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Interview with Stephen Hansbrough, CEO of HearUSA

Stephen Hansbrough

September 15, 2008
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Topic: HearUSA Partnership with AARP

Dr. Paul Dybala: Hello everyone. This is Dr. Paul Dybala with Audiology Online and today I am pleased to be speaking with Stephen Hansbrough, the CEO of HearUSA. Steve, thank you so much for taking the time to meet with me to talk about HearUSA's (www.hearusa.com) announcement of a new relationship with AARP (www.aarp.org).

Hansbrough: My pleasure, Paul. We have already received a lot of great feedback from several small focus groups comprised of industry leaders. Having the opportunity to do this interview with you today is another great stride towards our goal of making sure that everyone understands what we are seeking to do and how it will effect us in particular and the industry in general. In the end, knowledge truly is power.

Dybala: Let's start off with an overview of what this relationship between AARP and HearUSA entails.


Hansbrough: To begin with, our relationship is with AARP Services, Inc. (ASI), which is the wholly owned, taxable subsidiary of the non-profit AARP organization. ASI manages the vendor relationships that support the AARP mission. Next, it is important to realize the power and influence of AARP, the organization. They currently have 40 million plus members and are looking to get to 50 million members in the near future, and all of these members are over the age of 50. According to the statistics that come from Sergei Kochkin, who is recognized as, among other things, the industry's expert when it comes to consumer research, 94% of all hearing aids sold in the U.S. are sold to people 50 years or older, and over 42% of those people belong to AARP. Interestingly, AARP did a survey of their membership and found that over 15% admitted to having a hearing loss but are not seeking treatment. I am sure that this number is actually much higher, because, as we all know, there is a lot of denial involved in hearing loss.

This 15% equates to 6 million people that would be willing to get their hearing checked through an AARP promoted program. The potential upside of this for growing the industry in my opinion is absolutely huge. I think what impressed me the most is how committed AARP and ASI are to improving the quality of life of seniors. They are convinced that a quality hearing health care program is in the best interest of their members, which is why ASI searched for a hearing program for several years and why they decided to take a request for proposal approach to establish a hearing aid program. They are not interested in a cheap hearing aid, nor are they interested in cutting corners. ASI wanted a true value-added plan that they believe is monitorable, consistent, and that will, in fact, improve the quality of life of their members. This is where HearUSA came in, and it is all very exciting.

Dybala: What aspects of HearUSA do you think helped you to acquire this relationship with AARP?

Hansbrough: I think we were awarded the contract because of our medical model, as evidenced through our managed care relationships. Across the board, we demonstrated quality care, best practices, and evidence based patient outcomes. In addition, because we are JCAHO accredited (www.jointcommission.org) and currently seeking URAC accreditation, (www.urac.org), we have certain standards for reporting that are critical to AARP, because they follow up constantly with their members to find out about their experiences and to know if they were satisfied, etc.

Those are pretty important things that went to us getting the contract. Second to that, but equally important, is the fact that we were able to put together a fairly innovative program that focused on value and service, not just another discount or certain cheap hearing aid. For instance, we know that having directional microphones makes a big difference and this feature is important to AARP members for quality of hearing. Rather than let patients undersell themselves, we are looking to have a quality range of products across all major hearing aid manufacturers beginning around $1300 and going up to $2000 plus per aid. This will include a value package with batteries, warranties, aural rehabilitation, and the proper technology. These are all very important things to aligning with the AARP mission.

There is another important point to this program. HearUSA currently has 190 locations and we are going to need to roll out 5000 providers across all 50 states and the U.S. territories as soon as possible. We are reaching out in a very inclusive manner in order to offer every provider the opportunity to participate in this program on an equal basis if they so desire and if they meet the quality of care standards that we are working on with AARP. In line with that, we are also reaching out to several of the best and brightest in the industry, enlisting them to come on and help us develop protocols and testing procedures to best serve AARP members.

Dybala: I think it is important to reiterate that HearUSA is reaching out to expand its network of approved providers to participate in this program, tell us more about this aspect of the program.

