The Role of Advertising in High-Tech Medical Procedures: Evidence from Robotic Surgeries

Abstract

Hospital advertising has grown more than five-fold in the last two decades. However, unlike pharmaceutical marketing to healthcare professionals and direct-to-consumer advertising (DTCA) for prescription drugs, hospital advertising has been understudied. This study brings a customer-centric view to this market by investigating the role of advertising in patients’ choice of high-tech procedures, with a focus on robotic surgery. We analyze approximately 140,000 individual patient records and television advertising data from Florida during 2011-2015 to investigate how advertising robotic surgery affects the choice of robotic surgery over more conventional laparoscopic and open surgeries. We find that this advertising leads to more robotic surgery choices, with patients responding only to the specific, relevant ad creatives related to robotic surgery. We additionally find customer heterogeneity in response to the advertising. Supplementary analyses suggest that robotic surgery is associated with shorter length-of-stay (LOS) and higher costs. Understanding the effect of advertising in surgical care may have implications for different stakeholders in the healthcare industry such as patients, healthcare service providers, insurance providers, and policymakers.

Keywords: Healthcare marketing, hospital, advertising, consumer protection, public policy

JEL Classification: I11, I18, M31, M37, M38