Welcome, everyone, to the IHS webinar, Navigating the Hearing Healthcare Arena in 2023, sponsored by Oticon. I'm your moderator, Ciara Sharp, IHS's Director of Professional Development. Thank you so much for joining us. Before we get started, I want to share a few housekeeping items with you. Note that we are recording today's webinar so it can be offered on demand through the IHS website in the future. Post-captioning is also available and can be turned on using the Zoom toolbar as shown on the screen. Also, this webinar is available for one continuing education credit through the International Hearing Society. The CE quiz and information about how to receive credit can be found on our website, IHSinfo.org slash webinars. A link to this page has been added to the chat box for you as well. The slides for today's presentation can be downloaded from that same page. Feel free to take a moment now to do so if you'd like to follow along. Tomorrow, you'll receive an email from us with a brief survey about this webinar. Your feedback is incredibly helpful as we strive to create valuable content for you moving forward. Lastly, note that today's presentation is sponsored by Oticon and represents their view on industry trends and changes. The content has been specially developed for you by Oticon and may not necessarily reflect IHS's policy and stance on hearing health care issues. And now, on to our presenter. To share valuable insights about the state of the hearing health care industry is Gary Rosenblum, president of Oticon and immediate past chairman of Hearing Industries Association. Gary has been president of Oticon Inc. since October 2016. He is responsible for leading the U.S. Oticon organization, consisting of its sales, marketing, customer experience, training, audiology, and business development teams. He brings a rich understanding of how customers and consumers are adapting to a changing health care environment. Prior to Oticon, Gary ran several medical device and consumer health care businesses for Fortune 500 companies, including Johnson & Johnson, Abbott Labs, and Pfizer. Gary earned his MBA from Cornell University and his BA in psychology and history from Washington University in St. Louis. I think it's safe to say that we've got an expert on our hands today. As you can see, Gary has much to cover during today's presentation. At the end, we'll move on to a Q&A session. On your bottom menu, you'll see icons for chat and Q&A. Try to keep general conversation in the chat box and all questions, which you can send in at any time, in the Q&A box. And now, let's get to our main presentation. Take it away, Gary. Thank you so much. Great to be here, everybody. Let me share my screen. All right. So, here we go. Hopefully, you guys can hear me. I assume you can. So, first of all, I just want to thank our partners at IHS for inviting me to do this. I think this is the third or fourth time I've done this, and it's always great. I learn more from these sessions that, hopefully, I'm conveying to you, because it's really the Q&A session at the end that really I enjoy just interacting with you all and understand what's going on out there with your practices. And also, we have a very, very strong partnership with IHS. We've been a partner for many, many years, so I'll be also at their seminar – sorry, their meeting later on this fall. So, I look forward to seeing you live then as well. So, I've done this webinar a couple times, and I think the last time I did this, we were in the middle of what was obviously an interesting year in 2022. 2022 was – we had the war in Europe. We had a lot of inflation, a lot of consumer uncertainty that was happening. What I said then – and I'm not saying I told you so. I'm just saying that I love this industry because of how resilient it is. There is a really, really strong demand for the services that you all provide, and we're seeing that in 2023, and I'm going to show you some numbers around that. But what's exciting to me – and again, in October, I will be in this industry for seven years – it just continues to be really, really interesting with technology, with just overall macroeconomic factors, political factors, scientific factors, all that stuff keeps it really, really interesting. And this is the only job that I've been in for this long. I've never been in a job for more than five years. Now, it's seven years, but it just continues to get interesting because of really the interactions with you all. So, let's jump in, and let's talk about navigating the hearing healthcare arena in 2023, really in 2023 and beyond. But I think that the main point of this presentation, just as one takeaway, is that the business or the industry or the arena in which we all play, which is hearing healthcare, is an extremely strong – in a really extremely strong place right now. And I'll kind of go through why that is. And it's also very unique for the United States versus other countries where the – let's call it the reimbursement system is different. And I wouldn't say the consumers are very different. The demographics really aren't different. But because of sort of the infrastructure that we have and how our industry is set up, it really allows for this to be a very successful business – really allows you to have very successful practices. So, let's keep going here. So, just a little bit about me. And many of you have met me already, but I'll just give you a little bit of background. And I like using this picture because it's the week that I started seven years ago. So, there's a lot less gray involved in the hair and the beard. It's like a time capsule. But I think it's probably time to change that picture. But anyway, six years with Oticon. My background in general has been in medical devices, about 15 years or so in medical devices before that. So, I worked in classic surgical supplies and blood glucose monitors on the diabetes side. And then before that, I was in consumer health care where I ran ChapStick, believe it or not, the lip balm for the US for a few years and Robitussin as well. So, some consumer health care experience. I started my career in retail. So, obviously, I can understand how you guys operate when it comes to dealing directly with a consumer. And then, as was mentioned before, my background educationally is a BA from WashU in psychology and history and an MBA from Cornell. So, first thing I want to talk about is reassurance. I kind of talked about that when I first started, which is what does the market look like? And I think it's, you know, again, we had this conversation last year. 2022 is looking pretty flat, okay? The overall growth in 2022, meaning number of hearing aids dispensed in the US market was really a little bit less than 1%. All that growth really came from the VA. So, when you think about how the hearing aid industry is structured, it's really two main channels. It's the VA, which is a completely, you know, sort of closed loop system, except for, of course, you know, VA community care and choice, VA choice, which kind of floats into the independent market a little bit, but it's a very small segment. But in general, VA and commercial are two separate channels. The commercial channel, which is where all you guys play, where Costco plays, where, you know, Miracle Ear plays and Hearing Life and