Studying Consumer Responses to the Changing Information Environment in Health Care: a Research Agenda

Paul N. Bloom, University of North Carolina at Chapel Hill
ABSTRACT - There has been an explosion in the amount of information available to consumers to guide them in making choices about health care. Much of this information has emerged because of public policies that have sought to use information programs to encourage both more competitiveness in health care markets and more protection for consumers. This paper reviews what is known about how well these programs have achieved their objectives. Several propositions are offered about effective program features, and suggestions are made about priorities for future consumer research on the effects of health information.
[ to cite ]:
Paul N. Bloom (1997) ,"Studying Consumer Responses to the Changing Information Environment in Health Care: a Research Agenda", in NA - Advances in Consumer Research Volume 24, eds. Merrie Brucks and Deborah J. MacInnis, Provo, UT : Association for Consumer Research, Pages: 360-365.

Advances in Consumer Research Volume 24, 1997      Pages 360-365


Paul N. Bloom, University of North Carolina at Chapel Hill


There has been an explosion in the amount of information available to consumers to guide them in making choices about health care. Much of this information has emerged because of public policies that have sought to use information programs to encourage both more competitiveness in health care markets and more protection for consumers. This paper reviews what is known about how well these programs have achieved their objectives. Several propositions are offered about effective program features, and suggestions are made about priorities for future consumer research on the effects of health information.


The health care system in the United States is undergoing enormous changes. The traditional ways that consumers have searched for, selected, received, and paid for health care are steadily fading, and a new environment emphasizing "managed care" and preventive health is rapidly emerging. A key feature of this new environment is the huge amount of information that has become available to consumers to help guide them in their health care decisions and choices. Compared to only a few years ago, consumers are being exposed to or have access to substantially more information in the form of:

- Advertising by health care professionals and providers

- Direct-to-consumer advertising of prescription drugs

- Social marketing campaigns encouraging preventive health behaviors

- "Hot Lines" and other remote communications programs

- Warning and informational labels

- Provider quality and mortality ratings

Much of this cascade of new information can be attributed to conscious efforts by public policy makers to use information provision as a means of stimulating competition, increasing consumer protection, and encouraging preventive health behaviors. Policy makers have often turned to "information remedies" to help markets function more effectively, particularly when they want to limit the use of more intrusive forms of regulatory control (FTC 1979, Beales, Craswell and Salop 1981). Additionally, much of the new information has been introduced in response to consumer demand for guidance. The American public appears to have developed a huge appetite for health information.

All of the new information certainly has the potential for helping the evolving U.S. health care system function more efficiently and effectively for consumers and society. However, there is also the possibility that some forms of information could produce negative consequences, such as creating consumer confusion or raising health care costs. Consumer researchers, with their extensive experience studying how consumers use and respond to information, clearly have a role to play in helping public policy makers, health care administrators, public health officials, and consumer advocates determine what types of information programs should be encouraged in the future. This paper attempts to identify contributions consumer researchers could make.


The use of information programs and remedies has had much appeal to those concerned with health policy. In general, proponents of information provision have argued that a process similar to the one portrayed in Figure 1 takes place when increased information is supplied about health choices. The model suggests that increased information will allow health consumers to make more informed and satisfying choices. They should be able to use the information to help them eat better, exercise more, avoid dangerous products, get more preventive check-ups, reduce search costs, and find more respected and reasonably-priced providers. Health providers should respond to these informed choicesCand to the existence of more information about health optionsCwith more vigorous efforts to (1) provide even more information and (2) supply quality health care offerings at competitive prices or fees. The combination of more informed choices by consumers, better quality offerings, and lower prices should produce improved health outcomes. All this can theoretically be done with regulatory actions that are low in intrusiveness and monitoring requirements, unlike what has historically been done, for example, in regulating the drug and transportation industries to achieve better safety. Once put in place, many information programs can help in allowing health markets to regulate themselves, reducing the need for labor-intensive and paperwork-filled oversight programs that involve peer review, cost monitoring, and continuous reporting (Magat and Viscusi 1992, Adler and Pittle 1984).

In addition to the more general effects portrayed in Figure 1, increased information ha the potential of producing several other positive effects. These include:

- improving doctor-patient communication, and thereby patient compliance with physicians’ recommendations (Masson 1991).

