Data breaches lead to higher advertising expenses for hospitals: Report

A new study recently showcased the relationship between data breaches and increasing advertising expenditures from the hospitals. Published by American Journal of Managed Care, the study named Understanding the Relationship Between Data Breaches and Hospital Advertising Expenditures revealed that the hospitals who suffered a data breach increased their annual advertising budget by 64 percent.

The researchers Sung J. Choi and M. Eric Johnson stated that they’ve inspected and compared the non-federal acute care inpatient hospitals’ advertising expenditures after a breach to the hospitals without breach history. The analysis, based on the information from the Healthcare Cost Report Information System, market competition, and surveys on media vehicles from 2011 to 2014, stated that the effect of data breaches increased the advertising expenses incurred to restore the hospital’s image.

“We found that breached hospitals were associated with significantly higher advertising expenditures. Repairing the affected hospital’s image and minimizing patient loss to competitors are potential drivers of the increased spending. Regardless of the motivation, breach response adds a financial burden to hospitals and the healthcare system. Advertising and the efforts to fix the damages from a data breach increase healthcare costs and may divert resources and attention away from initiatives to improve care quality. Advertising costs subsequent to a breach are another cost to the healthcare system that could be avoided with better data security,” the report stated.

The Healthcare industry has been a prime target for hackers. Recently, around 15,000 Medicare advantage members of Blue Cross Blue Shield of Michigan were in threat of being affected by a potential data breach. The healthcare and health insurance provider stated that the theft of its employee’s laptop on October 26, 2018, may have compromised the customers’ personal information.