Increased spending on hospital advertisements is linked to a rise in emergency department visits and Medicare spending, according to research at Philadelphia-based University of Pennsylvania.
For a 10% increase in a regional market’s hospital ads (about 150 more ad impressions), the rate of hospital use increased by nine admissions per 100,000 beneficiaries, per the National Bureau of Economic Research working paper.
“People have studied the effect of drug ads extensively,” said study co-author Atul Gupta, PhD, a senior fellow at the Penn Leonard Davis Institute of Health Economics, in a March 19 news release. “But few have studied hospital ads, even though they’re No. 2 in healthcare ad spending.”
The authors found a patient-volume-to-advertising elasticity of 6%, meaning that if advertising impressions rise by 100, hospital visits increase by 6. The research analyzed traditional Medicare claims and Nielsen data from January 2015 to November 2016, comparing a time when the presidential election crowded out healthcare ads.
The study couldn’t determine whether the additional patients came from competing hospitals or would not have otherwise visited a hospital. Dr. Gupta said in the release that increased Medicare utilization creates a cycle where public money — Medicare is the top payer for hospitals — is spent on ads that then drive more taxpayer spending.
“We’re not saying it’s a waste,” he stated. “It’s just useful for policymakers to be aware of it.”
