Hello. Welcome, everyone, to the IHS webinar, Navigating the Hearing Healthcare Arena in 2024, sponsored by Oticon. I'm your moderator, Sierra Sharpe, IHS's Director of Professional Development. Thank you so much for joining us today. Before we get started, I just 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. Closed captioning is also available and can be turned on using the Zoom toolbar as shown on the screen. This webinar is available for one continuing education credit through IHS. The CE quiz and information about how to receive the credit can be found on the webinar webpage, which is shown on the screen and is linked for you in the chat box. 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. Following completion of the CE quiz, you'll be asked to take a quick three-question evaluation. We appreciate your feedback, and we use it to create future content for our valued IHS members. 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 former chairman of Hearing Industries Association. Gary Rosenblum has been president of Oticon Inc. since October 2016. In that role, he is responsible for leading the U.S. Oticon organization, which includes the 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 a BA in psychology and history from Washington University in St. Louis, and then he received his MBA in business strategy from Cornell University. Gary is a former chairman of the Hearing Industries Association, the national trade association representing global manufacturers advancing hearing technology, public policy, patient safety, and education. And as you can see, Gary has a lot to cover today. At the end, we'll move on to a Q&A session. On your bottom menu, you'll see icons for chat and for Q&A. Try to keep general conversation in the chat box and all questions, which you can send at any time throughout the presentation, in that Q&A box. And now let's go ahead and get to our main presentation. Take it away, Gary. Thanks a lot, Sarah. Share my screen here. All righty. Well, thanks, everybody. Thanks for having me again. I think this is the fifth time that I'm doing this, which is awesome. I actually love this because I learn a lot from you guys. Hopefully, this is not just a lecture. I hope this is a dialogue because hearing from our customers out there and our partners is always really very helpful for me. I think many of you have met me. I've been in this industry now for almost eight years, and I'm hooked on it. It's fascinating. When I heard about the job to work for Oticon, which is what I called it the first time I saw the invitation, I thought hearing aids, I thought this is going to be pretty stodgy. It's anything but. It is super dramatic. There's always stuff going on, and there's a lot of exciting things happening every single day, which keeps it really interesting. So I am definitely in it for the long haul. So I appreciate if you guys are working with us today, I really appreciate that. It's a wonderful industry to be in, and that's really the right segue to talk about because I am a New Yorker, so I tend to be paranoid sometimes. I'm not paranoid about our industry. I think it's in really good shape, and that's what really the main theme is to share with you today. I mean, it's a very resilient industry. It's a very resilient arena, so to speak, and I'm going to tell you why that is. Of course, there's always drama, like I said. There's always watchouts or challenges, and I'll talk about that as well, but I've been in medical devices for many, many years, and this industry is actually growing faster than most. I mean, I've been in diabetes care and blood pressure and contact lenses, and those industries grow usually 3, 4, 3, 3.5, 4% a year. Hearing aids typically grows 5, 6, 7% a year, which means that still a lot of people out there who are not getting our products, and that's another main takeaway that I want to share with you today is that despite the growth of the industry and despite how long we've been doing this, it is massively underpenetrated, and what I mean by that is there are so many people out there with hearing loss who are not addressing it with hearing aids, and hearing aid specialists are absolutely the people to address this, but it means that there's a lot of patients out there, and we'll talk a little bit about that today, about how to pursue them and where they are and what things you should look for to find more patients to bring them into your practice. So let's jump in. So this is me. For those of you who haven't met me, as I said, almost eight years, about seven and a half years right now with Oticon. I've been in medical devices for really the second half of my career. I've been working for, believe it or not, almost 30 years, and the last 15 have been in med device. Before that, I was in consulting and in consumer healthcare. I actually ran ChapStick and Centrum and Robitussin for the U.S. before getting into medical devices. Some retail experience started my career at Macy's as a buyer for Macy's, and then got my bachelor's in both history and psychology at Wash U, and then an MBA from Cornell. But I'm telling you, this is the best job of all the jobs. It's really cool because I'm a business guy and I'm a strategy guy, and there's always new things to challenge you intellectually, and I think that makes it for a very, very interesting career. So one of the things that I do when I run my business at Oticon is I am a stickler for what I call KPIs, key performance indicators. These are things that you look for to make sure that your business is healthy. Market share growth, revenue growth, profit growth, how many patients you're actually helping, those are really important KPIs. What I thought I would do also is to create a KPI document for the industry. So how's the industry doing? What are the KPIs that determine if the industry is in a healthy spot? And I assure you that it definitely is. First, it's growing, and we'll talk a little bit more about that. Second, is there innovation? Constantly. It's not just Oticon that's launching products every year, but most of our biggest competitors as well as some of the small upstart companies are constantly trying to get into the hearing aid world, mainly because of what I said before, you have 40 million people in the United States with hearing loss and only about 32%, 38% of them are actually adopting hearing aids, which means that there's a huge underpenetrated or unsaturated part of the market. Patient satisfaction is spectacular. This is one of the myths that I think NASM and PCAST got wrong when they were developing the rationale for OTC, is that patients didn't have any place to go and they weren't satisfied with the current technology and there wasn't very much of a hearing care infrastructure. There absolutely is, there always has been for many, many years, and even before OTC, patients were satisfied above 90%. So what that means is that the services that you guys provide, patients walk out of