all the large retailers and Costco, as well as all the independent folks like yourself, that's all the commercial channel. I'll talk about that in a second. So, if you take the VA out, you look at the commercial hearing aid market, again, this is VA out. Last year was down. It was weak. And a lot of that, again, is consumer uncertainty. It was inflation. It was a lot of macroeconomic factors, a number that really kind of led to a slowness in the market. You probably saw that in some of your practices. That inflation and that consumer uncertainty hasn't really gone away. It has to some extent. And if you watch, you know, if you watch the financial news, you can see that inflation is starting to wane and consumer uncertainty is starting to come back, but really not that aggressively. However, if you look at our market, again, the commercial hearing aid market, the growth this year is 8%, which is really fantastic to see how much of a rebound the market has taken, meaning the market or the arena for hearing aids. It's very similar to 2021, which coming out of COVID was a massive increase, but in 2023, very surprising. When we at Oticon, when we do our projections for the following year, we have to assume that the market's going to grow. And we assume that the market for hearing aids is only going to grow about 1% in 2023. So it's really nice to see how quickly this has kind of turned around and is growing so quickly at 8%. That is actually faster than sort of the average. The average, if you look back the last 15 years of hearing aid growth, it's really about three or 4% a year. So you can see there's a little bit of pent up demand. People who chose not to buy hearing aids in 2022 are buying them in 2023. And then I think now that all this sort of stuff is hopefully getting behind us, we will see a nice steady growth of the demand for hearing aids over the next, really over the next 15 years. And it'll probably be three or 4%. So again, this is why the title of this section is reassurance, because I can assure you that despite what you might see in the news and where there might be some consumer concern, et cetera, the hearing aid arena is very, very resilient. There is a strong demand for products that we make and the services that you guys provide. So the partnership between the manufacturer and the hearing instrument specialist has to stay tight because by working together, we will fulfill the demand that will undoubtedly increase in this marketplace. The number to the right is the increase in the number of hearing aids sold per week on sort of an average basis. So we're seeing a nice steady increase of people coming in and demanding hearing aids and demanding the services that you guys provide. So the other thing that, and again, this is a slide I showed last year. I show this all the time. You may be bored by this slide, but it's so great for me. I love looking at this because, and I kind of joke around with my staff here at Oticon, that we're sort of entering the golden age or the silver age of hearing aid sales. Because if you look at the age of the first time user, which was 69 years old, and you know, you take 2023, you subtract 69, that's 1954. So if I pull up my cursor here on my screen, hold on a second. Yeah. So this is 1954 right here. Okay. What happens, this is the number of babies born in the United States in 1954. Which is again, 69 years ago. So the age of the first time user is 69 years. What happens after 1954? A really nice steady growth for a while of people entering this segment, meaning the sort of the baby boomer slash 69 year plus segment of people who are the sort of the sweet spot for hearing aid sales. So it's great because the industry, meaning the infrastructure where you guys are providing services is very well equipped to take on this demand. You know, if you look at all the available hours of hearing instrument specialist time in the United States, there is enough hours in some states, some states are different, some communities are different to accommodate this. We just got to sort of match up the patient increase with the hours. And that doesn't always work. And you might be, you know, overloaded in your practice because you have this significant demand that you may need to hire more folks. On the flip side, you may have gaps in your schedule, which will hopefully be filled. So, but it's interesting to see this because we're, if you look, if you go back a slide, you know, this 8% growth is very much aligned to the growth of these, of these patients that are entering our category. So I can't talk about the hearing aid world without talking about OTC. I've been talking about OTC since I joined. I literally joined, many of you know, my predecessor, Pierre Lawrence. And then when I, when I got my offer back in 2016, and I met with him for the first time, first topic he talked about was OTC and how the industry is going to obviously be impacted by this, which it definitely has. And I'll, I'll talk about that in a minute. But what was so interesting about that is I, I had been working for Johnson & Johnson prior to that, and I dealt with the change in the Medicare laws for diabetes care where competitive bidding kind of took over the, the, the reimbursement rate for, for, for diabetes care. I was so psyched to join the hearing aid world because I was done with, you know, lobbying and DCA. Well, sure enough, day one of my experience in the hearing aid world, we're, we're managing another, let's call it political issue. I also, by the way, it was with Pfizer when we were dealing with the behind the counter issue with pseudoephedrine. So I seemed, I can't seem to get away from this kind of stuff. But anyway, so back in 16, we started talking about this. The, the OTC law was approved by Trump, meaning written into law in 2017, but did not actually go into effect for five years. So I've kind of lived both sides of this in my last seven years in this industry, and it is now officially part of the world in which we live. And, you know, Oticon has always been very supportive of OTC. We believe OTC is a, is a, is a great way for, for specific patients who need, you know, amplification and they need help with some elements of their hearing loss that would work. We, as an organization has decided not to pursue OTC. We think that, you know, there's business reasons behind it. Meaning, is it going to be profitable versus is it aligned with our history, our legacy and our brand? And we don't, we don't believe that's the case, but it's. Again, it's sort of like our own personal decision as Oticon, but I do think it is a good thing for, for the population of people with hearing loss in the United States. So big question is, are over-the-counter hearing aids impacting your business? That's more of a question for you. I'd love to talk to you about that a little bit in our, in our Q&A session. But the real question, you know, about, about OTC is, you know, it's what's going on. What's happened since, since October of 2022, when the final rule went into effect? A lot, what's happened is a lot of, a lot of companies have gotten into the OTC space. Jabra and Sennheiser, Starkey, and of course, you know, other like Eargo, they've all kind of gotten into it. Jabra, Sennheiser and Starkey being the brands associated with some of the big