Available resources, not competition, drive nursing homes to advertise
Research Activities, March 2009, No. 343
Health care facilities regularly spend money to advertise their services in hopes of attracting new customers and promoting their facilities as superior to others. Nursing homes have turned to advertising to reach potential customers as well. In a new study of 819 nursing homes in Texas, researchers found that the average annual amount spent on advertising was $6,930. Nursing homes that spent the most on advertising tended to be large, have ample funds, and housed residents who either paid for their care themselves or had Medicare or private insurance. Nursing homes that spent the least on advertising tended to be in rural areas. They also had large numbers of residents for whom Medicaid was their insurer, which likely resulted in the homes having fewer available resources for advertising, as reimbursement rates for Medicaid patients in nursing homes have declined in recent years.
Unlike typical product advertising, market competition did not appear to drive nursing homes' advertising dollars. Further, the nursing homes that spent the most on advertising did not appear to offer higher quality care than those homes that did not pay to advertise. These results indicate that advertising dollars could be better spent as wage increases to help quell the nursing turnover prevalent in homes, according to researchers Bita A. Kash, Ph.D., of Texas A&M University, and Gregory J. Boyer, a Ph.D. student at the University of North Carolina, Chapel Hill. Additionally, because most families consult primary care physicians and hospital discharge personnel when choosing a nursing home, targeting advertising toward these professionals could be more cost effective. This study was funded in part by the Agency for Healthcare Research and Quality (HS16229).
See "Advertising expenditures in the nursing home sector: Evaluating the need for and purpose of advertising," by Drs. Kash and Boyer in the July-August 2008 Journal of Healthcare Management 53(4), pp. 242-255.