your doors, whether they've purchased hearing aids or not, they're extremely satisfied. And that also bodes well for a medical device industry. Favorable demographics. If you joined this webinar last year, I talked a lot about baby boomers. I'm not going to talk about that this year. The baby boomers though are still there and they're still growing and it makes our industry very buoyant because we have a lot of people entering the 65 plus category every single day or segment every day. And that definitely helps because these people need hearing care. I'm going to introduce a concept called a pest analysis. This is a macroeconomic analysis that you can do to look at how well your industry is doing, what challenges your industry has. So I'll walk you through a pest analysis that tells you that we're actually in quite good shape. Then of course, strong professional and trade association support. IHS is a perfect example of that. Having a loud voice in DC is obviously very, very important. So I would say overall, the industry KPIs are really good, but I'll get into some of the details there in a minute. Let's just talk about the market initially. This is the hearing aid market itself. So overall US penetration is really something that I don't think we talk about enough. And it's low, it's less than 1%, but this includes everyone. This includes all 330 plus million people in the United States. But as a percentage to the population, it may seem like a small number, but it's growing rapidly. In 2023, it was close to 1% of the population engaging with hearing aids. Again, this is everyone's kids, people without hearing loss, babies, et cetera. So it says though that overall as a population in the United States, we are becoming much more accepting of hearing care and realizing how important it is not just to address your hearing loss, but the connection between hearing loss and healthcare. And I think that's another theme that I want to convey for you today is that's a big trend that I'm seeing that is a really important thing that you speak to your patients about, is that it's not just about addressing your hearing loss. There's so much evidence about the link to cognitive decline, fall risk, et cetera. So really speaking about hearing aids and hearing care as a healthcare delivery device is a really important thing that is a narrative that we should be starting to talk about as an industry in general. Adoption rates. This is something that HIA, the Hearing Industries Association, Sierra mentioned that at the beginning. I've been a part of that organization since I joined. That organization puts out a research study every two years called MarketTrack. And MarketTrack actually tracks the adoption rate of hearing aids. And meaning if you have a population of people who have hearing loss, what percent of the population is adopting hearing technology? And it's growing 38%. I mentioned this before, still super low, growing very, very quickly, but still really low and too low, frankly. And what it means though, is that there's plenty of patients out there who have not considered jumping into hearing care technology to address their hearing loss, but also to improve their quality of life. But again, the growth is great, which again, which is a really important part of why I think this industry is quite healthy. This is an interesting chart. This breaks out the hearing aid market performance for this year by channel. And I think there's, I know this is a boring PowerPoint slide and I apologize, but I think, and I breathe in PowerPoint because it really helps visualize what's happening with the business and with the industry in general. So let me just alert you to a few things here. First of all, the overall market is growing at 7.4%. That's the far right of your screen. As I said, that is a very, very solid growth rate. This is the number of units being sold this year versus last year. And with all the challenges we've had with inflation and consumer uncertainty, that really existed in 2022. We saw that go away in 23 and we've seen that continue, meaning the resilience of the industry get back to a normal level at 7.4% in 2024. That number will go down a little bit and I'll explain why by the end of the year, we should probably see that landed around 6%, but I'll explain why in a minute. The next thing I wanted to talk about is where the arrow is pointing out is the managed care market. Now 8.7% may seem like a high number to you. It's actually not. What's interesting about managed care, which some of you I'm sure out there embrace it and have it as a very large part of your practice. Some of you don't, some focus on private pay. Managed care has been a polarizing force in the hearing care world really since I joined eight years ago. It was a very small percentage of the business. It's now, as you see, it's about 21% of all units are flowing through managed care channels at this point. And that number, the 21% actually hasn't grown year over year. It was growing dramatically as a percentage for the last couple of years, but it's essentially stagnated at that 21% as a percent to the total units that are being sold in the United States. But why the 8.7% growth versus last year is so important to talk about is that last year's growth rate was 25%. And the 8.7 is actually reflective of the full year. What we're seeing is month after month, the growth rate for managed care slowed down. And that is actually a very interesting development when you think about how managed care has indoctrinated itself into a lot of the practices. And again, I'm not trashing the managed care. I think it's actually great because it gives access to patients who wouldn't normally get it. And a lot of managed care patients are brand new patients, which is fantastic. But as you know, it's polarizing because sometimes a shift to managed care means a much lower revenue per patient. But what this means though, is that managed care is probably stabilizing. It's not growing as quickly as it was and month over month, it's getting to this low single digit increases. What I was afraid of was the, if you move over one, was the indie cash market was going to get sort of absorbed and scooped up by the managed care market. Meaning those patients who were private pay patients five, six years ago are now managed care patients. What I'm seeing though, is that there's actually a growth in the indie cash market, the private pay market. This is the patients who are coming in without insurance and coming into your clinics as hearing aid specialists. And see that grow at 6% is something that was extremely unexpected. We thought that that would not grow at all this year because of the strength of Costco, the strength of managed care and the strength of retail direct, which I'll talk about in a second. So it was really nice to see that the work that you were doing, which is really most of the folks on this call. I know there's some folks on this call who may be