
and even quicker than what the big box stores are.
So there's definitely a need for private practice audiology,
but a lot of those small business owners
are gonna start feeling the pinch.
And I wouldn't be shocked if there are clinics
that end up having to either close their doors permanently
because of the price increases,
or that end up selling to larger groups,
and then these clinics become corporatized, right?
Where like the quality of care,
to be quite honest with you,
typically drops down substantially from a clinic owner,
who's actually an owner and operator
of their particular clinic.
So I guess what I'm saying here is
is that if you are on the fence
about treating your hearing loss,
and you're like, "Ah, I think I might treat
my hearing loss in 2022,"
it's like, you should probably go out right now
and do your hearing test, your consultation,
and get started with hearing treatment,
because I wanna say it's gonna be in July
that a lot of these price increases actually take hold.
And so if you can get in before that point,
you're going to end up beating these price increases
that are definitely coming.
Like, they're coming, I'm telling you right now,
everything's gonna be more expensive
by the end of this year than it is right now.
And this is not me trying to be like,
"Oh, let's try to drive up sales."
Like no, I'm telling you to help you,
and to help you save money,
to purchase hearing treatment now,
rather than waiting if you are on the fence.
Now, if you're someone
who is looking for new technology, right,
if you're looking for, if you're surfing my channel,
be like, "Oh, what's the best hearing aid
that's out there right now?"
that best hearing aid will be more expensive
at the end of the year than it will be right now.
And so if you are considering upgrading your technology,
you had better do that closer to right now
than towards the end of the year, right?
And I don't know what stuff you got going on this summer,
I mean, you might have vacations and things like that
that might interrupt with a fitting sequence
of a new set of devices,
but to at least get the hearing aids,
get the initial fitting done with them,
is gonna put you in a better financial position
than waiting towards the end of the year, okay?
So hopefully I've kind of given you the feeling
that like if you're gonna do something anyway,
just do it now.
If you're like, "No, I'm I'm gonna wait a bit,"
then that's fine, like you do what you wanna do
for your own hearing health,
but just know that it is going to be more expensive
if you wait down the road.
And once prices go up,
so this is something that I learned again from my dad,
and Dad, you're getting another shout out on this video,
two weeks in a row, go figure,
I think that that will make it
so I don't have to mention my dad again
for another six months, at least, right?
But I remember back when gas prices went up,
I think I was in high school, or just out of high school,
and what happened is is that all of the input,
so like the fertilizer, the fuel,
and all that stuff to to run the farm,
all of those went up, right?
And then when, when prices of gas and all that came down,
guess what didn't come down?
The inputs that it took to actually run the farm.
So like, it was still really expensive for seed.
It was expensive for fertilizer.
It was expensive for the different herbicides
and pesticides and all of that,
that he needed to use on the farm
to keep the plants growing and all of that, right?
So like even when prices came back down,
everything stayed back up.
So basically what I'm saying here
is that once you take the cat out of the bag,
you can't get it back in the bag.
So the prices that increase over the course
of the rest of this year,
and potentially even through next year,
and who knows, this is two price increases
from a cost of goods standpoint, within six months, right?
So like, it could happen again.
If we keep on this 8.6% inflation that we have right now,
there's a chance that next year
there's another eight to 10% increase in cost of goods,
and then just cost of treatment in general.
So once that cat is out of the bag,
you typically cannot get it back in the bag.
Once these prices go up,
even if inflation comes down, guess what?
The prices are still going to be what they are going to be.
And they're likely going to be at a higher level,
I don't care where you get hearing aids from.
So that is just my warning for you guys at this point.
I felt like this was a very timely point
to kind of bring that out, to kinda give you a warning
that things are about to change.
So if you're gonna do something,
do it now rather than later, okay?
I promise you will not regret it.
If you choose to treat your hearing loss,
obviously that's gonna be great in and of itself,
but to do it for less money now
than what it would cost you in two to three months from now
is even better, all right.
That is all that I wanted to share with you guys today.
Hopefully you enjoyed this video.
If you did, again, go ahead and give it that like,
and as always, I'll see you next week.
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