Hansbrough: I feel that it is the bond between the hearing care professional and the patient, one encounter at a time, which personifies the industry. I am constantly amazed how, to the majority of hearing care professionals out there, their profession is not a vocation but rather an avocation. They work long hours serving mostly the very young and the very old in an effort to improve their patient's quality of life. These are the people we need to reach out to.

I get so frustrated looking at the industry and wondering with the aging of the population, the great demographics, why, when you take the VA out of the equation, this industry is not growing. I personally believe that the problem lies predominantly with the manufacturers. They do not do a "Milk, it does the body good," or "Pork, the other white meat" marketing campaign, that is, an image campaign aimed at the end user. Of course, I guess you cannot blame them because they do not control distribution. If they spend that money, there is no guarantee that their product will be sold because there is no real name recognition for hearing aids at the end user level. The end user trusts the professional on what type of instrument is best suited for his needs. However, if you look at the distribution channel, we are very fractured. We have different approaches on how to operate and we have neither the money nor the solidarity to launch such an image campaign. Therefore, most of us, again in my opinion, market to the buyer ready consumer, and we are price-oriented.

I think that this opportunity is the best chance this industry has to really grow and grow exponentially, just given the very numbers that we are talking about here. But it is not just growing the industry;it is the added credibility that AARP gives us as caregivers. I think that these are lofty goals, and it is nothing that HearUSA can do on its own;we are just going to be in this as, of course, a participant and also as a gate keeper, monitoring and basically running the program. For it to be successful, we have to reach out to myriad of quality hearing care professionals who are qualified and want to participate. For manufacturers and distribution alike we fully intend to make sure there is no favoritism and that the cost of entry is the same for everyone and that everybody is treated equally.

Dybala: Tell us more about how HearUSA intends to roll out this program and how will individual providers apply to be a part of it?

Hansbrough: Initially, we are going start out with a pilot in Florida and New Jersey where we have company-owned centers and a strong network. We are going to be approaching licensed hearing care providers in those markets to see if they would like to participate. We are computerizing the whole credentialing system, which will expedite the process and help any provider that may be interested to learn the details and let us know if they want to participate.

I think one of the most important things here is that we do not want to be a buying group, we do not want to dictate how much income a professional can make, and we do not want to interfere with the professional's relationship with the manufacturers. We have established a price by technology that AARP members will pay for their hearing instruments. That price is for a certain type of instrument, with certain "add-ons and accessories" that are part of that price. We are visiting the manufacturers and negotiating with them to see if they want to participate. If they want to participate, they will be made an approved vendor for the AARP Hearing Care Program under HearUSA. The relationship between the vendor and the professional remains unchanged. We are not stepping in the middle as a buying group and making the dispenser deal with us. Whatever discounts that the individual provider works out and whatever single unit price the manufacturers set is completely their business. We are not getting in the middle of that whatsoever.

Dybala: You mentioned additional add-ons, what type of extended warranty will be required on these hearing aids?

Hansbrough: There will be a set three year warranty that comes with the AARP hearing care package. That is something that has to be worked out between us and the manufacturer;therefore, that is all part of what the professional is buying. We are not asking the distribution network to stick its neck out in that respect, whatsoever. That has to be a manufacturer issue.

Dybala: Now, you mentioned $1300 to $2000 plus per aid as the price to the patient. What about practices that unbundle their prices, are there options for that?

Hansbrough: We intend for this program to co-exist with current business models. However, consistency is critical to us and AARP. It is important that every member receives the same care, approved products, and pays the same price, so that when they do their surveys on member satisfaction they have a consistent base on which to compare. However, we are tying to form a steering committee so that we can work out these particulars. Obviously even newer technology has been released since this original RFP was done;therefore, higher technology may be added to the mix as well. The protocols, the tests, and how aural rehabilitation will be handled are all factors that we are reaching out to the industry to help us develop a level of care that is within the parameters agreed upon with AARP. We do have a consultation and evaluation fee that is separate from the hearing aid.

Dybala: What will your standards of care involve as far as for verification, fitting, etc.?