affiliated with retailers, but for your independent hearing aid specialist, it says that you have figured out how to go after patients and bring them into your practice and grow your practice. One of the questions I'm going to ask at the end is how are you doing? What's your percent growth this year? I'm really curious to know what that is because I'm wondering if it's reflective of the 6% because it definitely reflects who the audience is on this webinar right now. Medicaid, pretty stable. Retail direct, 11.6. That might alarm you. That's Amplifon, Costco, Hearing Life, Connect Hearing, et cetera. The reason why that number is so high is because Costco shifted a significant amount of their business from drop ship to centralized distribution. What I mean by that is manufacturers were sending hearing aids directly to Costco clinics for the last 15 years. Costco has shifted to a centralized distribution model where we're shipping pallets of hearing aids to Costco and meaning we, meaning all the manufacturers that are involved with Costco. And so a lot of that ship out happened this year, which is why the 11.6 is such a high growth rate. Typically retail direct is about 4% or 5%, usually growing a little bit slower than the indie cash market. That's why I think the overall growth rate of 7.4 will probably slip down to about 6% because we're not going to see that sell in for the remainder of 2024. But again, 6% for medical device business is a fantastic industry growth rate. It says that the industry is quite healthy. OTC, I just wanted to have, I want to spend a few minutes on OTC today, which is OTC is actually growing quickly, but a very, very slow, slow base or low base, only 1.2% of all hearing aids sold in the United States are OTC hearing aids. And let me caveat that, but that's what we track at HIA. So that's hearing aids sold by, but that's OTC hearing aids sold by Phonak, Starkey, GN and WS Audiology. As you know, Oticon does not go down, didn't go down the path of OTC. We feel like as a manufacturer, a hearing care professional or hearing aid specialist needs to be involved in every, in every transaction. But anyway, getting back to that growth rate, it is a high growth rate, but it's a growth rate based on ship out, not necessarily on consumption. What I mean by that is, are people buying 38% more OTC products this year? No, they're not. It means that manufacturers are shipping it to many more locations and many more customers. Like for example, all of the managed care TPAs in the United States have adopted an OTC segment in their formularies. So it's essentially a $0 out of pocket hearing aid for some of their patients. Again, that's OTC. So the 38% should not be alarming. And you can see 1.2 is still a very, very small percentage of the overall hearing aids sold in the United States. So this to me says buoyancy. It says a lot of success, a lot of resilience, especially like I said before, just going back to that indie cash market at 6%, that is just a spectacular growth rate. I know it doesn't sound that exciting, but it is in my mind. And it says a lot about the work that you guys are doing to find private pay patients and get a high level of revenue for the work that you absolutely deserve what you're doing. All right. So this was something I thought was interesting. I wanted to share where the hearing aids are being sold. And if you want, I can share all the states, all 50 states with you. It'll take me absolutely one second to send it to you. So if you want to send me an email at the end of this presentation, I can tell you where the hearing aids are being sold. This is a little bit deceiving because California has that Costco distribution center. So that's why they have a lot of hearing aids there. But it shows you what percent by state where hearing aids are being sold. And what's interesting here is below Washington, you know, numbers 11 to 50, they're not much different. They're about, you know, 1.5 to 2.5% of the overall hearing aids sold in the United States. So this, you know, of course, I'm always interested just to know where can we go after more patients? How can we work with our customers to go after more patients and really, you know, find that something that I think it's 17 million, 14 million or 17 million people in the United States who are not engaging in hearing care. I'm going to show you that in a slide in a minute. So first place I went to was where are they? First of all, these are the, this is the top 10 states. Interesting. But then you go one step further and you look at what's the penetration. So if you look at the people for people over 65 in every state, how many are there? And of those people over 65, how many of those people are engaging in hearing care? And that gives you a penetration level. And the, the story is quite different when you look at it from a penetration level when it comes to states. And again, California is going to throw you off, but it shows you, you know, in a lot of cases, what the level of engagement is for patients in specific states. And once again, I can show you, I have this data for you for all 50 states. If your state is not listed on here, I'm actually embarrassed by this. I live and work in New Jersey and, you know, we sell a lot of hearing aids in New Jersey, but it says that there's a lot of patients to go after. And by the way, you know, this is normalized for the fact that people have the same level of hearing loss in every state. There's, there's some, you know, there's some assumptions that I've made here, but I can tell you that New Jersey doesn't have people who hear better. Absolutely not considering, you know, if you drive on the New Jersey turnpike or you go to a bar in New Jersey, or you go to a Bon Jovi concert or a Bruce Springsteen concert, there's a lot of people who are exposed to a lot of loud noises. And it's not an issue of New Jersey, New Jerseyans having better hearing. It's just a question of, of our, of our customers, our partners, and us as a manufacturer not finding these patients and getting them into clinics. And that's a critical initiative for us, you know, over the next, over the next five years. Thank you for the text. This is just a message from our folks at IHS telling me about timing, but we're in good shape. All right. So OTC update really quick. Just wanted to give you a little bit of background there. I know this is something that still remains in everyone's minds. You know, the, the original rationale for OTC was affordability access and innovation. I think we can all agree that that was a myth by PCAST and NASA. There's plenty of affordable opportunities out there for people, plenty of access based on, you know, the fact that you guys exist and how widespread you are. Then of course, you know, innovation that we, as well as other manufacturers are bringing to the table. So those were all sort of there for a reason where they, you know, and I just, so you know, when PCAST and NASA developed