Hospital advertising in California, 1991-1997

This paper examines the advertising behavior of California hospitals from 1991 to 1997. Using highly detailed hospital-level information, we found that hospital advertising in California increased dramatically: annual spending on advertising grew (inflation adjusted) more than sixfold over the period. In addition, advertising expenditures varied significantly across hospitals. We found that hospital advertising increased with market concentration; with the number of nearby potential patients; with the percentage of nearby patients insured through Medicare, health maintenance organizations (HMOs), and indemnity insurance; and with chain affiliation. For-profit hospitals were not found to advertise more than their not-for-profit counterparts.