five hearing manufacturers, Jabra being GN, Sennheiser being, being Sonova, Sony being WS Audiology and Starkey, of course, Starkey. So everyone essentially is getting into this, whether it's a big player, like what I just, like those that I just mentioned, or these small upstarts like Eargo and Nuheara and Nano and ND Hearing. The reality is, is that it really hasn't made much of a dent so far. And this is when I say, you know, 21,786, that's the number of hearing aids that HIA tracks. That's not all the hearing aids that have been sold, but it's probably a pretty good proxy for the, the hearing aids that have entered the OTC space. How that sort of translates to the entire hearing aid market, it's really less than 1%. It's about 0.7% of the hearing aids sold. Now, again, that's just Jabra, Sony, Sennheiser, Starkey. The other guys are sort of selling their own hearing aids. They're selling a lot of them, but it's not tracked by HIA. So maybe you double that number, maybe even triple that number and say it's 60,000 hearing aids that are sold. So it's about 1% to 2% of the, of the overall hearing aid market. So very small, very small. Again, providing an important, you know, service or product or need for some of those patients who need it. But the reality is, you know, what we at Oticon have been talking about for a while is that we believe very strongly in the work that you guys all do, that you really can't dispense a hearing aid appropriately without a hearing care professional like a hearing instrument specialist. And you see it, you know, there's a lot of challenges to OTC. Actually, just a quick funny story. I, when OTC launched in October, I went to Best Buy as a civilian, you know, to just dressed in jeans and a t-shirt and asked about, you know, over-the-counter hearing aids. And they had them, they were extremely nice and informed about it, but they weren't behind the counter, which is kind of ironic. It's an over-the-counter product, but they were behind the counter at Best Buy because it's a very expensive product and they don't want, you know, anyone to shoplift it. So it's a concern, but obviously it was there and they were very informed about it. The return policy was only 15 days at Best Buy. It also creates a challenge where, you know, you're going to spend $1,100 on a pair of hearing aids and you only have 15 days to really figure out how it works. Again, a little bit of a challenge there. We've also heard a lot, and this is pretty much, you know, documented that the return rate for OTC is quite high in that what is being discussed versus what is being delivered or being conveyed is not quite what patients had in mind. And they're returning them, obviously what they do after they return that, we can only guess, but my assumption is that they are, some of them are obviously going to hearing agency specialists to get their hearing loss addressed. That's what's going on there. So, you know, there's a lot of hype. I get a Google alert every day with the word hearing aid in it. And every single day there's an article somewhere in the United States about over-the-counter hearing aids, yet that level of hype versus what is actually transpired is quite different. So the one thing that I will tell you though, is that in 2024, we know that many of the managed care companies will put OTC on their formula. So they will essentially be giving out free hearing aids to many of their patients. That will be likely a direct-to-consumer model. It won't involve hearing care professionals, which of course, once a hearing care professional is involved, the concept of OTC goes out the door. That's really important for you to realize, is that once a hearing instrument specialist touches an OTC device for a patient in their office, it's really not an OTC device anymore. The whole point of OTC is over-the-counter, no HCP involvement. So that's a question you got to ask yourself if it's worth it for you to kind of keep that in your practice. All right. But that's sort of the overview on OTC. The other thing, just from an economic standpoint that I should mention, is, you know, if we are not seeing a significant amount of growth of the OTC channel, more of these players that are getting into it means it's a smaller piece of the pie for them. And it's already not a very profitable business because prices are a lot lower than traditional hearing aids. But the cost to produce is probably not much lower than the way we're currently developing prescription hearing aids. That's kind of a squeeze when it comes to profit, you know, higher product cost, lower what's called wholesale price, which means that profit amount is going to be a lot smaller. So as more of these folks enter into the market, it's likely that there'll be less of a pie for everybody. We're already hearing of challenges across the board. Both Ergo and Nuheara have refreshed their senior leadership. So both CEOs for both of those companies have left and have been replaced by more financial people because either their stock prices are too low or their profits are too low or the units that are being generated are too low. Ergo specifically was a CEO. Nuheara was specifically their U.S. president. But the other folks, I don't really know too much about in terms of what they're doing. But again, I've also spent some time visiting CVS and Walgreens asking for Lexi. And most of the time, pharmacists really haven't heard about it. It's not really sitting on the shelf. The one thing I will tell you, though, is Best Buy is doing a test. I believe it's 600 stores of their entire array of OTC hearing aids. So we'll see how that works out for Best Buy. Being an ex-retailer, just like you guys are, inventory is very expensive, especially inventory that doesn't turn over. So if they've got a lot of inventory on their shelves of OTC hearing aids that doesn't turn, that means that it's not necessarily successful. So we'll be monitoring that to see how it goes. And again, just to be clear, I may sound a little bit negative. This is something that, of course, Oticon was thinking about and we were considering. We have our own legacy and our brand issues, but we also have the business side of it. This is actually going to be a profitable business for us. And at this stage, we decided it wasn't the right move for us. Just a couple of questions for you. And again, I want to be as objective as possible. But also, I was asked by IHS to really, what can I convey to you guys today that helps you grow your practice? And if you are considering OTC, I just want you to think about some of these questions. Will selling OTC instruments possibly enhance your practice? You could argue that there are loss leaders where they bring people in, totally get that. But the profit that you make from an OTC device, does that cover your hourly rate of operating your practice? Really important to understand if that's worth it. Or is that hour better served either doing marketing for prescription hearing aids or, of course, fitting patients with prescription hearing aids? So what I have seen and just some of the customers that I've spoken to, they either have front office staff do their selling of OTC or they have tech people doing it, but they don't have their hearing instrument specialists doing it because their hourly rate is a lot