As the cost of healthcare becomes an increasing focus of attention, advertising becomes an increasing object of concern. At its best, advertising can provide information to help consumers make informed choices. Conversely, it can also inflate expectations, create demand, manipulate desire, transform wants into perceived needs, and increase the use and cost of healthcare services. In the not too distant past, healthcare was understood as medical care. The activities of physicians were regulated by standards of ethics that eschewed commercialism. Though there has always been an economic aspect (usually a fee) associated with the physician-patient encounter, the revolution in the financing of healthcare delivery is transforming the personal doctor-patient relationship into a socially complex interaction in which physicians are cast among a multitude of providers, and patients are transformed into consumers. The focus on the economics of healthcare underscores the commercial aspects of healthcare delivery both by physicians and other providers. Though physicians and not-for-profit institutions should be responsive to a service ethic, they compete in the same economic arena as for-profit organizations and often behave similarly. Furthermore, in some cases the patients are not the direct consumers; services may be purchased by employers, alliances, the state, or other contracting entities, whose interests may not entirely coincide with those of patients.

Advertising may be judged by the standards of business ethics: truthfulness, nondeceitfulness, nonexploitativeness, and profitability. But healthcare is not strictly a commodity to be sold effectively with profit to the public. The care of health is also a fundamental human endeavor binding the caregiver and the care-seeker in mutually reciprocal ways. Otto E. Guttentag, noting the essential human quality of healthcare, defined medicine as "the care of health of human beings by human beings." Lawrence J. Nelson and colleagues argued in a 1989 article that several key features distinguish caring for the sick from other commercial products: (1) Patients are in a distinctive position of vulnerability and dependency on those providing the services; (2) their own self and destiny—even life—are at stake in the encounter with the provider; and (3) the relationship with the provider may become an important aspect of the healing encounter. All of these elements suggest that there are special obligations incumbent on healthcare providers that go beyond the usual obligations of the seller to the buyer of most commodities.

Traditional prohibitions against advertising attempted to orient professionals to their service obligations by minimizing the commercialization of the encounter (Relman). According to the traditional view, physicians and other professionals should obtain business by developing a reputation for quality service, getting referrals from satisfied patients/clients or from others who know their work, not through any kind of self-promotion.

The major ethical issue in advertising in a market economy is truthfulness. If given adequate information, the consumer should make appropriate choices: what kind of healthcare, where, when, provided by whom, at what cost. A larger question concerns the justice of a market system of choice based on individual self-interest. Proponents view advertising in healthcare as a way to promote competition and thus reduce cost in a highly regulated industry. Opponents criticize advertising for inflating expectations and thus increasing cost. Others suggest that the quality of care has been lowered by making cost rather than quality the focus of allocation decisions (Rodning and Dacso).

The high cost of healthcare in the United States has prompted a search for ways of reducing both the cost of medical services and the percentage of gross national product devoted to healthcare without appreciably lowering quality of care. Advertising is located at the crossroads between cost and quality, between regulated markets with an emphasis on quality and free markets with an emphasis on cost and choice. Regulations that provide standards for training, licensure, specialty certification, and hospital accreditation have resulted in high-quality, but expensive, healthcare. Market solutions, such as encouraging advertising to promote competition, have been seen as a way of reducing cost.

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