DTC Advertising Is Ineffective
In contrast to several studies which indicate a growing awareness of brand name drugs through DTC advertising campaigns, a new study finds few consumers respond favorably to the multi-million dollar marketing campaigns. Last month, the healthcare unit of Campbell Mithun Esty announced the results of its national Drug Advertising Effectiveness study of 1,000 adults.
The study contends that major pharmaceutical brands like Prozac, Viagra and Allegra generate high awareness levels but fall short of creating advertising messages that appeal to consumers and prompt them to change their purchasing choices. The top 18 brands included in the survey accounted for about $520 million in ad dollars in 1997 or two-thirds of the entire category's spending.
Key survey findings include:
- For 15 of the top 18 pharmaceutical brands, consumers were twice as likely to strongly dislike the ads as to strongly like them.
- Most pharmaceutical advertising has little impact with those consumers who are most likely to buy their products.
(CME, Paula Baldwin, 612/347-1316)
For-Profit Conversions Distorted
Most media reports exaggerate the perception that most hospitals are owned by for-profit entities, says a new report on the status of for-profit and nonprofit providers. Last month, the American Enterprise Institute released a report that found an equal number of conversions by nonprofit and for-profit hospitals from 1984 to 1994.
Using data from the Health Care Financing Administration's Medicare Hospital Cost Reports, economists found that nationally, the number of nonprofits remained fairly constant during the 10-year period studied.
The number of hospitals which convert from nonprofit to for-profit status are a small fraction of total conversions, according to the study's authors. In 1994, 59 percent of hospitals were nonprofit, 14 percent were for-profit and 27 percent were government-owned.
Study highlights include:
- Of 18,984 nonprofit hospitals, 159 switched to for-profit status and 391 became government-owned facilities.
- Of 2,643 for-profit hospitals, 188 converted to a nonprofit status and 222 to government facilities.
- For-profits tend to have a smaller market share, lower labor costs and higher debt than their nonprofit counterparts.
(American Enterprise Institute, 202/862-5800)
Florida HMOs Profitable Again
In spite of the controversy surrounding the inability of managed care plans to be profitable and their low hospital occupancy rates, Florida HMOs are breaking even and state hospitals are posting strong surpluses in 1997, according to the Florida Managed Care Review 1998. The report, published by Allan Baumgarten, an independent healthcare finance and policy analysts in Minneapolis, analyzes trends and issues in the Florida healthcare market.
The report found that:
- HMO enrollment has increased at an average annual rate of 16.5 percent since 1994. By June 1998, enrollment had reached 4.7 million, more than 32 percent of the state's population.
- HMOs started to break even during the first half of 1998. The average profit margin was.1 percent with 20 HMOs losing money. Humana, the state's most profitable HMO, posted a profit of $35 million during this period, however. This trend is an improvement over 1997, when HMOs lost $66.6 million, or.7 percent of revenues at $8.8 billion.
The return to profitability is being attributed to significant premium increases of 6 percent in 1997, which were paid by the state's employers and individual enrollees.
(Florida Managed Care Review 1998, Allan Baumgarten, 612/925-91921)