The winning business model for hospitals is simple: Do as many high-margin elective surgeries for as many privately-insured patients as possible. In the pursuit of this goal, some hospitals have started advertising their services, and the prevalence of advertising has grown significantly over the past few years. The world is slowly taking notice as to how many hospitals have worked towards advancing their own interests, with various forms of advertising being a channel to promote their brands. From 2011-2015, hospital advertising increased by 40%, to more than $2 billion, according to a report by Kantar Media. Another report by advertising consultants BIA/Kelsey estimated hospital advertising at $4.9 billion in 2017, and projected that spending will keep growing by 1.8% each year.
Behind the advertising boom
Why is hospital advertising booming? Alicia Daugherty, Managing Director at Advisory Board, attributes the drastic increase in advertising spending due to patterns of hospital consolidation and expansion. “More health systems are expanding their geographic reach—many with aspirations of being a destination medicine hub—which requires that they introduce themselves to consumers in new markets,” said Daugherty. Additionally, when hospitals have more demand for their services, it puts pressure on insurers to pay higher prices, meaning more profits for hospitals.
Some hospitals may feel that advertising is necessary for their institution to survive financially. Yet it’s worth noting that hospitals are spending nearly $5 billion on advertising, when they owe their communities $17 billion in unspent community benefits. If those advertising funds and resources had gone towards tending to their local communities instead, it could make a real difference in community health.
Performance at hospitals that advertise
Hospitals that advertise their services often tout their expertise, recognition, technology, quality of care, and more. But are these hospitals doing a better job than those that don’t advertise at all? A recent study in JAMA titled, “Characterization of US Hospital Advertising and Association With Hospital Performance, 2008-2016,” examined the possible connection between hospital advertising and performance. Out of more than 4,500 acute care hospitals, almost half advertised their services to consumers; however, researchers did not find a clear association between advertising and hospital performance measures such as patient safety, mortality, or readmission rates. Rather, hospitals that advertised were more likely to be nonprofits, larger, and wealthier.
The authors conclude that hospital advertising misleads consumers about where they can expect the highest-quality care, rather than informing them. The sad fact is that the goal of hospital advertising isn’t to provide patient education, but to expand hospitals’ market reach and generate profits. The trend of nonprofit hospitals advertising more is concerning—for these hospitals, servicing the community and providing charity care may be playing second fiddle to self-interest. In a time where investing in our communities should be of utmost importance, some hospitals prefer to just invest in themselves.