higher. And hence, you're not going to necessarily make back that profit in that hour if you have one of your hearing specialists actually working on it. So just a thought. The other thing is for us is we are very, very focused. This is just, again, I was told not to talk too much about Oticon, which I won't. But I just want you to think about the suppliers that you work with. And are they fully focused on helping your practice thrive? Because when it comes to over-the-counter hearing aids, those are potential opportunities for patients to leave the prescription channel or the independent prescription hearing aid channel. So it's just important to realize about, think about who your partners are and are they fully focused on helping you drive your practice? All right. So a couple other things, and I think I'm doing pretty well on time here. We got about 20 minutes left before we go to Q&A or maybe about 15 minutes left before Q&A. A couple of consumer insights that also should reassure you going back to that original comment. And this is all from MarketTrack. I shared some of this last year, but some of you may be new. And I just think these are so important to understand that despite all the noise that you're hearing in the market and what's going on, that the core businesses that you guys are running and you're operating in are really doing the right thing. And we know this from the MarketTrack study, which is a research study that HIA, by the way, I didn't mention this. I used to, I was the chairman of HIA. I vacated that role about a month ago. And the new chairman is Sandy Brandmeier, who's the president of SANOVA. But HIA sponsors this MarketTrack research study every few years. And it's a, it's a really robust study. It's probably 200 pages long and a lot of questions being asked mainly to consumers and to hearing care professionals, but mostly consumers. And a few things that you should just be aware of, 80% of consumers are still being fitted in person by HCP. There are some self-fitting going on, of course, some on the OTC side. The middle top is probably the most important thing. Despite having the highest prices in the world, across the hearing aid world, 90% of patients or higher are satisfied with their hearing care professional. The overall experience is very satisfying. When you think about, you've all experienced this before where somebody's walking and really can't hear that well, all of a sudden they're hearing the birds, they're hearing, they're able to talk to their grandkids. It is a massive life-changing difference for these folks. Hence, I think that's why the satisfaction rate is so high. The top right I thought was really interesting also, and it kind of goes back to the OTC thing, is that hearing aids are complicated and hearing loss is complicated. It's not mechanical. Like glasses, you just put something on somebody's face and it fixes their eyes. Hearing aids is very sensory neural. Every ear is different. Every brain is different. So people need a couple of visits to really get the hearing aid sounding right. Both ears may not be right. They may not have the right setting. It's a relationship that patients have to develop with their hearing care professional in order to actually get the fit right. I think that's another thing that the folks who have really pushed for OTC don't really understand. This is a relationship that has developed between the patient and the hearing care professional. The other thing I thought that was important is 85% of HCPs set the right expectations. What I mean by that, what is meant by that is they're not there to, in most cases, patients understand that you're not there to just sell them hearing aid. You are there to actually tell them what's going on, tell them what their options are, and then help them with their hearing loss. I think those bottom two, the 85%, 84% on HCPs are good at considering individual needs. Those are really high numbers for the market track study. It says that patients are being serviced quite well by you. There's comparable studies to this done all over the world that typically the service that is offered in the United States is top of the list. The last one I should say is 77% of HCPs let them take just the steps they want. That's really the patience that you guys have with patients. You're not forcing them out the door with hearing aids. You're allowing them to try it. You're answering their questions. Again, overall, all these stats are saying that patients are believing that services that they're offered by hearing issue specialists are quite good and quite effective. This is a big one. Let's talk about managed care for 10 minutes, and then we'll wrap this up. Managed care is definitely not going away. It is something that is impacting our business both in a positive way and a negative way. I'll just be very neutral about this, but I just wanted to give you the overall heads up. 44% of hearing aid non-owners say that having insurance would motivate them to buy hearing aids. That's an important thing to understand. This also came out of the market track study. Important to realize to understand that it wasn't that I have a hearing loss and my mother or my husband or my son is telling me to get hearing aids. The number one motivator was knowing that they have insurance. Very interesting. I think that's an opportunity for many of us to convey to some people who are non-owners to potentially move over to the ownership side. 30 million patients right now have Medicare Advantage in the United States, and 94% of them have a hearing benefit. That's a lot of people that now have a hearing benefit. When people say, does Medicare not cover hearing aids, it absolutely does. In fact, half of Medicare beneficiaries now have Medicare Advantage, and 94% of them have a hearing benefit. It does. Medicare does cover hearing aids. You can definitively say that. It's about half of the beneficiaries in the United States. Just understand that. There's the flip side to this, which is the most profitable part of our businesses, for me as well, is the out-of-pocket side of the business. It's private pay, cash pay patients. That's still about 57% of the overall market, but Medicare has really taken a piece of that. Last year, it was 18%. So far this year, it's about 22%. What does that mean? It means a lot more patients coming into the category. What it also means is a lower profitability per patient when it comes to managed care, because you're not getting the full supply value of the hearing aid that's sold. You're just getting a fitting fee. In a lot of cases, your patient, which you may have sold a pair of Oticon Reals to three years ago, or at the time it was Oticon More or Oticon Open S, may have gotten $6,500 for that pair of hearing aids. Today, you're getting a fitting fee, which might only be $1,000 or even less, $900 or $800. Big change in the market that we all have to manage. There's a massive increase in managed care. It's about 27% growth in managed care so far this year. Taking a bite out of the out-of-pocket business, but overall, the market is growing. There's still plenty of out-of-pocket patients to go after, but I'm sure many of you are feeling a pinch of managed care impacting it. For Oticon, it's a tough one for us because they definitely hit us from