the, the, the rationale for OTC, no actual practicing hearing aid specialists or audiologists were interviewed or discussed with. It was all academics. So there's just a lot of myths and a lot of misconceptions about the hearing aid market. So, you know, Trump signed a hearing aid act in August of 17. And then as you guys know, we in August of 17. And then as you guys know, we fretted and we're concerned and stressed out and freaked out for five years. And then the guidelines were finally released in October of 2022. And what happened? Not a lot. And I can tell you, you know, as I said, 2024 OTC is about 1.2% of total hearing aids sold. You know, a lot of the OTC brands that existed before the law, like MD hearing and audio and all that, they still exist and they're still selling OTC hearing aids. So what we sort of predicted, which was not a lot is going to change is exactly what has occurred. Not a lot has changed 1.2% of the, of the total hearing care market. And, you know, again, it's now been almost two years since OTC has existed. So I would have expected a pretty substantial market development change or market dynamic change to occur by this point, but it simply hasn't. I think what it says a lot in something I'm going to show you on the next slide is that people really need care. They need, they need a professional, they need a hearing, they need a hearing aid specialist to help them address their hearing loss. Some, some, some articles that have kind of popped up over the last year or so, this is about, yes, the last, last I'd say it's about the last 15 months, you know, Ergo which was sort of the leading OTC deliver has really struggled. They're no longer public. They've been taken private and they're struggling as an organization mainly because of their, their pickle that they got into with the department of justice. But the bottom line is when you're selling hearing aids at the price that they were selling in a direct-to-consumer model, it requires you to spend a ton of money on marketing to get people to your site to buy, you know, what was a $2,200 pair of hearing aids. The business model just didn't work. And I think that's a really important takeaway is that BTC direct-to-consumer has yet to prove out as a profitable entity. Same thing goes for, you know, for listen lively. There was a, there was a, a analyst meeting with listen lively about a year and a half ago, which is now part of GN's organization. And they said that listen lively will probably be profitable in five years. So once again, that that's public information. It says that the DTC model that, you know, has been adopted by a lot of these OTC companies just clearly isn't working. And as evidenced by, by Ergo having a stock price, less than less than a dollar, I think before it was sold. And then as most recently new hero, which was a very, very popular brand of OTC hearing aids, they just announced that they are in administration, which is they're based in Australia and going into administration basically means bankruptcy for them. So OTC doesn't seem to be, or DTC seemed to be the right model for this, for this industry. Last year, Best Buy expanded their OTC hearing aid offerings by offering it in store. We're waiting and seeing on that. I haven't seen any further expansion there. So I'm wondering, and I'm not sure if any of you have seen in Best Buy, if the hearing aids, the OTC hearing aids are still there. So I'm curious to see how that, how that pans out. Bottom right is AirPods. That's a big question. And, you know, I don't worry about AirPods hurting Oticon's business. I do think though that AirPods given the consistent enhancements that they make are likely going to impact the OTC market. And, you know, they are, they are earphones as a, as a category, but if they're offering hearing enhancement, it is, it was something that as an OTC manufacturer, I'd be worried about. The last and sort of off, off subject a little bit is Smile Direct Club. And I'm not sure if you're not sure, familiar with Smile Direct Club, but they're OTC braces basically. And they also have been shut down. And the bottom line for, for why I put this in here and why the overall message is about OTC is that it's just not going to work because people need care. They need a professional, they need a hearing aid specialist to help them address their hearing care and their hearing loss. And that has clearly proven out over the last two years since OTC launched. So I just thought it was important to share that with you. Managed care. I know we talked about this a little bit. Many of you know, Oticon has a very specific stance on managed care, which we'll, we'll talk about later. But what's happening with managed care is Medicare Advantage, which is where most people in the United States who have hearing aid insurance are getting their hearing aids through, meaning the TPAs, True Hearing, United, et cetera. They're engaged in the Medicare Advantage part of Medicare when it comes to delivering discount plans or essentially hearing aid insurance. Medicare Advantage is getting a lot of scrutiny in Washington, D.C. these days because they are, you know, essentially giving away too much money to the insurers and it's costing the government too much money. And there are a lot of people in D.C. who are looking at this really on both sides of the aisle. And, and also Medicare Advantage, because it is run by the private insurers, it's not a, it's not a Medicare specific run program, meaning it's, it's essentially outsourced by Medicare to the private insurance companies. They're essentially taking advantage of it in a lot of cases. You can see some of the, some of the comments here, not only are they making too much money, but also they're not necessarily, they're denying too many claims and therefore a lot of hospitals are leaving these, these, these companies. So, all right, let's keep going. Consumer Insights. And this is something I'm going to share some consumer insights that I did not share over the last couple of years with you. This is also from MarketTrack, which is just a fantastic study. It's about 250 pages of information about how consumers are behaving in the hearing care market. You saw some information I shared earlier about, about adoption rate. We're going to dive in a little bit further here on some consumer insights that I think might help you with how you run your practice. So, first of all, I think, you know, delivering a very high level of service is absolutely critical to capturing a lot more of those patients. I, I'm, I'm sure that many of you have acquired patients because of word of mouth, because you delivered a fantastic level of service to, you know, Betty Jones in your community. And she talked to Sadie about it, who talked to Kevin about it. And therefore, your service is why people are coming into your, into your office. And it's about a high level of satisfaction. So, you can see on the right, you know, for people who own