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The workshop

Introducing audiology: the options

OT  poses a monthly scenario from a practitioner. This month, we look at introducing hearing care in independent practices with Dominic Watson, director of Myers La Roche and Audiology Business Central and author of Sonic Boom and Bust – the danger of separation from ‘The Heard’

01 Aug 2019 by Dominic Watson

The scenario

Charlotte, AOP member

“I am an independent practice owner of a single opticians in the South West of England that has a large elderly patient demographic. The practice has three testing rooms, but we only routinely use two. I am considering converting the third testing room into an audiology room in order to offer hearing care services to my patients. I know that there are a number of ways I could do this and want advice on how to decide which model is right for me and what things I should consider.”

The advice

Dominic Watson, director of Myers La Roche and Audiology Business Central

Having just returned from the British Society of Hearing Aid Audiologists (BSHAA) audiology conference, I can report that integration between optics and audiology continues to be one of the hottest topics in both sectors right now. Independent practitioners and stakeholders in both disciplines are extremely motivated by both the opportunity and the threat presented by the disruption to their traditional models.

Motivation

From a defensive perspective, adding an in-house hearing offer to your optical practice will reduce the chances of patients going to an alternative provider for their hearing care as well as the risk losing them from your core business altogether if the provider offers eye care services too.

More positively, this initiative affords the opportunity of increased annual revenue and profits from existing patients. Furthermore, it provides scope for attracting new ‘external’ hearing customers, to whom you can then cross sell your core optical services.

The addition of a successful hearing service may also add to the appeal and underlying value of your enterprise from a longer-term exit planning and wealth management perspective.

“In my experience, the other essential ingredient for success is having a suitably affluent patient base”

Feasibility

With an older patient base, and spare testing room capacity, it makes sense to consider making provision for hearing in your practice. However, before you consider the available options, it is important to point out that adequate physical space and a suitable number of older patients are only two of the three key pre-requisites that make adding a hearing service commercially feasible. In my experience, the other essential ingredient for success is having a suitably affluent patient base.

It is important to understand that when delivering hearing services commercially in private practice, the relative affluence and discretionary spending levels of patients is more important than in eye care, due to one key distinction. Unlike optics – where only certain segments of the population are entitled to free eye tests and glasses – with hearing here there is no such “qualification” criterion. Free hearing tests and hearing aids are currently available to all who need them via the NHS.

At the same time, the ability of private practices to deliver NHS hearing services, under the current AQP scheme is extremely limited. In practice, this means that the only hearing products and services that you will be able to offer are private ones. With hearing aids costing a few thousand pounds or more for a pair, your patient base needs to understand the advantages and be willing and able to pay for better hearing products and services available privately.

The options

There are two main routes available to you for in-house hearing delivery:

1. Implement an in-house solution 100% under your own control

This approach involves employing a hearing aid dispenser (HAD) or engaging a locum HAD. Based on the scale of your practice, at present this is likely to be only a part-time arrangement for you.

Advantages 

  • Full control of delivery of the service and the reputation
  • Enjoyment of all of the profits generated, rather than just a cut of sales
  • You retain full ownership of your patient data, meaning fewer concerns around GDPR and no compliance issues around sharing patient information with a third party
  • Improved annual profitability and an increased value for your business on exit
  • Full choice of hearing aid manufacturers and products to choose from
  • The stimulation and self-actualising satisfaction of a creating a new aspect to your business.

Disadvantages

  • The capital cost of buying the necessary equipment
  • A whole new sector to learn, master and manage, with the risk of making mistakes
  • Like any new start-up venture, this approach involves outlay and financial risk, with no guarantee of either immediate or long-term profit
  • The challenge of recruiting a suitable HAD or locum HAD with a complimentary ethos for your core business
  • The potential opportunity cost, ie the risk that hearing care becomes a distraction, adversely affecting your core business if you take your eye off the ball
  • Unlike optics, this is not a role you will be able to step into if your hired hearing aid dispenser is unable to work for any reason.

Other key considerations

  • The supply and cost of audiologists in your immediate area. Like all areas, different parts of the South West have variance in the supply of clinical professionals. If there is a shortage of hearing aid dispensers within a reasonable commute of your practice, then choice, quality and cost may be an issue, as can continuity. You need to consider the issue that if you struggle to recruit a decent HAD during the set up phase, you may struggle to provide continuity of service if they elect to move on and you need to replace them
  • What services should you offer? As well as the core staple of hearing tests and hearing aids, should you also offer micro suction? And beyond this, is it commercially feasible and sensible for you to offer any other specialisms such as tinnitus solutions?
  • To minimise your learning curve, seek unbiased advice from a specialist independent consultant not aligned with any of the hearing aid manufacturers to ensure you get off to a flying start.