a profitability standpoint. We have to offer them because our patients are demanding it, but we also have great partnerships with our managed care companies because they are obviously working on getting as many of these patients into the channel as possible to help drive the market accordingly. It's a very nuanced approach that we have to take. Managed care is not the enemy, definitely not, but they also are generating a significant amount of lower profit units, which I fully acknowledge. It's something that we just have to balance. I think one of the important things that I've seen, and this is just something that I work with customers all the time, is what's the right balance of managed care in your practice? Is it 100% managed care? Is it 1% managed care? The most successful practices that I've seen take about 18%, 19%, 20% of their units that they're selling are managed care units, and they're also being very choiceful about which managed care plans that they're using, and they're even being more choiceful about which hearing aids they're selling to managed care patients. A couple things there to understand. Obviously, you want to work with the managed care companies that you feel work well with your practice. The fitting fees that you get for higher levels of technology obviously would compel you to sell more premium hearing aids to managed care patients. Then it's how do you balance it with your out-of-pocket patients as well. Obviously, if I'm in your shoes, I am pushing and generating as many out-of-pocket patients as I can, meaning private pay, cash pay patients, but I'm balancing that with managed care because as a community, hearing instrument specialist, I want to be able to really sell to everybody in my community, but how do you balance it? There are some cases where I've seen people be extremely successful with 100% managed care. I've also seen situations where people pick and choose which managed care companies they're working with and which levels of hearing aids they're selling. It's a very individual decision, but it really behooves you to understand what is the best mix of managed care versus out-of-pocket that you are conveying or that you are indoctrinating into your practice and with your team. Hopefully, that makes sense. I'm trying to convey neutrality here, which is important because there are a lot of benefits to managed care, but there also are a lot of challenges. All right, let's keep going. A couple of things. I won't go through all this because you guys will have these slides later, but one of the things that's also really important to be aware of is that there's a lot of movement in Washington, D.C. right now about concerns about Medicare Advantage, not specific to hearing aids, but Medicare Advantage overall. Are the insurance companies essentially making too much money? Are the benefits that are being offered to patients the right level of benefits? It's considered supplemental services, which is essentially hearing, dental, and vision. Are there deceptive marketing practices happening? There were some challenges that the FTC found with pharmacy benefit managers. That's the ESIs of the world or care marks of the world, big pharmacy benefit manager owned by CVS. The same question might be applied to the true hearings and hearing care solutions and United Healthcares of the world. It's been under the radar for a while and the U.S. government is starting to take a look at the overall Medicare Advantage channel, which again, I don't think anything will happen anytime soon, but five years down the road, this is how these things start to bubble up in Washington, D.C. All right. Other trends I should just mention, I mentioned this last year, so I'll buzz through this real quick, but I want to say a couple of things. Modern seniors, really quick, my mom can program the VCR in the 80s. Now she's got a Ponto. She's got an Oticon Reel. She's got a Connect Clip and she's programming it all herself. Super modern seniors that we can't take for granted. They want to know how these devices work. Aging population, I talked about that with baby boomers. A lot of new news recently with the Achieve study about untreated hearing loss. I'll talk about that in a second. Connectivity and digitalization, absolutely a big trend for every manufacturer in this space. How do we get more connected and how do we get more digital, both on the apps which we work with, as well as the fitting software. Pace of innovation is not stopping. In fact, it's ramping up. We're really seeing launches of new products every six months from all manufacturers. That keeps things fresh for you to tap into your database and get patients who are interested in the newest, best thing to come in and buy a new hearing aid. There's still bad actors out there. These are the online sort of gray market sellers of hearing aids, which is something that we at Oticon are very much against. We will protect our customer base by taking legal action against some of these online sellers, as well as a lot of these manufacturers out there that are making false claims about their over-the-counter hearing aids or hearing aids in general. We at Oticon are very, very keen on monitoring the market. What we'll typically do is we'll send them, this just happened with a site called Club Hearing. Club Hearing was selling over-the-counter, sorry, they were selling Oticon directly to patients. We sent them a cease and desist letter and they've just last week taken all the Oticon stuff off their site. We're very aggressive about that. I think we're more aggressive than some of the other manufacturers out there, but we do that to protect our constituents or our customers like you guys are partners. All right. I mentioned the ACHIEVE study. I won't talk about this in too much detail. It's all really interesting news for us as a industry. ACHIEVE study, that's the right side, talks about an older adult's increased risk for cognitive decline. Hearing intervention slows down the loss of thinking and memory abilities, 48% over three years, pretty substantial. On the left side is the U.S. Surgeon General's advisory, which is recognition of the health consequences of social isolation and loneliness. Hearing aids is a prevention strategy to prevent or preventing loneliness and social isolation. Again, these are documented papers that essentially very respected people are conveying to the market. I urge you to take a screenshot of this. I just won't go into too much detail on this. Take a screenshot and read them yourself because it's really important information that you should convey to your patients who might be on the fence. So stay the course. This is really my wrap-up. Okay. There's still a lot of work to be done to get our patients addressed with hearing loss. 40 million people in the United States with hearing loss, really between five and 10 people with hearing aids, 10 million people with hearing aids. So there's a huge gap out there. Clearly OTC is not addressing that gap. Okay. For mild hearing loss sufferers, it's about 67% of all the sufferers or hearing loss patients in the United States, only 10% of them are wearing hearing aids. We'll see if that switches with OTC. But the big one that concerns me the most is profound hearing loss. It's only 6% of people with hearing loss, but