Working Paper: NBER ID: w8899
Authors: Jason R. Barro; Michael Chu
Abstract: We examine the recent increase in hospital advertising expenditures. We first illustrate that the rise in hospital advertising has not been universal. Large, not-for-profit, teaching hospitals have, by far, experienced the largest increase in spending. Adjusting for size, for-profit hospitals over this period have actually decreased their marketing expenses. This increase in advertising spending is best explained by managed care penetration. There is a small and marginally significant relationship between increases in for-profit presence in hospital markets and an increase in advertising spending by the not-for-profit hospitals in those markets.
Keywords: hospital advertising; managed care; not-for-profit hospitals; for-profit hospitals
JEL Codes: I1; L3; L1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| managed care penetration (I11) | hospital advertising (I11) |
| financial distress (G33) | hospital advertising (I11) |
| increase in for-profit hospitals (L39) | advertising spending of not-for-profit hospitals (I23) |
| market structure changes (D49) | returns to advertising (M38) |
| credible hospitals (I11) | hospital advertising in response to HMO penetration (I11) |
| HMO penetration (I11) | advertising expenditures of large teaching hospitals (I23) |