Banning hospital advertising – it was only a matter of time.
Over the past year we’ve pondered periodically in our podcast why we haven’t heard a call for a ban on hospital advertising, given the national debate on healthcare reform. Well we finally have our first salvo.
According to an article in the Burlington Free Press on Monday, Vermont state representative Steve Maier is proposing legislation to ban hospitals from spending money on advertising or marketing in the state. Here’s a quote from the article:
“It’s not producing health care,” Maier said of the money spent on advertising (quote from a previous online version of the article).
Given the focus on healthcare costs at a national level, it’s not surprising a politician has latched onto the relatively easy mark of hospital advertising. (It is surprising that it took this long). Let’s put aside the argument surrounding advertising that supports public health issues such as obesity, smoking or wellness for a moment. There are at least three reasons I can think of why such a proposal doesn’t make sense.
First, a hospital’s marketing expense is a tiny fraction of its overall expense. To be generous, let’s say it’s 1% of revenues, including all marketing salaries, external expenses, media, etc. Obviously it’s higher in some places and lower in others, but the point is that eliminating this expense won’t do much of anything to impact the cost of healthcare in the U.S. Of course, this is politics, so the actual impact of something is pretty much beside the point.
Second, there are serious free-speech issues involved, and it’s very rare for the courts to allow a restriction on an industry’s ability to communicate or promote itself. This will likely be the reason legislation of this nature won’t go anywhere, and if it does, why it won’t survive.
The third reason, and the one that is perhaps the most frustrating, is that hospitals and health systems in the U.S. – whether they’re for-profit or non-profit – must compete for patients to succeed. That’s the way the market is set up, and unless we went to a single-payor Canadian-style system, that’s the way it will likely stay. And with that type of market, organizations must be allowed to do whatever it takes to attract the customers (patients) they need to succeed. Many in the public would find this nonsensical or outrageous – “why do hospitals need to spend money to attract patients?” And politicians can prey on the public’s misunderstanding of the business of healthcare to drum up support for this type of legislation. But those who want hospitals banned from advertising their services miss the point that these are businesses that compete in an open market, and that’s a good thing.
If you believe in capitalism, you believe that competition drives innovation, efficiency, service and more. Competition should make healthcare better, not worse, though not everyone agrees with that. But the point is a bit moot – as long as we have the “system” we have of providing care, where providers must compete to find and keep patients, they should be allowed to use the tools other businesses use to pursue the same goals, and that includes marketing and advertising.
What do you think? Is this just an obvious/defensive position coming from a healthcare marketing firm? Will this legislation or others like it take hold? If they did, what would they mean for hospitals and all of us marketers?
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Chris,
I have to wonder if you may have left off the most compelling reason for marketing, patient centered innovation. It is our marketing department that is continually pushing the envelope in order to provide our patients better and more timely services. Marketing helps keep a patient centered focus and pushes to improve the patient experience. Yes, we spend some money talking about our products, innovations or results, but I believe without marketing we may actually care less and it will be evident to patients.
Hospital marketing also involves educating customers/patients about healthcare/disease/medical issues to help them make the right choices. Banning healthcare marketing makes no sense whatsoever.
I do not buy this argument about advertisement being tied to innovation.
I also do not understand how advertising or marketing does anything to get accurate information out there. When you advertise, you are as biased a party as there can possibly be. The goal of advertisement is to present one’s own organization in as positive a light as possible.
Medicine is often a matter of life and death. It seems to make sense to leave these matters up to impartial parties and professionals. Any hospital can paint themselves in a positive light by picking and choosing favorable-sounding statistics and putting them up on a professionally-designed billboard that plays on people’s emotions. But this says nothing about the hospital’s actual effectiveness at delivering quality healthcare. This can only be assessed by truly impartial parties.
I have no objection to the free market. But your comments here about the free market and competition really cement that hospitals, including most of them that operate as “non-profit” entities, really behave more like for-profit corporations. If hospitals want to act like for-profit businesses, then let them pay tax. Hospitals are trying to have it both ways: they are acting like businesses but they want tax exemptions.
I have put forth a plan to ban hospital advertising for hospitals wishing to retain non-profit status, but allow advertising for ones that want to pay tax. But I would not object very strongly to a complete ban, for the simple reason that I object to the idea of a for-profit hospital.
I think there are many benefits to a ban, too, which I explain more on my site. The main benefits I think are that without advertising, there is more incentive for quality care because a hospital can’t just spend money to manipulate their image, they need to focus on delivering quality care.
Alex – thanks for the feedback. I think there are a lot of valid arguments for questioning the value of hospital advertising. We’ll probably have to agree to disagree on a few points, though. The concept of innovation is not tied to advertising itself, but to competition. Competition in a market (theoretically) should drive continual improvement, innovation, lower prices and more. I think that’s pretty widely accepted, though given the current state of healthcare, these benefits of competition don’t always present themselves. If we want competition with our providers (and the system we currently have supports that), then we need to let organizations compete for patients, resources and mindshare. And that means allowing them to use tools necessary, such as public relations, sales, and yes, advertising.
I’m not sure I agree with tying non-profit status to the use of advertising, but I think I get where you’re going with it. Often people consider advertising simply an expense, a drain on the budget, and when used inappropriately or ineffectively, that’s exactly what it is. But effective advertising pays for itself in bringing more customers into the fold. In many cases, health systems could not sustain certain clinical offerings, physician expertise or technology without a minimum number of patients. A proper investment in advertising will help ensure they bring in the right patients, which helps ensure they can provide those offerings, which gives more choice in the market to folks like us who use care. Without the ability to market these programs, many would disappear, which would limit our choice and reduce competition.
But we’re in total agreement on the proper use of advertising and transparency. There are certainly many organizations that attempt to “manipulate their image” through advertising (yes, that’s partially it’s role), but as we say over and over again, the only true way to build a successful brand is by delivering a better experience. Advertising can give you a short bump in business, but in the end, the only way to sustain success is by providing a better product or service. And advertising that makes promises that organization can’t deliver upon will do more harm than good.