only 70% are wearing hearing aids. That means that 30% are not. So there's still a lot of people out there who are not addressing their hearing loss. And it's up to us as partners, meaning hearing instrument specialists and manufacturers like Oticon who can really help to find these patients and help them with what I think is a very, very terrible situation for them to be in. The more I'm in this industry, the more I sleep well at night knowing that what we do and what we do with our partners like yourselves are really helping people. So it's a great business to be in. Last thing, I think this is my last slide, is really what Oticon believes in, but I think you guys do as well, is this is directly from Market Track. The number one trigger experience, that trigger, that spark, that impetus that patients report is the reason why they obtained hearing aids. It's not enjoying dread or dreading social settings. They want to be social. We as a species are extremely social. We want to be with people. We want to be around people. I'm an office person. I've been coming into the office every day for the last almost two and a half years, even though we have a policy in our office, you don't have to be in the office two days a week. I just want to be around people, right? I want to be around customers. I want to be around patients. I want to be around my coworkers, right? It's the one, number one thing that why people who are, who are, they're dreading these social interactions, why they go and get hearing aids. Okay. So understanding that what the patient needs is so important and that's what you do so well. Only hearing care professionals can deliver the right counseling and fitting experience to patients. Okay. I think that's really, really important that if somebody is kind of dabbling with their decision about how they want to acquire hearing aids, in-person interaction with an HCP is the best way to address hearing loss. I have no problem saying that to a patient, to a customer. I don't think you should have a problem with it either. And then finally, patients need solutions that are tailored to their individual needs. As I said before, every ear is different. Every brain is different. It's non-mechanical solution to address someone's hearing loss. Sensory neural. We need your help to do that. That is it. On the button. 1240. Exactly 40 minutes. Try to be- Almost like you've done this before or something. Let's, let's go to Q and A. Let's do it. That was great. Thank you so much. So folks, as a reminder, you can go ahead and enter your questions into the Q and A box at the bottom of your screen. We'll take as many as we can in the time remaining. We do have plenty of time. So please go ahead and drop your questions there. So Gary, our first question is from Kristen. You obviously talked about, you know, spending your time marketing to potential private pay patients. And so she wants to know in your opinion or experience, what marketing tactics are you seeing as being the most successful to bring in those private pay patients to the practice? Yep. So great question. We actually had a meeting about this yesterday in terms of we're thinking about where we're spending our money next year as a company. And it's a perfect, you know, sort of parallel of what you're dealing with. What I would say is the most successful practices in terms of driving the most private pays in is to be a community hearing instrument specialist. So doing local events, marketing events in your community, whether that's a lunch and learn in your office that drives people into your practice and getting them to try hearing aids and ultimately come back and buying hearing aids is by far the least expensive and the most lucrative. By maybe it requires direct mail, it requires digital media. The tactics for getting there, of course that's different in every market, but doing that local event where you actually interact with the patient in a very non-intrusive way and in a very community oriented and very comfortable way is by far the most effective way to sell more hearing aids and getting those private patients in and helping them understand that it's time for them to address their hearing loss. So to be really specific, we call them lunch and learns, we call them community events, whether it's in the office, it's a lunch and learn, if it's somewhere else in the community, it's a community event, but it's getting a live interaction with you, the hearing instrument specialist, telling them a practice, telling them about your practice and developing those relationships. So how do you actually get them there is a question. In some communities, direct mail is great, some communities it's social media, but it's really about that individual event that drives the most amount of value. That's great, thank you so much for that thorough answer. Next question is from Nicole, Nicole's in Canada and she's wondering how much you know about the Canadian market specifically regarding the laws around OTCs or the presence of over-the-counter devices in Canada? Yeah, good question. So far, Canada really hasn't touched it. So, and I'm very tight with my counterpart in Canada. Canada has a little bit more of a stringent, and Nicole, you probably know this better than I do, but Health Canada is a sort of the FDA equivalent in Canada and it requires a much more rigorous approval process. So that to me, I think is thwarting the ability for OTC manufacturers to win in Canada. Of course, I'm sure these OTC guys are thinking about it in Canada, but as of this point, there's no real movement there to launch it. I will check and I will get back to you because I don't know for sure, but I would have heard about it at this point, but I haven't heard anything about OTCs in Canada. Great, thank you. And Nicole, just to mention, we'll throw up Gary's email address at the end. So if you want a follow-up response, it might be helpful to shoot him a quick email so he can get back to you directly. Yep. Thanks. Next question, Gary, is from Ken. Ken is wondering if there's any study that you're aware of monitoring the patient satisfaction level of private label managed care hearing aids, such as true hearing or relate products versus brand name product satisfaction. Wow, that's a great question. I don't know of any study, but that's something I'm gonna ask about because it's really interesting. I mean, obviously, the TrueSelect, which is made by Signia and the Relate, which I believe was made by Unitron are obviously pretty good hearing aids, meaning they're made by global manufacturers, but I don't know about a study about that, but I can check on that one for you as well. Send me a note about that one and I'll follow up. Great, thank you. Next question is from Linda, and she's just wondering if you can explain more about the relationship between Medicare Advantage policies and the U.S. government. So is there money changing hands there? How much money are the insurance companies that provide Medicare Advantage policies getting paid by the government, et cetera? Yeah, so if you have three hours, I can explain that to you. So I've been dealing with Medicare Advantage and managed care for 30 years, and I still haven't figured it out, but I can tell you a few things. So Medicare Advantage is essentially, it was a law or