Industry Insider | January 2020 Hearing Review
Managed care and third-party reimbursement issues have, in many respects, become the #1 issue facing hearing healthcare businesses—superseding worries about over-the-counter (OTC) hearing aids, Medicare/Medicaid, and other important topics. While reliable statistics are difficult to find, surveys and industry experts tend to indicate that, overall, managed care probably accounts for around 17% of new hearing aid buyers. However, recent surveys suggest that about 40-50% of all hearing aid purchases involve some kind of help in payment for the consumer, even though most managed care plans that include hearing aids cover only a limited dollar amount every few years. But these numbers can vary widely depending on where you live, with managed care contracts being involved in as much as 80% or as little as 5% of hearing care sales. Additionally, third-party reimbursement may be growing faster than any other channel. The Hearing Review recently sat down with Sycle Co-founder and CEO Ridge Sampson to talk about the changing audiology market, and how he views the role of managed care, third-party reimbursement, and how they are influencing the hearing healthcare field.
HR: What impacts to the industry are you seeing with managed care programs?
Sampson: Right now, we’re seeing customers who used to have managed care as part of their business move from 10-15% to upwards of 40% and greater, and it’s really hurting their topline. Revenue isn’t as high as it used to be, and it’s a struggle for practices to stay profitable. We’re seeing some close their doors and some move or consolidate into larger organizations.
HR: What are some of the challenges customers have in working with managed care programs?
Sampson: From what I understand, each managed care program seems to be different, and that can definitely be a challenge for both the consumer and the hearing healthcare professional. For example, most managed care programs have different sets of rules; some are stricter than others, some pay different prices (eg, for fitting fees), and some require more visits.
HR: How can Sycle support customers in working with managed care?
Sampson: For Sycle today, we have tools to help administer managed care patients. In the future, we will add a lot more features so that customers will be able to manage the number of appointments, the number of batteries that are given out, and other things that are part of the various managed care contracts.
HR: Last January, Hearing Review ran articles on the pros and cons of managed care, and one line of thought is that managed care brings patients into the clinic when they wouldn’t have visited otherwise. What are your thoughts on this? Would the clinic have seen that patient without a managed care referral?
Sampson: Yes, I think the chances are excellent they would’ve seen that patient without a managed care referral. Oftentimes, the clinic’s own marketing will drive people into the clinic and then they will discover they’re a managed care patient. It’s not always the managed care reimbursement that is driving the consumer into an office. It’s a bit of both.
HR: Is managed care helping clinics increase their revenue?
Sampson: Well, managed care may be increasing revenue of the clinic, but it is not increasing their profitability. I think that it’s small revenue increases; it’s probably not sustainable in the long-term. If all patients were managed care patients, I don’t think most clinics would stay in business
HR: What do you see the future of managed care being?
Sampson: I’m actually not sure. As there’s more consolidation in the industry, managed care will be one of the many tools of marketing. However, for a hearing aid clinic, they have to be careful not to rely on managed care 100%, or even 50 or 60%. Rather, there needs to be healthy a balance in their other options, like private-pay.
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