The Potential benefits of ED advertising vs. the real costs for patients and society
A recently released academic study on the effectiveness of hospital advertising shows that there can be an impact on hospital visits from increased advertising spend. But that finding helps support the contention that health systems should focus on ServingOverSelling.
One of the expected pushbacks against the idea of prioritizing ServingOverSelling is that promotional marketing does impact health systems in a positive way, and a recently released academic study reported in the National Bureau of Economic Research seems at first glance to support that contention. The academic study (a “working paper” and not therefore peer reviewed as of yet) released in early 2026 purports to be the “first comprehensive analysis” on the impact of hospital advertising on patient volumes at a national level. The researchers used a clever mechanism for measuring that impact by looking at Medicare admissions during a political election season, when political advertising blocks out many other forms of advertising, including health system advertising. This allowed them to measure whether there was any subsequent drop in Medicare admissions that would correlate with that drop in advertising.
And they did find a connection. According to the study, researchers found that a 10% increase in a market's hospital television advertising produced about nine additional inpatient admissions per 100,000 Medicare beneficiaries per month. That sounds like a lot until you see what it's measured against: according to the study, those same markets were already running roughly 1,510 admissions per 100,000 beneficiaries every month. Nine out of 1,510 is six tenths of one percent. In the language of economists, that's an elasticity of 0.06, meaning that a one percent increase in advertising moves patient volume by six hundredths of a percent. Or put another way, the researchers measure advertising in gross rating points, and a 10% increase works out to 153 additional points. A rating point is one percent of the audience reached one time, so in a mid-size market, say one of 1.5 million people, those 153 points represent roughly 2.3 million additional ad impressions. More than two million impressions to move nine admissions per 100,000 Medicare beneficiaries in a month.
While there could be issues with the study itself, let’s take those results as accurate, that hospital advertising can drive patient volumes at some level. The question we pose is, at what cost? In fact, the study helps draw attention to the idea of the “cost” of hospital advertising in two significant ways: the cost to the organization, and the cost to society:
The Cost of ED Advertising to Health Systems
The authors of the study are clear that their research doesn’t measure financial ROI from the advertising impact they report, and they actually downplay that impact overall noting that the increase in patient volumes they show is “modest.” What they do say is that the primary way patient volumes are impacted is through visits to the emergency room.
It’s common knowledge that some of the largest health systems in the country, some of them for-profit, have prioritized promoting their EDs for years. That advertising must be leading to some positive effect, and with for-profit health systems, it’s hard to imagine a heavy investment in any kind of marketing strategy if it didn’t show results. So let’s just grant that, given the right circumstances and maybe a high level of advertising spend, that advertising can drive positive impact for a health system in terms of increased patient volumes. Whether or not those increased patient volumes actually drive positive or material ROI is an entirely different question – our experience tells us it would require a sizeable advertising spend across a system with many ED options to show positive ROI.
Further, the study’s authors point out that they are “estimating the aggregate market expansion effect on hospital care net any business stealing effects.” In other words, those increased admissions are assigned to the market as a whole, not to individual systems, and definitely not to those systems that are actually advertising ED services. Without the ability to tie increased volumes directly to the advertising health system, the study again leaves the question of ROI up in the air.
The Cost of ED Advertising on Society
One of the main takeaways cited by the study’s author is that increased utilization from advertising would “cost an estimated $3.3 million in Medicare spending per year for the average regional ad market.” Why is that important?
“The results on inpatient and outpatient care collectively suggest that hospital advertising draws patients to the ED who otherwise would not have used hospital services. This could occur if, for example, advertising persuades elderly individuals to prefer the hospital ED instead of going to an urgent care clinic. Researchers note that if advertising influences patients to utilize ‘costly ED care’ rather than alternatives, it may represent inefficient care, and use of taxpayer dollars in the case of Medicare.”
In other words, increased advertising that does impact an increase in ED visits is likely driving unnecessary emergency care, and that unnecessary or inefficient utilization drives up the cost of care for both Medicare and commercial insurers, which impacts all of us. And what about the individual patients? In a statement following the release of the study, one of the authors said about the increased ED utilization: “It seems like patients are not worse off. That’s the most important thing.” They may not be worse off medically (though one could argue receiving unnecessary care isn’t a positive), but what about financially? What about those with high-deductible plans, Medicare Advantage plans or no insurance at all?
Another case for ServingOverSelling
So when it comes to the principles of ServingOverSelling, what can we take away from this study? Hospital advertising can work in specific situations. But “work” is the key word, as ROI is not a given, let alone material ROI. Additionally, who does the advertising work for? Not for patients who don’t need ED care, or for the system that now has to cover a higher cost of care. But it may work for some health systems. It’s not a coincidence that some health systems have focused on driving increased utilization to their EDs – ED visits and their subsequent hospitalizations from the commercially insured are among the highest margin encounters for a health system. So while it could be argued that advertising ED services benefits health systems, it seems fair to argue it only benefits health systems, and only in those cases where a material ROI from the effort can be proven.
All of this calls into question a system that incentivizes providers of care to promote services, which in many cases drives unnecessary care or over care, solely for monetary gain. What is the moral answer to a practice that only financially benefits health systems at the detriment of patients and the healthcare system as a whole? Should we as health systems be “selling” emergency services? Do patients really need hospital advertising to know where to go in an emergency? Without evidence of a material financial impact, the reallocation of funds away from ED advertising to those efforts focused on serving such as experience, access or community engagement seems like the right choice. And even if you could show some sort of positive ROI for that practice, it seems like the moral choice given an affordability crisis in the U.S. that has grown completely out of hand.