hearing aids, they have reporting a 91% satisfaction level. This, again, is really important because we have the highest prices in the world in the United States when it comes to the retail price of hearing aids. But even non-owners, people who didn't buy the hearing aids, still showing a 73% satisfaction level. The left, though, is probably even more important to talk about. I talked about this a little bit. 40 million people in the United States with hearing loss, but only 17, 17 million of them with hearing, hearing devices. That means there's 23 million without, which means that this is a grossly under-penetrated market for us as manufacturers and, and, you know, hearing aid specialist partners for us to go after. So, and, you know, this industry more than any other industry in which I've worked, the partnership between the manufacturer and, and the hearing aid specialist is absolutely critical. So, I'm hoping that if you don't have a relationship with Oticon, you would consider it because we're very much in this game of capturing more of these patients. This was another one that I did not share over the last couple of years that I wanted to bring up this year, which is only half hearing loss patients have discussed their hearing problem with a doctor. Now, some of these patients have got, may have gone directly to a hearing aid specialist, but, you know, typically when you have a medical problem, which of course hearing loss is, you're going to talk to your doctor about it. But what was shocking to me when I saw this data was that only half, 52%, a little bit higher than half, have discussed their hearing problem with a medical doctor, which says that there are a lot of just people out there with hearing loss who are just not doing anything about it. And that's where we meet through marketing outreach, lunch and learns, et cetera, have to reach these patients and deliver great care for them. The other thing that I just thought was really interesting was the recommendations from doctor, 45% referred to an HCP. That's great, but that's less than half. I would, I would assume if you're, if you're smart and you're a doctor, you're going to refer all of your patients to an HCP. They're saying, take a professional hearing test. Some of them are referring, are referred to an ENT, and that's an overlap between the first one and the third one there, but they're recommending ear cleaning. You know, they're talking about a hearing aid device, but they're not really being as proactive about it as they should. They should be saying to every patient that comes in with a hearing loss, refer it to a hearing care professional, refer it to a hearing aid specialist so that people can address their hearing loss. So you can see, this is one of the reasons why this market is so under penetrated. Great for us, but it is disappointing because a lot more people could have much better hearing technology in their ears today if doctors had a different approach. This is another one that I just thought was really interesting. And many of these things that you guys are seeing today on this presentation, you might be shrugging and saying, yeah, no kidding, Gary. I deal with this stuff all the time. I'm interested to hear at the end of this presentation, tell me, is this insightful or is this the same old stuff? But this one was interesting to me. Half of hearing aid purchasers are first-time buyers. So what does that mean? Does that mean that they have waited just way too long? And we're going to talk about that distance between diagnosis and fitting in a minute. Does it mean that many of these people have only experienced one manufacturer when they have engaged in hearing loss? It was surprising to hear that half of hearing aid purchasers, half, 50% are first-time buyers, regardless of how they were fitted, as you can see in the bottom, whether it's an in-person fit or a remote fit. So to me, that was a big surprise. I thought I would share that with you. This one is probably the most important takeaway from the presentation today, if you're not aware of this. The desire to address hearing loss has improved dramatically over the past several years. So how many of you have been thinking it's seven years between diagnosis and fitting, or six years between diagnosis and fitting? I have been seeing that stat for most of my seven-plus years in this industry. And I missed this when I originally looked through the Market Track study. But what it says, even back to this, this was done in 2022. So two years later, we are seeing... Actually, I'm sorry. This was going back to... Let me fix this. Hold on a second. It's going back five years ago to Market Track 2019. The gap between diagnosis and fitting was six years. Three years after that, it's four years. Who knows what it is in 2024? It could be three years. We are doing another Market Track study. And of course, we will ask this question. But that bodes very well for us, meaning that people are much more quick to engage and address their hearing loss than ever before. This was a big one. So don't miss it. I'm going to share this with you. It might be on the quiz. I was told I was not allowed to give hints. All right. This is another one that is near and dear to my heart, being the president of Oticon. And as you know, legacy Oticon is people first, life-changing technology, life-changing hearing health. Those are a lot of our mantras. And the fact that people across the United States are connecting quality of life with hearing care is really, really important. I think that's fantastic. Back in 2015, less than half believed, and now almost two-thirds believe that it is an improvement in their quality of life. That also says a lot about the importance of connecting hearing care with health care and something that I think will also help continue to propel the growth of this industry. Okay. Pest analysis. I talked about this. This is a, let's call it a framework for understanding the macro-academic effects of the industry. It's political, economic, social, and technological. Just to start off here, you know, political. Back in 2022, I would have said that I was very nervous about this industry because of Build Back Better. I'm a big, big fan of giving Medicare access for hearing aids. It makes a lot of sense. However, what most people don't realize is that with Build Back Better, it would have shifted hearing aids to a DME category, durable medical equipment category, which is subject to competitive bidding, which means that a reimbursement rate, basically a fitting fee, would be set for most hearing aids. That fitting fee would be set based on bids from the lowest bidder. It may have had a massive effect on the industry and essentially rendering everyone unprofitable. I'm very happy that Build Back Better did not pass. Depending on what happens this November, Medicare coverage for hearing aids may pop up again. It's very expensive. HIA did a really good job lobbying against it if competitive bidding is part of it. If it's free and clear, fee for service, Medicare, and there's no competitive bidding, then yes, I'm all in favor of it. But if not, then we will fight to pull hearing care out of Medicare access for hearing aids. Economically, if you guys remember, 2022 was tough because of inflation. 