Hansbrough: There are best practices clearly defined in this area. We, in turn, are reaching out to a number of you to help us implement those standards in order to make sure that it is something that everyone is comfortable with. We do not want to cause the industry to take on additional costs to do something just because HearUSA happens to do it;however, if a general majority agrees that something is critical to patient care, then it is going to be something that will be required for AARP members.

Dybala: If I am following how the system will work, HearUSA is working to set up a fitting and verification protocol based on various input from experts in the profession, this will become the standard of care for AARP members who participate in this system. We are all creatures of habit, and so I could see where some professionals might follow their own protocols or maybe other instances could arise with sub-standard care. Would HearUSA then revoke their AARP providership? How would you see that working?

Hansbrough: Part of the management of this contract is to make sure that we are doing surveys that are statistically meaningful on patient outcomes. Further, growing the market is contingent upon a better level of care and improved satisfaction. So, yes, ultimately, that would be the outcome if there were documented chronic problems with a provider. Obviously, there will be start-up issues, there can be honest mistakes, and there can be other issues we haven't even thought of yet. I do not want the Sword of Damocles hanging over providers' heads if they make one mistake, but if we have a situation where we have a statistically meaningful number of complaints for a provider, or if there is continued non-compliance with the program, we will have to take them out of the network.

Dybala: Could you be kind enough to go through some of the things that you have been talking about with ASI in terms of marketing and how the initial call center for AARP members to call will work? To clarify, HearUSA will be doing marketing with AARP Services, and patients can call a call center to be referred to participating providers, correct?

Hansbrough: Sure, first of all, we should look at the marketing as a two-pronged approach. AARP has a very impressive marketing campaign, not only through their magazines, but TV commercials, mailers, and ads in numerous publications. They also have an 800-person call center to get information out and listen to patient inquiries and questions. We are contributing to AARP's general fund for the education of their membership. They are going to take that money and promote the importance of hearing care to their members. This is all going to be part of their push for improving quality of life.

On the other side, we will be marketing directly to the consumer about the AARP hearing plan. When that call comes in, the member number is captured and we follow up with those members to see if they enjoyed their experience. This goes back to the fundamental point that this is a great opportunity for the industry as a whole. This is an opportunity to pull together to raise the industry in the eyes of the people that really could benefit from our services;therefore, when a person calls in, they are going to get the closest locations to where they live. It will either be a HearUSA Center or a network member, but we are not going to differentiate.

Dybala: Thank you for explaining that, Steve. My last 2 questions for you today are how do professionals get more information about this program and what do you see as your next steps?

Hansbrough: As mentioned, we are actually in the process of forming both a steering committee and several task forces with some of the volunteers from the distribution side of the industry to agree to some business rules, and we are also going over to Europe to begin talking with the manufacturers. I would estimate that around the end of September, first part of October, we should have enough information to answer more specific questions;however, you can go to our website for updates at www.hearusa.com. Providers may also call our Network number and discuss their questions with our provider relations team: 800-333-3389. Credibility is extremely important, particularly early on in the process, and as soon as we have confirmed information, we will definitely release it. We are working under a time constraint. We have to have the pilot up and running by December 1st;therefore, this is not going to be a long process and we are ready to get things going.

Dybala: Well, thank you so much for taking the time to visit with us. We really appreciate you sharing the information, and I am sure we will be meeting with you again in the short future to see how things evolve. I think this is a really interesting program for the industry and for the profession.

Hansbrough: The pleasure was all mine. Thank you very much for your time.

More About HearUSA

HearUSA is the result of a unity between HEARx Ltd and Helix Hearing Care of America in 2002. HearUSA organizations and plans can also be found under the names HEARx Ltd., HEARx West, Helix Hearing Care of America Corp., and National Ear Care Plan in some parts of the country. Currently, HearUSA is an established and dynamic company clearly interested in providing excellent and affordable hearing healthcare. They provide a unique combination of hearing aid benefits to organizations and individuals as well as direct patient care at approximately 190 company-owned clinics in regions throughout the nation and parts of Canada. Their commitment to quality of care will continue to provide a model for clinicians to follow as more individuals join their network. www.hearusa.com

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Stephen Hansbrough

CEO, HearUSA