“If your practice fits the key criterion of having a large, older, affluent patient base and you have sufficient space to accommodate it, then adding a hearing service is potentially a shrewd move”

2. A Clinic Partnership Arrangement

A clinic partnership arrangement would involve you granting permission for a third party audiologist or audiology company to operate from your spare testing room; and typically a level of commitment to proactively promote your clinic partner’s hearing services to your patient base. In return, you receive an agreed financial reward.

This remuneration normally takes the form of a room rental payment or a commission on hearing services and sales, or a combination of both. There are a broad range of providers available and they operate in a variety of different ways. Not all will be able to provide immediate coverage for your practice location. 

Advantages

  • With no up-front capital expenditure required for equipment and no direct costs for staff, this approach financially de-risks the venture for you
  • No recruitment costs or hassles
  • A much lower time input for you in terms of implementation, this approach avoids you having to learn the minutia of running a business in a whole new healthcare sector, or from having to negotiate with multiple new suppliers
  • The benefit of having an experienced operator managing the service.

Disadvantages

  • Risk of your clinic partner overselling to your patients and reputational damage/loss of patient goodwill to your core business via association
  • It is harder to manage or influence the quality of the customer journey and aftercare, which might be a potential risk to your practice reputation
  • Data projection and GDPR complications 
  • Risk that the partner company may have a hidden agenda. For example, they perform well for an initial period to capitalise on early easy win sales, but fail to provide a long-term service or aftercare for your patients. Again, this risks reputational damage to your practice via association.

Partnerships

There are a broad range of clinic partnership opportunities to choose from. These can be categorised into three main types, which each, again, having potential advantages and disadvantages that you must consider.

1. Partnering with a local independent audiology practice

The advantages are that they are most likely to share a similar ethos and long-term outlook, and have better local knowledge and focus than larger regional or national players. They are also likely to be able to offer the widest range of products and services.

The disadvantages are that they may have limited resource with little or no back up for the main hearing aid dispenser. They may have less sophisticated systems and less experience of successfully operating within an optical practice than the other options.

2. Partnering with a hearing aid manufacture/national hearing chain

The advantages are potentially that these providers will have more systems, support and back up, as well as more experience of successfully implementing and operating clinic partnerships within an optical practice than an independent private audiology practitioner.
The disadvantage is that they are likely to only offer a limited choice of hearing aids to your patients, ie only their own brands.

3. Partnering with an optical chain that offers clinic partnership

The main advantage is that these people originate from the same world as you, and therefore typically have the best insight and experience of how to effectively implement hearing service into the optical customer journey with sophistication and sensitivity.

The disadvantage is that they typically offer a wider range of products than the manufacturers own clinic partnerships, but this is more limited than what a true independent can offer. Any future optical practice acquisitions of nearby competitors by your clinic partner’s group could change the dynamic and create a potential issue.

“The addition of a successful hearing service may also add to the appeal and underlying value of your enterprise from a longer-term exit planning and wealth management perspective”

Other considerations

Larger companies may have charming CEOs and slick sales teams, but remember that their offer is only as good as the HAD on the ground. I would strongly recommend that you meet the actual HAD who would be working in your practice, before signing up with any provider.

Check out multiple reference sites and ask them about specific details in terms of financial performance compared with what was projected.

You don’t have to accept the first contract/commercial terms you are offered, be prepared to negotiate. In my experience, commission and contractual terms vary not only between different hearing partnership companies, but also between different implementations from the same company. Make sure you obtain the most favourable commission rates and the least draconian terms. Seek to reduce the notice period for the arrangement and any ‘prohibition’ clause that prevents you operating an alternative hearing service after the notice period.

A final word

If your practice fits the key criterion of having a large, older, affluent patient base and you have sufficient space to accommodate it, then adding a hearing service is potentially a shrewd move. However, effectively implementing and fully capitalising on a hearing offering in your optical practice via any of the options is not easy. The downside risks should not be ignored or taken lightly. They are very real. Likewise, irrespective of the solution you choose, even if you end up with best audiologist in the world operating within your practice, they can only deliver if you proactively point patients in their direction. It won’t magically happen. Just like with contact lens uptake, there is a direct link between how many patients you discuss the products and services with – and the uptake.

Image credit: Getty/erhui1979

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