Devices & Diagnostics, Hospitals, Startups

Change of business model at novel hearing aid maker leaves patients confused, angry

Envoy Medical, the St. Paul, Minnesota medical device startup, appears to be having some growing […]

Envoy Medical, the St. Paul, Minnesota medical device startup, appears to be having some growing pains.

Back in March 2010, it won the regulatory approval for the world’s first, fully implantable hearing aid system. Since then, Envoy, which has raised upward of $100 million to bring the Esteem device to market, has seen its share of positive and negative publicity, the latter related to a patient’s activation video that went viral.

And now a change at the top — the board of directors in June brought in former Medtronic executive Bill Murray to replace Patrick Spearman as CEO — is bringing about some not-so-welcome changes in operations, according to patients.

Specifically, the changes would mean that patients would require to pay for any adjustments following the implant and the activation. The procedure costs $30,000 and is really not covered by health insurance, which means it is an out-of-pocket expenditure.

Now, not only do patients have to pay for these follow-up sessions, they also have to travel farther than they are used to to get the device to work properly. Previously, Envoy technicians would come near patients’ locations to make any adjustments following the activation of the implant. Now patients need to find an Envoy-trained audiologist or go to the implanting surgeon if they require adjustments to the device or have a medical concern.

Take patient Sharla Enlow who got the Esteem implant in May 2011.

She has gone to a facility less than 20 miles from her house to get routine adjustments. But Enlow is confused as to whether that facility will be where she will go in the future given that the person she sees is no longer coming there.

“No one knows what is going to happen to [that] facility, but if I have to go to my surgeon’s office for a battery replacement or adjustments, that will mean flying from Houston, Texas to San Diego, California, which will be very inconvenient, especially when the remote we use for our Esteems will give a light/tone when the processor battery needs to be changed with maybe two months to get an appointment, airfare, hotel, etc.,” Enlow wrote in an email. “When you work full time, you cannot always have the luxury of taking vacation time that quickly.”

Enlow added that all patients signed a letter of understanding that the company appears to be enforcing now. That letter of understanding noted that the $30,000 would cover “implant, surgery, post-op, pain meds, nausea meds, facility charges, etc for the surgery and an activation appointment and either one or two adjustments later.”

She has had four or five adjustments, but wasn’t charged for them. A letter from the company dated Aug. 18 now explains that is about to change, without mentioning the mode of operation previously. Enlow has also felt that the company has not communicated effectively.

Another patient, Richard Robbins, is also none too pleased.

“It seems to be an unsustainable model to send someone around to activate and adjust the implant, but as a patient, this was what was promised,” Robbins said. “The business plan they came up with was a decent business plan to launch a product [and perhaps] it wouldn’t work long term, but to change their tune in the middle of the game because of financial challenges is just nonsense.”

He added that now he is required to travel two hours for any adjustments.

Other patients complained of not receiving any communication from the company and it appears that the August letter, which Robbins described as “cold and callous,” was not received by all patients.

New CEO Murray believes that these changes are the result of a focus on what is best for the patient.

“Envoy’s position is that their care is best managed through their implanting surgeon and an Esteemed-trained audiologist,” Murray said in a recent phone interview. “Certainly there is a change and the letter outlines those changes and the focus is on providing care through their caregiver and not Envoy, a medical device manufacturer.”

Murray declined to provide the exact number of patients who have been implanted with the Esteem device, preferring to say “over 500” worldwide.

And exactly how many audiologists and surgeons can these patients access?

The number of surgeons who are actively implanting the device is 12, Murray said. He did not know exactly how many audiologists are trained to do adjustments, but said there were more than the number of surgeons.

“We are an early stage medical device manufacturer and with that we are building a network of trained audiologists nationally,” he said. “And in some cases that network needs to be expanded and we are working on that.”

Having raised more than $100 million to get a novel device approved, few would likely agree with the description of Envoy as an “early stage” company.

Murray declined to talk about any reductions in the workforce. He also declined to comment on whether changes were being made because the board felt that the previous model was too expensive. A request to interview a board member was declined.

Murray also declined to provide revenue details about Envoy, which seeks to go public at some point in the future. To those patients worried about the viability of the company, he offered this brief statement.

“We have a very experienced and committed investor and board, and they continue to support the company,” he said, noting that he believed that Envoy’s product has the power to benefit people’s lives.

While he agreed that changes were being made, he declined to comment on whether it was fair to have patients pay for adjustments that technicians had told them would be free.

“I can’t comment on what people have been told and anecdotal responses,” Murray said. “What I can comment on is that [there is] a contractual letter of understanding that we have with patients and the contract they’ve signed is what we are following and adhering to with a focus on making sure that they receive the best outcomes and patient care.”

But that is cold comfort to patients.

“I don’t care what I signed,” Robbins declared. “Everybody heard the same thing.”

 

 

 

 

 

 

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