- reducing the adverse selection problem in markets such as that for health insurance, which forces low-risk consumers to pay more (and high-risk consumers less) for coverage than they should (Folland, Goodman, and Stano 1993). Having better information about policies and rates could make it easier for low-risk consumers to locate and demand low- cost coverage.

- reducing the incidence of supplier-induced demand (Kenkel 1990). More informed consumers may be less susceptible to efforts by providers to persuade them to obtain unnecessary tests and procedures.

- reducing the incidence of malpractice suits. More informed consumers may be more likely to find providers who match their needs well, thereby making them more reluctant to sue. The creation of better patient communication and compliance could also help this situation.

- creating more opportunities for poor and disadvantaged consumers to gain access to health care. Providers who are interested in serving these populations may find it easier to attract patients efficiently using advertising, while these patients may simultaneously find themselves better able to insist on and find good care.

Overall, increased information can potentially help consumers navigate successfully through the confusion associated with the emerging managed care environment in health care.

The ability of increased information to set in motion processes in health care markets like those portrayed in Figure 1 has been discussed by many authors. Bloom and Stiff (1980) have discussed how advertising could help markets for physicians become more competitive, while Masson (1991) and Sheffet and Kopp (1990) have identified the potential benefits of advertising of prescription drugs to consumers. Dorfman and Wallack (1993), Walsh et al. (1993), and Ling et al. (1992) have explored the possibilities of social marketing programs, while Freimuth, Stein, and Kean (1989) have looked at the potential of telephone information services. Bettman, Payne and Staelin (1986) and Stewart and Martin (1994) have discussed how warning labels can reduce poor consumer choices for risky products, while Greenberg (1991) and Sisk et al. (1990) have examined the value of hospital quality and mortality ratings. These authors have drawn from seminal works in the economics of information by Stigler (1961), Arrow (1963), and Nelson (1970, 1974)Cas well as fundamental thinking in decision theory, social psychology, sociology, and communicationsCto shape their views.



Many authors have also recognized the possibility of a negative side to the expansion of information provision in health care markets. One concern is that information can be inaccurate, or it can be literally accurate but incapable of being processed accurately by consumers. Indeed, several authors have expressed concern about the information asymmetry that exists between knowledgeable health providers and inexperienced health consumers who are unable to assess the real utility to them of different options (Folland, Goodman, and Stano 1993). Consumers may, among other things, rely on the faulty recommendations of friends or on certain misleading signals or "sign-posts" of quality such as price (Rizzo and Zeckhauser 1989). The fear is that, whatever the cause, consumers will be mislead into choosing health providers, tests, insurance coverages, therapies, and preventive behaviors that are not a good fit for their personal needs. Regulatory oversightCsuch as programs to police deceptive advertisingCcan help to mitigate problems created by misled consumers, but this can potentially make an information-provision program look less like a remedy and more like a new layer of reglation.

Another concern is that information provision can lead to less competitiveness in health care markets by favoring larger providers who are able to advertise more, do more procedures, or otherwise show up better than smaller providers in rating systems. Because of information asymmetry, economies of scale in information provision, and other factors, the possibility exists that the big and rich will just get bigger and richer, making it difficult for small providers to enter or survive in markets. Ultimately, this could put some providers in positions of exercising monopoly power, leading to higher prices and lower quality service.

Still another concern is that information provision may somehow damage the reputations and public faith held by many health care providers. Advertising could make doctors look too commercial and manipulative, and rating systems could make hospitals or surgeons look too numbers-oriented and calculating.

Finally, there is concern that information provision may prove costly to implement. These costs might actually be passed on to consumers in the form of higher prices or taxes, negating any of the benefits consumers might obtain from the programs (Adler and Pittle 1984).

An effective information program can be viewed as one that produces more competitiveness among health providers and better health outcomes for health consumers without adding a significant regulatory and expense burden to society. To judge effectiveness, the following questions need to be addressed about information programs:

- How much do consumers use the information provided?

- Are consumers misled or confused by the information?

- What impact has the information had on consumer knowledge, attitudes, and behaviors?

- What impact has the information had on the health and financial status of consumers?

