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Who are hospital ads really aimed at?

Gregory Warner May 28, 2010

Who are hospital ads really aimed at?

Gregory Warner May 28, 2010


Bob Moon: Maybe you’ve noticed this where you live: In some places, just about everywhere you look, there’s a billboard pitching the superior services of a particular hospital. It seems they’re all spending more on those ads. As it turns out, a lot more. Hospital advertising on TV, radio, buses and billboards now adds up to well over a billion dollars a year.

So what’s all that money buying? The obvious answer is “more patients,” but Marketplace’s Gregory Warner reports it goes further than that. Here’s the story from our health desk at WHYY in Philadelphia.

Gregory Warner: Standing on the soft shoulder of a freeway in Exton, Penn., across from a big-box mall, nothing seems too special about the place. But for three nearby hospitals this is disputed turf.

RICHARD DONZE: We’re in a very sort of hotly-contested area here where three hospitals all claim this as part of their service area, where in fact it is!

WARNER: Now we’re actually walking on the highway here, right? On the main road?

DONZE: Yeah, we are. And we’re actually approaching a billboard for the hospital where I work, the Chester County Hospital.

Richard Donze is a doctor at Chester County.

DONZE: It’s got a big heart on it.

This billboard is for their cardiac-care program. On the other side of this billboard, is another billboard for another hospital. Advertising its joint and hip replacement program.

DONZE: They’ve got their awards listed up there, we’ve got similar awards for hip replacement, knee replacement — we have the same things.

Chester County advertises those specialties on other billboards around town. There’s a reason that hospital ads usually brag about one thing at a time.

Hospital ad: The specialists at the Rothman…

A specialized surgery or state-of-the-art technology.

Hospital ad: Cyber knife and gamma knife technology…

It’s not just to get your attention if you happen to need a joint replaced right now. It’s to put in your mind that this would be the hospital to go to when and if you do need it. Because it turns out that what’s in your mind has a whole lot to do with how much a hospital gets paid.

PAUL GINSBURG: Insurance companies — how much they’re willing to pay a hospital — depends on how much their enrollees, or their enrollee’s employers, want that hospital to be in their network.

Paul Ginsburg runs the Center for Studying Health System Change.

GINSBURG: So in a sense, if they are perceived as a very ordinary, replaceable hospital, they’re not going to have much clout. On the other hand if they are a hospital that consumers really want to have access to, the hospital has a very strong bargaining position. It says, look, you pay me this, or I won’t be in your network.

And a hospital can demand those higher reimbursements even if it has just one coveted specialty.

Colin Drozdowski is a vice president for the insurance giant Anthem Wellpoint.

Colin Drozdowski: They are going to say, if you must have me for neonatal services or you must have me for cardiac services, then you’re going to also have to pay for all these other services at a premium.

It’s sort of like when you go to a fancy restaurant for the food and they charge you four bucks for a diet coke. A brand-name hospital might be able to charge an insurance company twice as much for an MRI as another hospital down the street. A recent investigation by the Massachusetts Attorney General found that price difference has nothing to do with the quality of care. Again, here’s Paul Ginsburg.

GINSBURG: If there are no solid data that consumers trust that can really tell hospitals apart, well then, Madison Avenue will take over.

So if a hospital gets a top ranking it can advertise that, and attract better doctors, which leads to more awards and a stronger brand and even more leverage with insurers.

Mike Dandorph is director of business development at The University of Pennsylvania Health System, which includes Penn Hospital.

MIKE DANDORPH: Every business wants to be a must have business, right? I mean that’s the essence of why we develop brands.

Penn Hospital ad: What would you give for a longer life? A fuller…

Penn’s ad campaign this year seems to embody its desire to ascend to that lucrative category known as the “must have.”

Penn Hopsital ad: When the only option is every option, your life is worth Penn Medicine.

This promise about your survival is what makes hospital advertising such a high-stakes game. Everyone wants the peace of mind that hospitals are selling. And hospitals know that the more they can make you love them, trust them, hope in them — the harder they can come down on your insurance company, and make it pay.

In Philadelphia, I’m Gregory Warner for Marketplace.

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