No one wants hearing aids unless they really need them. But Starkey Hearing Technologies hopes the fact that so many people walk around with earbuds in them will lead to even wider acceptance of devices that are smaller, smarter and equipped with AI technology. I am.
For Starkey, the largest hearing aid manufacturer in the United States, increasing the size and share of the overall market is key. The addition of new technology and over-the-counter models is putting additional strain on an already competitive industry.
CEO Brandon Sawalich said Starkey, like the industry as a whole, had a down year in 2022 in the aftermath of the pandemic.
But now, thanks to its AI-powered Genesis devices, the company, headquartered on 40 acres in Eden Prairie, is mostly back on track, Sawalich said. Starkey’s sales are up 8% to 10% this year, and hearing aid sales rose 10.5% in the third quarter, according to data from the nonprofit Hearing Industry Association.
The benefit of AI hearing aids is that they can recognize different listening environments, such as offices or coffee shops, and adjust to provide the clearest experience.
“You can train the signal processing. The patient will have to do less work and the signal processing will do more of the work,” said Tom Powers, strategic advisor for the Hearing Industry Association.
Starkey isn’t the only company with AI-powered products, but the Genesis suite is making inroads at the company.
“It’s been very well received in the market,” said Karl Strom, editor of the Duluth-based consumer website Hearing Tracker, who has reported on the hearing industry for 30 years.
Sawalich became CEO of the company after his stepfather, founder Bill Austin, learned that several former executives (who ultimately pleaded guilty or were convicted) were involved in embezzlement. was appointed.
Sawalich then began restructuring the company’s leadership, including bringing in chief technology officer Achin Bhowmik from Intel in 2017. The following year, the company began working to add AI to its hearing aids.
Europe dominates the hearing aid market, with four of the “big five” industry leaders based there, and Denmark alone accounting for three of them. Starkey employs his 6,000 people at 29 manufacturing facilities, including his 1,400 in Eden Prairie, and is the only company based in the United States.
In 2019, Starkey ranked fifth out of five companies in Germany-based Statista’s global market overview, accounting for 4% of global hearing aid sales.
Starkey disputes the ranking. The privately held company no longer discloses its revenue, but in 2015 it had sales of more than $800 million. He currently has over $1 billion in revenue, according to industry rankings compiled by Yahoo Finance.
Starkey has a large presence in the United States and is one of the major suppliers to Department of Veterans Affairs systems.
The already complex hearing aid market became even more complex a year ago when the Food and Drug Administration allowed over-the-counter hearing aids to enter the market.
These don’t have the same rigorous oversight as prescription high-end aids, but they were expected to upend the market.
The addition of OTCs disrupted the hearing aid industry, but not as dramatically as some experts predicted.
One reason is cost. According to Strom, OTC prices he estimates can exceed $1,000 per pair. Starkey prescription devices range in price from $2,000 to $6,000, but are also covered by many insurance plans.
For example, millions of people covered by UnitedHealthcare plans, including Medicare Advantage customers, can get prescription hearing aids for as little as $175, said Will Shanley, a spokesman for the Minnetonka-based insurance company. That’s what it means.
For people whose insurance does not cover hearing aids, OTC options are promoted as a cheaper and widely available alternative. You can buy it at stores like Walmart and Best Buy. According to FDA guidelines, OTC hearing aids are intended for people with mild to moderate hearing loss.
The FDA still recommends that patients with severe hearing loss get a prescribed pair.
Sawalich, who wears hearing aids in both ears, said some customers come to Starkey after purchasing over-the-counter hearing aids and being dissatisfied with their quality.
“We have people coming into our local office and they’re angry,” he said.
Still, Starkey also makes OTC devices through its subsidiary Start Hearing, which sell for $899 per pair.
“We have options for our customers and patients,” Sawalich said.
The average age of first-time Starkey hearing aid users is 67 years old.
According to the National Institute on Deafness and Other Communication Disorders, about one in three Americans ages 65 to 74 and half of Americans 75 and older have hearing loss.
According to Fortune Business Insights, the $11.98 billion global hearing aid market is expected to grow to $21.1 billion by 2030 as the population ages.
But the secondary market is among young people, especially if the industry can overcome the stigma associated with hearing aids. The Centers for Disease Control and Prevention estimates that one in five Americans will develop hearing loss due to noise pollution by the age of 30.
The technological advances made by Starkey and other companies can be fine-tuned for the market. For the elderly, it is programmed with features such as sensors to detect falls. For younger users, there are also noise-cancelling options (similar to what some earbuds have) and language translation.
But Sawalich wants his customers to know that hearing aids are more than just cool little devices.
“Hearing is health care. It’s not an appliance,” Sawalich said.
The Genesis AI support announced in February required “everything new,” Sawalich said. From new software and the design of the aid itself, to new smartphone apps and longer-lasting lithium batteries.
“Genesis AI is a workhorse in our industry,” Sawalich said.
Not everyone is as enthusiastic, but Brad Ingrao, a nationally known audiologist, recently said in a review for Seniorliving.org that he preferred Starkey over ReSound’s AI device, one of its biggest competitors. recommended AI devices.
Ingrao, who is the official audiologist for the International Sports Commission for the Deaf, gave both hearing aids good reviews, but noted one thing the Starkeys do better: “They also provide good health, “We also offer the industry’s first hearing aids with features that support wellness and safety.” It’s powered by AI technology. These features include fall detection, step tracking, and daily brain activity reports. ”
The Twin Cities was once considered the hearing aid capital of the world and was home to many companies in the industry. The local Telex company manufactured his vacuum tube hearing aids in the 1930s. Kenneth Dahlberg, who worked at Telex, founded Dahlberg Electronics in 1948. The company he invented the Miracle-Ear hearing aid in 1955.
Powers, an analyst with the Hearing Industry Association, said the Twin Cities “have been a real incubator for a lot of companies, a lot of technology.”
Amplifon, an Italian global hearing aid retailer that acquired Miracle-Ear in 1999, has U.S. headquarters in downtown Minneapolis. The company employs 224 people in the Twin Cities area.
“Minnesota has a long history as a business center and is home to some of the most innovators in health care, and there is tremendous value in being part of this type of community,” Amplifone Americas said. said Executive Vice President Alessandro Bonacina. In a statement.
3M used to be in the hearing aid business, but sold that business to ReSound in 1996.
And then there’s Starkey.
“Bill Austin changed the industry,” said David Preves, a former engineer with expertise in hearing aids who worked twice at Starkey and holds about 30 patents on components of hearing aid technology. .
“This is still the best custom in-ear product,” Prebus said of Starkey’s hearing aids.