An interesting report from CBC Manitoba this month brought our attention to one New Jersey-based startup that has a ton of Canadians visiting its website every month.
Audicus Inc. is a company that manufactures hearing aids and sells them online, often undercutting middlemen like the audiologist’s office by as much as 80 percent. The company’s biggest market outside of the US is Canada.
“There’s a pretty similar dynamic when it comes to reimbursement in Canada, as it is in the US, so it’s still very pricey for Canadians to purchase hearing aids. I think that dynamic has led a lot of Canadians to access our products,” said founder Patrick Freuler, who came to the states to attend MIT. He’s originally from Basel, Switzerland. “We’re big fans of Canadians- they’ve been very easy customers to deal with.”
The problem for consumers of these products all over North America has been price. Freuler said a typical hearing aid can cost anywhere from $2,000-$3,000, which doubles if the client needs a pair. They’re not covered by insurance in the US in most cases and they end up a very expensive product to buy. “What makes things even worse is there’s about 40 million people in the US who have hearing loss but mostly because of the price a lot of people can’t access hearing technology,” Freuler told BetaKit. “So approximately 30 million people who need a hearing aid don’t have one.”
His website sells hearing aids for about $400 to $600. “So we make these products affordable and accessible by cutting out the middle man,” he said.
Freuler came to Boston to study engineering at MIT, and after this he worked for McKinsey, a global consulting firm. He left for a healthcare investment fund where he was able to take his time observing several different spaces and products in the healthcare tech industry. “So when I first saw the hearing aids market it was a time where a lot of other traditional business models like eye glasses and contact lenses were being disrupted by the newer online delivery methods,” he said. “I just saw a very similar trend evolve for hearing aids and that’s where I kind of drafted up the business plan and launched a company.”
Since then Audicus has grown “very, very quickly” over 18 months and has saved consumers $5 million collectively. A large portion of their customers are actually first-time users, often people who needed hearing aids long ago but were “barred from the market”.
As this industry is being disrupted by ecommerce channels, both the audiologists are receiving more criticism from a more educated consumer base, and companies like Audicus are also hearing from the audiologists, who once dominated the market, now undercut by thousands of dollars.
Traditionally, Freuler said consumers would have to go to the audiologists office and simply assume the cost for a hearing aid there is the only option. “In the past there’s been very little transparency on what makes up the price tag, so whats happening now, thanks to the Internet and a higher adoption rate on the web among the 55 plus generation, is an increasing of dialogue.”
“Right now everyone is getting flak, lets be frank. Consumers are getting more educated, they want to know what they pay for, and on the other end there’s companies like ours who want to make the price tax-transparent.”