To bundle or not to bundle? That is the question. Many owners of private hearing care practices wonder whether it’s better to deal with today’s competitive hearing care market by bundling hearing aid costs with services or to step outside the status quo by unbundling. This is a hot debate among audiologists and other hearing care providers.
“There are mixed opinions on the merits of bundling and unbundling,” says Dennis Van Vliet, AuD, senior director of professional relations for Starkey Hearing Technologies in Eden Prairie, Minn. “But my observation is that a large majority of us offer a bundled package of services and products for hearing aids.”
Bundling has been the delivery model for hearing aids since the 1970s, and is still the “go-to” method of pricing for products and services: It’s billing for all the products or services and related items under one code. Many hearing care professionals believe this is the only way to make a profit in private practice. On the other hand, some hearing care professionals prefer unbundling product charges for select items that can be paid for separately from professional services.
Today’s Hearing Care Market and “Delivery Models”
“We are facing increasing challenges with respect to the public perception of affordability and accessibility of hearing care,” comments Van Vliet. He adds that professionals who care for patients with hearing problems know these individuals depend on their hearing specialist to ensure their devices continue to benefit them. Van Vliet points out that cost is a “significant barrier” to acquiring hearing aids, and bundling the cost of the aids with the cost of related clinic services can make the total cost appear more prohibitive.
The challenge for those in hearing healthcare is that there are less expensive alternatives promoted in the market today, which often do not include participation by hearing professionals. While the products themselves may be less expensive when they are not purchased through a hearing care professional who would typically provide related fitting services, this approach does not fit into “best practices” in hearing healthcare. “The best practices for assessment, selection, and fitting of hearing aids include the participation of an audiologist or other hearing care professional,” says Van Vliet.
In an effort to keep costs low, patients with hearing loss may also try the latest techno gadgets, such as personal sound amplification products, or PSAPs (that are outside the “sphere of hearing aids”). They may ask audiologists for advice about how consumer electronics can help improve their hearing. While professionals can offer patients guidance on using less expensive PSAPs or other consumer products, another approach is to remove the obstacle of “sticker shock” and give patients more financing options that enable them to purchase the hearing aids they need. Many hearing practices offer third-party patient financing, like CareCredit, which is a healthcare credit card that allows patients to defer payment for hearing devices. Instead of paying the full cost of a hearing aid up front, CareCredit allows patients to make smaller monthly payments over time. So, whether you choose to bundle your hearing aid sales with your services, or unbundle them, a financing program may be a good way for you to help patients cover the hearing device portion of the cost.
Let’s take a closer look at the pros and cons of bundling.
Pros of Bundling
- Gives patients many options: Patients may not have considered some of the items or services in the bundle and this exposure could lead to additional sales.
- Makes it easy for patients to get everything they need all in one package.
- Mostly everyone else does this. Hearing aid products and professional fees are under one price and code. No separate charge for the evaluation/ consultation.
- It is good for cash flow.
Cons of Bundling
- Prices are not transparent and it increases costs for many patients.
- It does not always include all of your professional time; you may be collecting less than is needed to cover the typical patient.
- It’s not how insurance reimburses for items and services.
- Patients may prefer only one product or service and want the price for that item only. They may not want extra products and services in the package.
Why Consider Unbundling?
“We have to differentiate ourselves and our services from the disruptive forces that now exist in the marketplace,” says Audiologist Kim Cavitt of Audiology Resources Inc in Chicago. Cavitt says the “norm” of offering bundled services may no longer work in the 21st century.
Pros of Unbundling
- Patients can get the specific product they want to meet their needs at a competitive price; improves price competitiveness with Internet and Big Box retailers (by separating out the device costs and service fees).
- Allows patients to see the added value of professional knowledge and skills (hearing care services). Patients may not have considered certain aspects of care related to their hearing aid devices.
- Increases a practice’s market potential by serving those who get their hearing aids by alternate means (eg, Internet, mail order, retail vendors).
- Offers audiologists a chance to provide transparency to patients on fees and services.
- Potential for greater revenues over the long term. Unbundling allows for more reimbursement within most managed care situations.
In moving to unbundling, you’ll contend with some disruptive forces. Your real “competition” may end up being the manufacturers with whom you work—Sonova (Phonak), Starkey, Widex and Siemens all own clinics and “direct to consumer” enterprises.
Other competitors may include third-party payers (ie, HiHealth Innovations and Medicaid). Or, your real “competitors” could be other audiologists, retail hearing aid dispensers, or third-party administrators (ie, HearUSA and EPIC). Additional competitors include Big Box retailers, apps (ie, Ear Machine, Sound Focus), the government (expansions in Medicaid and VA benefits) and, as discussed earlier, personal sound amplification products (PSAPs). This leads us to the negatives of unbundling:
Cons of Unbundling
- Patients will have to pay a fee for every item or service and will need to be charged every time the item is provided or service is performed.
- Nothing is free or “no-charge.” Patients may challenge the price or value.
- Patients may not care whether they have additional items in one package.
- Patients will need to pay a fixed rate per hearing aid device for the professional service of managing their hearing aids for a given period.
- Does not work as well with managed care plans where you have to take a large provider discount or plans with defined warranty/coverage terms.
To figure out whether to bundle or unbundle, take a hard look at your current business practices. Here are some questions to consider:
- What range of services do you provide?
- What role does the sale of hearing aids play in your practice? Do you have options to accommodate patient prospects who come into your practice with a hearing aid they bought elsewhere?
- What is the protocol for evaluating hearing, choosing hearing aids, dispensing, orientation and follow-up care?
- What is your current pricing model? How effective is it? (ie, Look at specific costs and desired profit to determine your pricing structure.) How would a switch to unbundling affect your cash flow?
“I’m going to continue to be eclectic in my approach,” says Van Vliet. “There are times when the simplicity of a bundled fee makes the most sense with certain consumers. Even with the bundled approach, calling out and ‘itemizing’ the services included provides full disclosure of what the consumer is paying for.”
And, offering as many payment options as possible, including CareCredit, may help your patients overcome the cost obstacle.
Image credits: CareCredit; © Stuart Miles | Dreamstime.com