policy that was created in 1999. And the rationale behind it, which I think is good, is that it allows for CMS, which is the Center for Medicaid and Medicare Services, that's the company that started the organization that manages Medicare and Medicaid. It allows them essentially outsourcing the care of patients to private insurance companies. That was a law that went into effect in 1999. And since then, you've seen this massive growth of Medicare Advantage. So CMS essentially pays the insurance companies a PMPM, per member per month, or sort of an allowable that, sorry, not an allowable, a dollar amount that allows them to essentially take this on for them. It is confidential exactly how much the government or CMS is paying these insurance companies. And remember, there's several players here. There's CMS, which is the Center for Medicaid and Medicare Services. There's the insurance plan, which is like Aetna, Cigna, UnitedHealthcare. And then there's the HBM. That's the True Hearings of the World, the Hearing Care Solutions, Nation's Benefits, et cetera. Those folks are contracting with the big insurance companies. And then they have an interaction of MoneyFlow, which of course, I don't know, because I just wouldn't be privy to that information. And then of course, there's the interaction that the HBM, that's like, again, True Hearing and Nation's Benefits. They have an interaction with me or with Oticon, where we sell them hearing aids. And then they, of course, interact with the hearing care provider, where they, of course, provide them a fitting fee. And then they have an interaction also with the patient, where the patient pays them a certain dollar amount for the hearing aid itself, depending on the type of plan that it is. So it's extremely complicated, but there's sort of that MoneyFlow that goes between CMS, to the insurance company, to the HBM, to the provider, slash Oticon, slash patient. And it's a very complicated process, but what we're hearing is that the amount of money that the supplemental plans are making, meaning the, and again, this is, I'm just trying to stay as objective as possible here, but what the news is lately, that these supplemental plans, which is the Medicare Advantage plans, are the U.S. government is looking at how much profit they're making by obviously offering Medicare Advantage benefits to patients. Hopefully that made sense. I know it's pretty complicated. Hopefully I didn't cause everyone on the phone to fall asleep as I was giving that speech right there, but that's the reality of the situation. It's taken me a while to figure it all out myself, but I'm happy to like literally walk through that with anybody, if they'd like to, individually. That's great, thank you. And I have another managed care question. You're going to be shocked, right? We talked about how managed care is top of mind for everybody. So the next question here is from Michelle Gary, and she's wondering if you're aware of any studies or information that are tracking patient satisfaction with managed care, specifically regarding the relationship with hearing care professionals. As in her experience, the follow-up is very limited and how that might impact the overall satisfaction seen by American users as the managed care grows. Yeah, really great question. I mean, the only thing that, and it's probably something, I definitely need to get a download of this conversation, because it's such a good question for the next MarketTrack study. So I don't know of anything, but it's something that we can definitely ask in MarketTrack is, and the question would be, is there a difference in satisfaction from patient that had managed care versus a private paid patient? And understanding that delta to show that satisfaction rates may be different among patients, depending on what type of, it's called a payment plan they use to acquire their hearing aids. But great question. Sorry, I can't answer it. Thank you. Another, getting back to a more technical question on these relationships between these different companies, Kathleen wonders if you can share any information about if there are kickbacks from the HBMs to the insurance plan for using the particular HBM. You're using a specific HBM or a specific manufacturer. Clears mud to me. The question is wondering if there are kickbacks from some HBMs to the insurance plan because they're using a particular HBM. Oh, I get it. Okay. Yeah, so I think it's a little bit, I get the question, but the reality is every relationship is a one-to-one relationship between the insurance company, like a Cigna and a managed care company like Amplifone. So Amplifone, which is a big customer of ours and a wonderful partner of ours, Amplifone contracts directly with Cigna. So Cigna has given Amplifone the HBM contract and therefore there's no kickback. It's just the relationship that exists. And it's usually, it could be a three, five-year contract. And then every several years, those contracts go up for bid and Amplifone will then try to win back or renew that contract with Cigna. So UnitedHealthcare is a little bit different because it's all vertically integrated. But UnitedHealthcare, great, one of our best customers, they are vertically integrated with their HBM. So there's no contracting going on between Epic, which is now UnitedBenefits, sorry, UnitedHearing, and the larger UnitedHearing, the UnitedHealthcare organization. That's a little bit different. There's no contract there. But another example I think is TrueHearing with some of the BlueCross BlueShield plans. TrueHearing has the BlueCross BlueShield contract. So for a specific state, a BCBS state, all of the hearing benefit patients would then go through TrueHearing. So there's no sort of dual sourcing or kickbacks happening for a specific HBM. It's a single source relationship between the insurance company and like the Cigna and the HBM being Amplifone. Great, thank you. Okay. And a very important follow-up question from Laura asks, what's an HBM? Hearing Benefit Manager. Okay, so it's essentially, an HBM is TrueHearing, HCS, Nation's Benefits, EPICS slash UnitedHearing. All of those fall in the category of HBMs or Hearing Benefit Managers. You may have heard the term TPA, which is Third Party Administrator, but there's a very specific classification of a TPA where they're actually, this is really boring stuff, but adjudicating benefits. If a Hearing Benefit Manager is not adjudicating or essentially paying out the reimbursement themselves, then they can't be classified as a TPA. So that's why the concept of HBM or Hearing Benefit Manager encompasses all of the, let's call it the managed care organizations that exist in the hearing care world. Excellent. Thank you for that explanation. And Laura, I was wondering the same thing. So thank you for being brave enough to ask. Yeah, good question. Sorry, I should have clarified that. No worries. Let's switch gears a little bit. So Hiba wants to know, Gary, what are the latest hearing aid innovations? What things are you most excited about right now? What things are coming on the pike that you can share that you're most excited about right now? Yeah, like what, there's so much happening that makes me very, very excited. Some of the stuff's proprietary, so I can't tell you that, but our launch of Oticon Real for us has