Direct-to-consumer (DTC) health care advertising has become a massive industry. In 2016, it was worth about $10 billion, with hospitals taking a slice of roughly $2 billion. By 2025, spending soared to an impressive $25 billion. Most of these ads focus on prescription drugs, benefiting both patients and pharmaceutical companies.
Recently, researchers at the Leonard Davis Institute of Health Economics revealed some surprising insights about hospital ads. The study, led by Atul Gupta and Abby Alpert, found a direct link between hospital advertising and increased emergency care, hospital admissions, and a spike in Medicare spending.
Gupta noted, “While many have studied the impact of drug ads, few have looked at hospital advertising. Yet, they account for a significant portion of health care ad spending.”
To uncover these findings, the researchers tapped into an unconventional method that leveraged the intense ad landscape of the 2016 election season. As candidates like Donald Trump and Hillary Clinton fought for attention, hospital ads took a backseat, allowing the team to study the effects of diminished advertising on health care usage. They analyzed data from Nielsen’s Ad Intel along with Medicare claims from 2015 to November 2016, assessing various types of care and costs.
How Ads Influence Hospital Visits
The study uncovered that when hospital ads increase, so do patient visits. Specifically, for every 10% increase in local hospital ads—about 150 more people seeing those ads—there were nine additional hospital admissions for every 100,000 Medicare beneficiaries. This surge costs the Medicare system an estimated $3.3 million annually for the average region.
Interestingly, the boost in visits seemed more connected to emergency departments. Gupta speculated that ads might lead people to seek immediate care rather than visiting primary care providers, which underscores the relationship between how hospitals advertise and how patients respond.
Notably, for-profit hospitals experienced more significant increases in patient numbers and Medicare payments than non-profit ones. However, the quality of care did not seem to decline; patients were not directed to lower-quality hospitals based on readmission rates.
Insights for Policymakers
Gupta emphasized that this data is crucial for policymakers. He explained that Medicare, being the largest hospital funder, is directly affected by advertisement costs driving up spending. He also suggested that some ads could lead to valuable health outcomes, as shown in previous research linking DTC pharmaceutical ads to better patient-doctor communication.
The study didn’t assess the impact of ads on uninsured individuals or those with specific plans, but Gupta commented that the influence on these groups could be even more pronounced, given the broader reach of ads through platforms like social media and billboards.
A Closer Look at Advertising Data
Through their study, the researchers identified the elasticity of hospital usage based on advertising. They found that a 100-ad increase could lead to six more patients. Spending showed a similar trend, suggesting that as ads grow, so will costs.
Gupta hopes more studies will follow, expanding on how marketing tactics influence not just utilization and spending but also patient care quality. With the DTC health care ad landscape constantly evolving, understanding these dynamics is more important than ever for the industry.
For further reading, you can find the study titled “Does Advertising Expand the Market for Hospital Services? Evidence From Medicare” published in January 2026 as a National Bureau of Economic Research Working Paper here.