- What impact has the program had on how providers supply information, provide services, or price their services?

- What impact has the program had on the functioning and costs of government regulation and oversight activities?

The following sections address what has been learned to date about answers to these questions with respect to different categories of information programs.

Advertising by Health Care Professionals and Providers: A significant amount of research has been done on the effects of advertising by health care professionals and providers. Some of this work was done prior to policy actions that opened up health care markets to more aggressive use of advertising (e.g., the Supreme Court’s 1982 ruling against the American Medical Association’s advertising ban). In fact, studies done by Benham (1972) on the eyeglasses market and Cady (1976) on the retail prescription drug marketCwhere prices were found to be lower in states that permitted price advertisingCwere highly influential in persuading policy makers at the FTC and elsewhere to pursue antitrust actions designed to encourage advertising by professionals.

The research on the effects of advertising by health professionals has basically sought to help resolve a debate between two schools of thought about the competitive effects of advertising (Albion and Farris 1981). The "advertising as information" school sees advertising as something that makes demand more elastic by providing low-cost information to consumers about options and encouraging competitive moves by sellers (Nelson 1974). The "advertising as barrier to entry" school sees advertising as something that makes demand more inelastic by creating brand loyalty with consumers that can only be overcome by spending large sums of money on competitive advertising (Comanor and Wilson 1974). The research in health care markets relevant to this debate has found inconsistent results. Advertsing has been found to be pro-competitive, lowering prices (and sometimes improving quality) in the markets for eyeglasses (Benham 1972), optometric services (Bond et al. 1980, Haas-Wilson 1986), and prescription drugs (Cady 1976). Advertising has been found to raise prices and (and sometimes hurt quality) in the markets for physician services (Rizzo and Zeckhauser 1992), eye examinations (Parker 1995), and dental services (Kwon, Safranski, and Kim 1993).

Additional research is needed to see if an explanation can be found for the inconsistent results. Previous efforts to explain these results have focused on how advertising tends to produce more pro-competitive outcomes when simpler offerings are being advertised and prices are included in the advertisements (Folland, Goodman, and Stano 1993, Rizzo and Zeckhauser 1992). Another way of looking at this is to say that advertising has more pro-competitive effects when "search" attributes (which can be determined upon inspection, such as price or office hours) are what are most interesting to consumers rather than "credence" attributes (which can never really be understood, such as a doctor’s true diagnostic skill).

Consumer researchers have addressed the controversy over advertising’s effect on price elasticity, but they have not focused on the health care market. Experimental researchCsuch as the work done by Mitra and Lynch (1995) on the conditions where advertising leads consumers to become more price sensitiveCcould clearly be done in a health care context. Among other things, comparisons could be made between advertising for search-oriented offerings and credence-oriented offerings. Other experimental studies could extend the work on brand equity by Keller and others (e.g., Keller and Aaker 1992, Campbell and Keller 1996) to understand the power of advertising brand names in health markets. It is conceivable that brand equity is even more powerful in markets that are high in credence qualities (like health markets), since consumers may be forced by information asymmetry to rely on signals of quality such as brand name. Thus, the advertising of strong brand names could have a more deleterious effect on competition in health markets.

Consumer research also could address the conditions under which consumers are easily misled by advertising by doctors, hospitals, and others. Questions that could be addressed include: Are certain types of claims more likely to be misunderstood? And are certain types of people (e.g., the poor) more likely to be deceived?

Advertising Prescription Drugs to Consumers: Little research has been done on the advertising of prescription drugs to consumers. This practice has technically been legal for a long time, but it was discouraged by the FDA for many yearsCwith even a moratorium on its use requested during the early 1980s. The FDA requirement that the lengthy disclosures of contraindications and other scientific findings (i.e., the "brief summary") be included in all ads that make efficacy claims helped to reduce incentives to use this form of advertising (Masson 1991). Late 1980s direct-to-consumer advertising was predominantly of the "see your doctor" variety, exhorting consumers with certain symptoms to seek medical advice. More recently, as FDA views on this practice have become more tolerant, the ads are naming brand names (even on television) and making efficacy claims (with the accompanying disclosures). The volume of this type of advertising is clearly increasing (Winters 1993).