been just a blockbuster. And I think the way Oticon works, and I'll really just speak to Oticon on this because we kind of pigeonhole ourselves as the innovation leader. We're trying to figure out what else can we do with the deep neural network, right? With the deep neural network, which we launched with Oticon More and that just got even better with Oticon Real, is a very unique way to process sounds, right? It's really enhancing the sounds that are important and de-emphasizing the sounds that are not. So you're not only just accessing sounds, but you're accessing the right sounds. It's not based on one specific algorithm, it's based on sort of teaching the hearing aid how these sounds are supposed to be heard by a hearing care professional. So what's the next step, sorry, by a patient? What's the next step there? What else can we do? How do we enhance our deep neural network to make it even easier? So that's one thing I would say that is a really exciting thing for us because we're all about the audiological and the technological elements of the hearing aids. We're not so much about the bells and whistles, but we see that in the sound quality that ultimately gets delivered, as well as the ability to discern speech and noise. The next thing though, that's really important is, and this is gonna affect the entire industry, is a new level of connectivity. There's this concept called LE audio, which will be coming out over the next several years, which is really just a better way to interact with your smartphone and sound quality of streaming and overall sound quality to smartphones will be better. And of course, improving connectivity overall to make it almost seamless, and then also connecting to all devices. That to me is also extremely exciting because we wanna make the experience of addressing hearing loss as easy as possible. And to me, ease of use is always really, really important. The other side is, even on fitting software, right? How do we make that even easier for you guys to, I guess, increase the throughput of patients going through your office? Because we want this demand that is definitely coming in, as you heard on the presentation, to be improved. So a lot of innovation happening there as well. I would say, the holy grail for us is, is it equivalent to normal hearing? We can never make that claim, but that's the focus for us, is to make this experience with hearing aids seamless for the patient when they forget that they have hearing aids in. And that's really the big focus for us. We don't want to, I don't wanna talk about off technology ideas. Those are all great. And we will, of course, innovate around them with stuff where you can hit your hearing aid and you can answer your phone. All that stuff's really important. But it's really, for us, it's the core audiological benefit that we're focused on. And we just wanna make it better for patients. And that's what we are. That's where we have our, I think it's 400 engineers focused on in Denmark. So it's great. That's cool. That stuff's really interesting. Thank you for sharing. Yeah. There's a follow-up question here from Sam who asks if you can explain more about what is a deep neural network? Yeah. So a deep neural network is essentially, it's similar to artificial intelligence. Artificial intelligence, though, implies that it's learning in real time. And we can't necessarily say that. But the deep neural network that is built in or onboarded to all of our Oticon Real and Oticon More hearing aids is essentially a network that has been trained with 2 million sound scenes. So we've taken examples of how sounds are actually being interpreted by patients. And we've determined how the patient should hear those sounds. So we're essentially training the hearing aid itself. So when the patient is interacting with one of those sounds, the hearing aid actually can recognize it and know how to then convey the sound appropriately to the patient's brain. And it's not a one-for-one algorithm. It's a network, meaning, and we kind of use my hands here because it's almost like we think about how a brain is. It's a lot of synapses. These are a lot of different pathways that that sound can take that is based on those 2 million sound scenes that have been trained. So it's every sound that gets, let's call it, that enters the hearing aid is different. And it's not going to be addressed in the same way every time. By training all of these different sound scenes, it travels along this network in a different way every single nanosecond, and then it gets interpreted by the brain differently. So again, the holy grail there is to utilize AI to improve the hearing aid. That's something that doesn't exist really anywhere yet. But what we've done is we're consistently with every new innovation that we will come out with, we will enhance the training that the hearing aid has gone through to possibly 5 million sound scenes so they can recognize those sounds and interpret it the most effective way for the patient. Hopefully that makes sense. It does. Thank you so much, Gary. Yeah. Folks, that's all the time we have today. Thank you, Gary, so much for your valuable presentation today about the hearing healthcare arena in 2023 and beyond. And thank you so much to our attendees for your fantastic questions. I think you really kept the conversation going and took it in some really interesting directions. So thank you for your engagement. To get in touch with our presenter, you can email him at garyatodacon.com, particularly Nicole and Ken who had those very specific questions, and Michelle who also asked a question about studies or data. Definitely drop Gary a note so that he can respond to you directly and continue that conversation. A reminder for everybody on the call for information on receiving CE credit for this webinar, visit the IHS webpage at ihsinfo.org slash webinars. And keep an eye out for the feedback survey you'll receive tomorrow via email. We ask that you just take a few moments to answer some brief questions about the quality of today's presentation. Lastly, make sure you join us in Palm Springs for our 71st Annual IHS Convention and Expo, September 28th through the 30th. Don't miss out on the opportunity to earn up to 14 CE credits at this one event. You can earn continuing education and seminars with two education tracks, new product previews in the innovation station, the Expo Hall skills lab and walk, learn and earn, and backed by popular demand. And as Gary alluded to earlier, the CEO panel. As he mentioned, Gary will be joining leaders from other manufacturers to speak on current and future innovations and perspectives that are changing the way hearing aids are developed and engineered to meet today's and tomorrow's patient needs and wants. You don't want to miss it. Join us in Palm Springs, California this September. You can register on our website now to save with advanced pricing. That's IHSconvention.org. Once again, thank you so much to Oticon for sponsoring this webinar, Gary for your great insights, and all of you for joining us today. We'll see you at the next IHS webinar. Take care. Bye everybody.

Gary Rosenblum

hearing healthcare industry

growth

hearing aids

OTC hearing aids

Medicare Advantage policies

innovations

resilience

aging population

untreated hearing loss