23 got a lot better. Growth rate last year was about 11%. We're still seeing a good growth rate overall based on the economic conditions of our country. So it's a plus. It's going to be about a plus 6% this year growth, like I said before, a really solid growth rate. No real concerns there about the continued growth rate of the industry. Socially, I think what's really key there is the acceptance of stuff in people's ears. People are fully accepting that people are walking around with hearing aids, with earbuds, AirPods, etc. And there's less stigma associated with it. I think that's definitely helping and reducing the stigma associated with hearing loss overall. And then last, technologically, the best thing about having competitors is that it forces us to be competitive. And we need to do that by continuing to make great products, which of course Oticon did this year with the launch of Oticon in 10. But as you can see, some of our other competitors have launched recently. So it's really important that we continue to do so. But again, overall, pest analysis says that we have concerns, but they're manageable, and we're in a very good macroeconomic environment. So final word from us. I'll just do a little bit of a summary about Oticon's stance related to the industry. I thought it was important for you to see that. One thing that Oticon definitely does that I would share with you, some of you may know this, is that we fight the bad actors. When there are gray market online sites out there, we will find out who that is and no longer sell to them. We do not want our hearing aid specialist customers to be undercut by online sites. So we do not allow that to happen. And then we will, in some cases, shut down their sites. In other cases, just stop selling to them, so they won't be able to receive any products from Oticon at all. The other thing that's really important about who we are as a company is our stance on DTC and OTC. We are not getting into this market. We believe both DTC and OTC circumvents our hearing aid specialist customers. So we won't go down that path. We are not going to create an Oticon.com e-commerce site for patients, that will never happen. And nor are we have any plans to get into OTC right now because as you can see, it looks like a pretty big dud. A lot of people getting into it without a lot of growth and without a lot of room for a lot of players. So we've chosen not to pursue that as you know, and we will continue that stance. The latest stance for us was on managed care. Let me be really clear, we are supportive of managed care. We sell to all the TPAs. We think it's important that patients get Oticon technology. However, when it comes to our newest technology, we wanted to give it to our hearing aid specialist customers to allow them to differentiate themselves in their community. This is a product, Oticon Intent. It's just our newest. Now Oticon Real is still available with all TPAs. And I'll talk about UnitedHealthcare in a minute. But Oticon Real is available with all. And it's just that Oticon Intent has been excluded from managed care formulas. But Oticon Real, Oticon Zircon, Oticon Own, all of our product lines are still available on with all TPAs. Specifically for UnitedHealthcare, UnitedHealthcare has removed us from most of their formularies at this point. We're hoping that that changes in 2025, but we are still available on some of United's formularies right now with Oticon Real. We celebrate our partners. As I said before, we really don't like to use the word customer too much. We really like to use the word partner because we believe it is a partnership. We know how the products that we deliver and allow you to use on your patients is allows you to grow your practice. So it's critical for us to make sure those products are good and partnership is great. Improving customer experience is something we are relentless about. We also wanna pick up the phone quickly and we wanna ask, we want to not keep you on hold very long and also answer your questions very quickly when you call us. The last is training center of excellence, something really important for us. It's not just training you on our products, but also training you how to sell our products to your patients. So that is the overview on navigating the hearing healthcare arena. Hopefully some of this information I provided to you today was insightful. I think we're now ready for questions. So thanks a lot for the time and thanks again to IHS for inviting me to do this in 2024. Thank you so much, Gary. That was really great as always. As he said, let's go ahead and take some questions. So as a reminder to our attendees, enter your questions into that Q&A box at the bottom of your screen and we'll take as many questions as we can in the time remaining. We have about 15 minutes for a really robust Q&A session. So whatever questions you have, go ahead and drop them in the Q&A box. Gary, our first question here is from Dorothy who wants to know, do you have any insights as to why PCPs aren't asking their patients about hearing or having more proactive conversations about hearing? So I'm gonna give you my politically correct answer and my blunt answer. Great. Okay. Love that. All right, my politically correct answer is that they forget to do it and they don't have a huge focus on hearing care because they have so many other things to worry about. But the other thing, the real reason is they're not reimbursed for tests in a lot of cases. And if there's no money involved there, they're not too focused on it. And that is a bummer because they should be reimbursed for it and there should be no problem, no reason why they shouldn't be reimbursed for it. That's a American Medical Association question. But there needs to be more overall reimbursement of what's called a preventative hearing care tests in order for doctors to get really behind it. But it's a great question. And that's a great point. Yeah, thank you so much. Some of it is arrogance too. They just don't believe that you need hearing care. I'm sure you've all heard the term age-related hearing loss, which is a ridiculous term. There's no such thing as age-related hearing loss, right? And somehow they make it out to sound okay that, well, you have age-related hearing loss, so you don't need hearing aids. That is not true, not true at all. And the reverse should be the case. You're getting older, your hearing is going a little bit. You should address it by seeing a hearing aid specialist in the local community. Absolutely. Thank you. Next question here from William. I think kind of talking about maybe past or historical market track data, do you know if