Six Reasons Proposed Hospital Advertising Ban Will Never Pass

Marianne Aiello, March 17, 2010

Earlier this month, a couple of well-meaning Vermont lawmakers proposed a bill that would outlaw hospitals from marketing and advertising their services, with the goal of reining in cost. But wait—take a deep breath and unclench your teeth. This is never going to happen. And here's why.

First, the back story: Vermont House Health Care Committee Chairman Steve Maier, a Democrat, proposed the legislation that would prohibit hospitals from using money for advertising and marketing.

"On one level it's competing for business," Maier told the Burlington Free Press. "I think it's appropriate to question whether our not-for-profit system needs to compete."

Sen. Kevin Mullin, a Republican, agrees with Maier. He told the newspaper that he dislikes it when hospitals advertise in another hospital's market because they are obviously trying to attract patients away from the other facility.

Right. Because no hospital deserves to lose patients to another hospital because of advertising.

It would be easy to jump off the ledge here and get indignant about how hospital advertising guides patients to the right organization for them and that these lawmakers are completely disregarding the larger implications of what a ban like this would mean for the healthcare industry. But it's not even worth the effort. Here is why this ban will never, ever come to fruition:

1. Interstate competition
Even though an advertising ban would effectively level the playing field for Vermont hospitals, it would put local hospitals at a major disadvantage when competing with other New England organizations. Montpelier is less than 200 miles from Boston and its world-class hospitals. If Vermont consumers aren't aware of their local healthcare options, they'll be more likely to opt for the big names in the big city, effectively taking money out of the state. Now that won't look good come election time, will it?

2. Freedom of advertising
Government interference in advertising isn't unprecedented, but a ban on hospital advertising would certainly bring it to the next level. The Burlington Free Press article points out that the courts have upheld advertising restrictions in the past, most notably on the tobacco industry. You know, the industry that sells a product that is detrimental to a person's health. As opposed to hospitals, whose main purpose is to keep people healthy. Such as—oh, I don't know—smokers who now have cancer?

3. It wouldn't even save that much
Big picture: Hospital marketing budgets don't account for large portion of a hospital's annual budget. Fletcher Allen Health Care, a 500-bed hospital in Burlington, VT, spends less than 1% of its annual budget on advertising, spokesman Mike Noble told the Burlington Free Press. Besides, according to the laws of the free market, anything that is conducive to competition (such as advertising) ultimately drives cost down—exactly what the Vermont statesmen say they are trying to do with this ban.

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