Hospital Advertising in the Beginning: Marketplace Dynamics and the Lifting of the Ban

Abstract

The beginning of the hospital advertising industry followed the successful Federal Trade Commission’s application of the antitrust laws to healthcare, fully opening the competitive floodgates. The 1982 Supreme Court decision, upholding the FTC petition, triggered the start of a new era of advertising—hospital advertising. This paper will examine the unique qualities of this service industry that challenged marketers; the turbulent industry environment of the 1980’s with the introduction of new Medicare reimbursement policies; the influence of the rise of HMO’s; and how each of these changes affected the behavior of hospitals as they began to explore the possible benefits of advertising in their industry.