Advertising for Healthcare Services Is Not Transparency

From the St. Cloud Times

Prior to the 1970s, the code of ethics established by the American Medical Association prohibited advertising for health care services, labeling the practice as “derogatory to the dignity of the profession.” Beginning in 1975, this rule, as well as other practice restrictions formulated by the AMA, was attacked by the Federal Trade Commission on the grounds such constraints were comparable to monopoly and against public interest. Supported by left-leaning consumer advocates and right-wing free market enthusiasts, the FTC prevailed, buttressed by a U.S. Supreme Court judgment. The advertising ban was reversed for good in 1982.

Whether public interest was ultimately served by this outcome is doubtful.

Although most Americans are familiar with direct-to-consumer promotions sponsored by the pharmaceutical industry, health care service marketing, initiated by physicians and hospitals, is also ubiquitous.

U.S. hospitals alone spend more than $1.5 billion each year on advertising. Proponents maintain advertising increases public awareness of important care interventions and their availability. In addition, similar to the arguments of the FTC, advocates assert competition fostered by marketing benefits consumers through lower prices and higher quality.

These claims are, in reality, rubbish.

Without question, advertising is capable of promoting healthy lifestyle choices and cost-effective preventive measures that diminish risk for disease. Unfortunately, too often, procedures and health screening studies of dubious benefit are marketed, at times falsely validated by heart-rending individual testimonials.

These tactics mask the overall inefficacy of an intervention. These measures, which often have unstated risks, improve the bottom line and, more importantly, serve as health care system entry points, exemplified by screening exams that demonstrate incidental, likely irrelevant abnormalities that prompt additional, costly testing.

Health care advertising increases market-share by siphoning “customers” (aka patients) from competitors, not through providing more services to those in need.

The Mayo Clinic did not sign a promotional agreement with the WNBA’s Minnesota Lynx team to increase awareness of the clinic’s exemplary care among the state’s indigent population. The intent is to capture dollars filling the coffers of other, equally competent, health care corporations.

The market for high-volume, high-revenue services — such as cancer, cardiovascular and orthopedic care — is exceedingly competitive, especially in urban areas. The market for the poor and uninsured is not.

Despite these economic pressures and an environment that theoretically fosters lower prices, care costs have spiraled out of control. In 1980, U.S. per capita health care spending was roughly equivalent to that of other Western nations. As of 2005, the amount was almost double the average spent by the same countries.

It’s hard to believe free market forces — including advertising unleashed on health care over three decades ago — were not largely responsible for this divergence. Because medical pricing is shielded from the competitive pressures that drive down costs of other goods, this outcome was predictable.

Health care pricing is arcane. In part due to negotiated contracts between third-party payers (private insurance companies, etc.) and providers, the cost of a standard procedure, such as an appendectomy, may vary hundredfold within a similar geographic area.

Also, until of late, care prices were not accessible to the consumer until after services were provided. Even with cost transparency, an acutely ill individual is unlikely to spend time “shopping” for the best deal. At any rate, most “customers” are themselves protected from the cost by insurance programs.

Given the above, it’s no surprise health care advertising stimulated demand without moderating costs.

Competition associated with health care advertising may have improved quality of care. As there is no reliable measure of quality, this assertion can neither be confirmed nor denied.

The lack of a dependable barometer of quality has not prevented health care organizations (abetted by expert consultants with otherworldly abilities to assess what others cannot) from claiming in promotional materials they’ve achieved something that cannot accurately be measured.

Somewhat paradoxically, this deception blossomed in an era characterized by rote, protocol-driven care that is mind-numbingly similar in hospitals nationwide.

Health service marketing has not been kind to the U.S. health care consumer. Inflationary, often inaccurate, and, overall, unnecessary, the practice should be ablated from the medical landscape. Until then, caveat emptor. Let the buyer beware.

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