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

Abstract

Hospital advertising has grown more than five-fold in the past two decades. However, unlike detailing and advertising for prescription drugs, the topic of hospital advertising has been understudied. This research introduces a customer-centric view to this market by investigating the role of advertising in patients’ choice of high-tech medical procedures, with a focus on robotic surgery. The authors analyze approximately 140,000 individual patient records and television advertising data from Florida during 2011–2015 to investigate how hospital advertising of robotic surgery affects patients’ choice of robotic surgery over more conventional laparoscopic and open surgeries. Using a variation of a designated market area border identification strategy, the authors find that this advertising leads to more robotic surgery choices. The advertising effect is especially strong for Medicaid patients, whose socioeconomic status tends to be lower. While robotic surgery is associated with a short-term health benefit (i.e., reduced length of hospital stay), it does not affect long-term health benefits and comes at a higher cost than other forms of surgery. Thus, understanding the effect of advertising robotic surgery has significant health, cost, and marketing implications for different stakeholders in the health care industry, such as patients, health care providers, surgical robot manufacturers, insurance providers, and policy makers.