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Is Hospital Advertising Money Well-Spent?

May 2019

Hospital marketing budgets are rising. That’s because hospitals need to increase volume to make up for lost revenue in the new value-based care model, where fees are no longer paid per procedure. How do hospitals get more patient volume? By increasing their hospital advertising.

A study published in the Journal of the American Medical Association in January 2019 found that direct-to-consumer advertising for health services increased from $542 million in 1997 to $2.9 billion in 2016. The largest proportional increases were for cancer centers, which went from $18 million to $200 million. A 2016 study focused on advertising spending by 890 U.S. cancer centers found that advertising spend was not correlated with quality.

Direct-to-consumer advertising for health services increased from $542 million in 1997 to $2.9 billion in 2016.

In many cases, these cancer centers are advertising in national publications, hoping to influence patients to travel long distances to get the ‘best’ care for their cancer. Researchers found that these advertisements were often manipulative and misleading, especially when directed at such a vulnerable population.

This leads to a scary proposition for employers, whose workers may be choosing hospitals and doctors based on billboards, radio ads, or by word of mouth recommendations from their friends on Facebook. They may be choosing inefficient, unsafe care. With a broad-based PPO health plan, there is little employers can do to positively influence these decisions.

Is it any wonder that consumers are susceptible to this kind of marketing? After all, hospitals aren’t required to disclose their quality scores, as determined by the Centers for Medicare and Medicaid Services, or by other well-respected national health care quality organizations. They certainly don’t describe how efficiently they deliver care, but instead appeal to consumers’ emotions. The 2019 report found that the Federal Trade Commission has acted against misleading marketing by a single for-profit cancer center since 1997.

It’s surprising that even as many hospitals’ margins are shrinking, they are spending even more money to promote themselves. Tactics are becoming more elaborate but no amount of marketing can fix bad quality. In fact, the glossy billboards you see may be diverting dollars from important care delivery investments that will positively impact cost and quality. It’s important to increase awareness among your employees about the possibility of misleading advertising, which could lead to sub-standard care.

Another way to combat sub-standard care is to change the system altogether. At Imagine Health, we’ve established direct contracts with high-performing, local healthcare providers with rates that are fair and reasonable. This will help make sure that employees are receiving safe, efficient care without worrying about misleading advertising. The result is a healthy workforce and a healthier bottom line for your business.

Imagine Health

about the author

A different kind of health plan, Imagine Health lowers spend today, controls costs over the long term and gives control to the people who pay for healthcare: employers and their employees. Ready to challenge the status quo and take back control of healthcare? Contact Imagine Health to get started.


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