This chapter examines the underlying cause of the rapid increase in hospital advertising in the United States. A critical component of the explanation is the rise of managed care across the country. In markets that experienced the greatest rise in managed care influence, large teaching hospitals had the most rapid increase in advertising. For all other hospitals, increased managed care reduced ad spending, suggesting that HMOs represent a financial shock to hospitals. The chapter is organized as follows. Section 3.2 discusses the history of hospital advertising and the economics behind advertising for hospitals. Section 3.3 presents various hypotheses as to why hospitals would have changed their advertising behavior at this time. Section 3.4 discusses the data; Section 3.5 presents the empirical results; and the final section concludes.
Keywords: hospital advertising; managed care; teaching hospitals
Chapter. 5010 words. Illustrated.
Subjects: Financial Markets
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