the time from diagnosis to treatment 20 years ago, was that a 10-year gap from diagnosis to treatment? Do you know if that's what the historical data showed that we went from 10 to kind of six, seven now to you're saying four? I think 10 years ago, it was probably six or seven. I think it was seven for a long time. But recently, just because of how much media coverage hearing loss has received, how the technology is getting better, both OTC and prescription hearing aids, as well as just more information that's out there via the internet, et cetera, people are much more informed and that's why the time period is shrinking. But I don't think it was 10 years ago, it was probably six or seven. Sure, thank you. Next question. So this is about excluding your latest technology from managed care. Question from Michael. Do you think that going forward that all new high-end products should be included from, should be excluded from managed care TPA contracts and delayed maybe a year or so? Should other manufacturers follow your lead on this? Yes, they should. That's my answer. No, I'm joking. I can, I'll expand on this. Of course, that's the way it should be because the challenge that I'm sure you guys have is that the consumer price for, that a consumer pays for a managed care set of devices versus a private pay set of devices is massive. It's a significant difference. And it's very hard for you all to compete with that sometimes. By offering your newest technology as only a private pay transaction, it allows for that period of time to really figure out what it takes to actually dispense the product and not be fettered by or hampered by the requirements of the managed care company. But also, it allows you to differentiate yourself in your community as we are. We're offering great technology with your managed care plan, which is wonderful. But the best technology is available to you only for a limited time. Maybe it's a year, year and a half, two years until the next innovation comes through private pay. So I do think that's the right stance. We are definitely taking that stance going forward. And I'm hopeful that the other manufacturers will follow us, but if they don't, we'll be fine. They are gonna endure the wrath of you guys if they don't do it. So we will continue that stance as Zotica. Great, thank you very much. Next question here is from Damian. I think it's referencing the slide, Gary, that you had showing growth in the different channels. Did you mention that managed care was showing as flat growth, question mark, but it looks like it's growing. Can you expand on that? So maybe your slide showed that there wasn't a ton of growth in the managed care, but maybe it feels or seems like there's more growth in managed care, I think is maybe where Damian is coming from. Can you comment on that at all? Yeah, so we've been tracking HIA, which is the amalgamator of all of the industry data. HIA has been tracking by-channel data since the third quarter of 2020. Before that, we had no idea how much managed care was growing versus retail, versus IndyCash, whatever it was. But since the third quarter of 2020, managed care has grown consistently at 25% a year or higher. So massive growth for managed care. The growth rate this year, meaning 2024 year to date, is 8.3, I think is what my slide said. But so it's still growing and it's still growing at a good clip. It's just growing at a much slower clip than we've seen in years past. What we've also seen is over the last few months is that it's slowing even further. Now that could be an anomaly of just one quarter. I don't know what it is. I can't tell you that it's slowing to a stop, but it's definitely, that growth is definitely slow. So hopefully that answers your question. Thank you. Yeah, so definitely something for us to continue to watch and see if that slowdown persists. Next question here is from Blair. In regards to the 50% of hearing aid sales are new buyers statistic, how does the repurchase of a hearing aid occurring every five years affect that statistic is the question. Well, 50% are first-time buyers. Sorry, give me the question again. It requiring me to do it, it's gonna be hard. How does the repurchase of hearing aids occurring every five years affect that statistic? So like obviously mathematically it affects it, but I think from this, I would also say like, are you finding that that's true? That like most people are repurchasing every five years or are they repurchasing less frequently or more frequently than that? Yeah. And when might we see the balance shift? So it's a more clear majority returning users than new users. Yeah, honestly, I don't know how to answer that one. I don't know if there is a connection. I was very surprised to see that, 50% of all users are first-time users. The five-year cycle makes sense to me. I think that seems right in terms of churn from one set of hearing aids to the next. What's also interesting about that is the average hearing aid in the United States is three and a half years old. So it says that most of those people who have five years in between products are essentially out of warranty. So we could probably pursue them with our database mailings a lot earlier than we have been. But I don't know about the correlation between first-time buying and the five-year purchase cycle. I have to think about that one a little bit further. Sure. And if Sierra, if you wanna give me that person's email, I'll look into it and I'll get back to them. Yeah, I'd be happy to do that. So Blair, I'll share your email address with Gary here after the call. Thank you for your question. Let's see. The next question is from Sarah. And she restates something that you said, which is other areas of medical care sometimes have low penetration slash compliance as well. For example, diabetes care from what she understands. Are there any insights from these other specialties about how to motivate patients and increase compliance with treatment? Yep. I mean, it's a great question. I love this question. I think more awareness at the diagnosis level is really important, right? So for example, did the patient go to see their general practitioner or their ENT about the hearing loss? And then how motivated is the general practitioner or the ENT to get that person treated for hearing loss? And I think that is really the most important thing. And it goes back to what I was saying before, whether or not they're reimbursed for it. I mean, they're in the business, they took the Hippocratic Oath. They're in the business to do no harm and to help people. They should be much more active about addressing hearing loss. There's no harm at all to getting your hearing test done. There's no harm at all. So why wouldn't they push for more hearing tests? And that's something we, meaning HIA, what IHS, we can work together on. This is a campaign that we have actually developed at HIA, which is this hear well, be vital campaign, something we had in place. But it's just about continuing to grow the awareness of hearing loss as a healthcare issue rather than just a hearing issue. And I just don't know if, I think there's plenty of doctors, ENTs and GPs who get that, but not enough. And I think that is probably the most important way to motivate a patient to address their hearing loss. Thank you. The next question, and it's a great segue from what you just said with the hear well, stay vital campaign from HIA. This question is from Monica. Why don't manufacturers do more mainstream education on TV, print, et cetera, on hearing loss and the importance of taking care of hearing? And the comment is that kind of widespread education is out of most independent practices reach, but would potentially help our penetration in that unserved market. Yes, so I would urge you to go to the HIA website, which is betterhearing.org, okay? And see the campaign. The campaign is exactly that. It is a campaign to get people to test their hearings, hearing in general. And we've actually made a lot of traction with the campaign. It's something like 20 million impressions on a yearly basis that we get out of this. I don't know if enough partners, specifically IHS partners are even aware that we've done this campaign. So I would urge, it's a great question, go to betterhearing.org to look at it because all the materials that we have developed at HIA are actually accessible to you. So you can use that, you can post that on your own website, you can make your own YouTube video out of it. It's all available to the market and it actually has resonated quite well. So that's really the best way. For a specific manufacturer to speak to the importance of getting hearing loss addressed, it's a very difficult approach from an ROI perspective. Like is the investment that we're going to make as one company going to pay back in terms of revenue growth? It's a tough one. It's a tough one to convince senior leadership of. But if you do it on a industry level through HIA, it can all contribute a little bit and ultimately deliver a very, very positive result which we have. So I urge you to go to betterhearing.org to find out more about it. Yeah, and just to add that campaign has been really great. We've shared it at IHS across our social media channels as well. So to reiterate, Monica, you can go from HIA's Facebook or LinkedIn or from IHS's and share those posts out to then to your patients as well. The other thing I would add is that IHS, we have it as part of our strategic campaign as well or a strategic plan to run consumer awareness campaigns. And we've been doing that over the last year and a half or so. And we have opportunities to get involved for professionals who might be interested in that kind of topic and helping get the message out there. So definitely reach out to us if you might be interested in getting involved in helping IHS spread that message as well. Thank you for the question, Monica. The next question here, Gary, is from Ryan. What happens to managed care when or maybe if Medicare goes away? Medicare goes away. I don't think Medicare is ever gonna go away. I think it's the third most expensive program that the United States actually spends its money on behind like defense and education, I think it is. So I don't think Medicare is gonna go away. If Medicare does go away, then yes, managed care will go away. Because almost all of the managed care hearing aids that are sold in the United States are attached to Medicare Advantage. There is some commercial insurance there, but I'd say 90% of the sales are through Medicare. So, but I just don't think Medicare is going away. I think maybe he wants to clarify that a little bit further. If you'd like to, Ryan, you can send it a clarification in the Q&A box and we'll see if we can come back to it. You can also send Gary an email. Yeah, if maybe we're missing something about the question. So I'm gonna give you one comment, Gary, and then a final question. The comment is from Kitty who said, thank you for excluding the Oticon Intent devices from managed care. The best hearing devices in the industry should be fitted and serviced by licensed professionals. Actually, all devices should be fit by licensed professionals, but a thank you from Kitty. Last question here for you from Dan. Seems like coming at this kind of from the opposite angle of where Oticon is coming from or the inverse angle. Some of the managed care companies do not offer top-line products in their formularies. What are your thoughts on this? It's bad. They should. A lot of them don't do it because they, they don't want to have to pay a high fitting fee for it. So they've relegated the specific formulary to starting at like a tier two price level. And therefore they're not then required to pay a higher fitting fee for that tier one price. So it's a tactic and it's a bummer because of course you want every patient to get the best level of technology. And if the TPAs are not offering it, it's disappointing. So I am not happy about it is my answer to that. It should, every single patient should have access to tier one technology. Thanks, Gary. Thank you all so much as well for such a robust Q&A session. That is all the time that we have today. Thank you again, Gary, for your time and your appreciation navigating the hearing healthcare arena in 2024. Again, sponsored by Oticon. To get in touch with our presenter, you can email him at garyatoticon.com. He just told me yesterday that he reads all of his own emails and he will respond to you. So definitely feel welcome to use the email address you see there on the screen. If you'd like to continue the conversation with Gary. And a reminder, information about how to receive CE credit can be found on the webinar webpage that's linked for you in the chat box. Last thing before we go, make sure you join us in Louisville, Kentucky for the 2024 IHS Conference and Expo, September 12th through the 14th. Don't miss out on the opportunity to earn up to 14 and a half CE credits at one event. You can earn CEs in seminars with two education tracks, new product previews in the innovation station, our walk, learn and earn opportunities in the Expo Hall, featuring a bourbon tasting, and backed by popular demand, the discussion with industry leaders. Gary will be joining leaders from other manufacturers to share insights 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. That panel will also be moderated by IHS President-Elect, Michael Andreozzi, who's also on today's call. Hi, Michael. You don't wanna miss us in Louisville, Kentucky this September. It's not too late to register. So go to ihsinfo.org slash conference and register today. Again, thank you to Oticon for sponsoring this webinar and all of you for joining today. We'll catch you at the next IHS webinar.

hearing healthcare

industry growth

market trends

consumer insights

managed care

OTC hearing aids

innovation

patient satisfaction

underpenetrated market

hearing care professionals