The research to date on the effects of this practice has focused on topics such as consumer attitudes toward this phenomenon (Williams and Hensel 1994). Little has been done to see whether the practice has produced positive results such as better communications between doctors and patients, better patient compliance with drug therapies, and lower pricesCor negative results such as doctor-patient conflict, drug abuse, deceptive claims, and higher prices. Consumer researchers could employ a wide range of approaches to address these issues. Survey research of doctors, patients, and others to obtain self-reports on behaior at various stages of advertising campaigns could be revealing. In addition, laboratory experiments could examine whether consumers are confused or deceived by prescription drug advertising. Moreover, field experiments, using test and control markets, could examine effects on visits to doctors, complaints, drug therapy compliance, and other measures. Of course, cooperation in data collection from larger managed care organizations and hospitals would be needed.

Social Marketing Campaigns: Considerable interest has developed in recent years in social marketing approaches to dealing with public health problems. Multi-faceted campaigns, employing marketing tools ranging from advertising to personal selling to publicity to creative branding to unique pricing, have been conducted by numerous government agencies, nonprofit organizations, and private corporations. Campaigns have sought to persuade people to engage in all types of socially-beneficial behaviors, including using condoms, getting a mammogram, wearing seat belts, and drinking responsibly. Large amounts of information are often disseminated in these campaigns.

Several reviews have been done previously of the effects of social marketing campaigns (Adler and Pittle 1984, ICF 1991, Ling et al. 1992, Walsh et al. 1993, and Dorfman and Wallack 1993). These reviews suggest that social marketing campaigns have had a mixed record, with only a few major campaigns that can be considered unqualified successes and many that must be considered disappointments. More evaluations clearly need to be done, even though program managers are frequently reluctant to entertain more than a cursory evaluation out of fear that poor results might get their budgets cut and that good results might raise supporters’ expectations to unreasonable levels (Bloom 1980). Consequently, little has been learned about general determinants of effectiveness, other than that it pays to do marketing research first before formulating a campaign and that "tailoring" messages to audience needs and tastes improves communication effectiveness (Rimer and Orleans 1994, Strecher et al. 1994). The value of using certain types of appeals (e.g., stressing personal benefits rather than societal benefits) in certain media (e.g., personal contact) with certain target audiences (e.g., those at the contemplation stage) in field settings needs to be examined more fully, with more emphasis put on understanding the behavioral impacts of preventive health messages, not just their attitudinal impacts. The latter have been studied amply in work on fear appeals and persuasive communication done in laboratory settings (e.g., Block and Anand-Keller 1995).

"Hot Line" and Other Remote Communications Programs: Numerous examples exist of hotlines and other information services that consumers can access from remote locations to obtain health information. Often these services are established as components of more comprehensive social marketing programs. Currently, some of these services are moving into providing information through two-way interactive television or through interactive on-line connections. To this point, little has been written on the effectiveness of these initiatives. Freimuth, Stein, and Kean (1989) have done an appraisal of the National Cancer Institute’s Cancer Information Service, and Tisdale (1993) and Glasgow et al. (1993) have studied smaller-scale programs. Consumer researchers would seem to be particularly well-suited for doing studies on, for example, how consumers respond to receiving advice from a doctor through a two-way interactive television appointment.

Warning Label and Informational Label Requirements: The effectiveness of labels has been studied extensively. Work has been done on cigarette warning labels (Viscusi 1992), alcohol warning labels (Andrews 1995), chemical warning labels (Magat and Viscusi 1992), nutritional labels (Levy and Derby 1995, Moorman 1990), and other topics. Several comprehensive efforts have already been made to synthesize what has been learned from this research (Stewart and Martin 1994, Bettman, Payne, and Staelin 1986), but more could be done. New typs of labels with new types of formats are being tried all the timeCsuch as the new rating system that will be used with television programsCand the effects of these disclosures deserve careful monitoring.

Provider Quality and Mortality Ratings: Considerable data is available that rates the quality and mortality results of hospitals and other providers. Efforts have been made to disseminate these data through guidebooks and the press. For example, the consumer magazine Consumers’ Checkbook (1992) has published ratings of both hospitals and doctors. Although the theoretical benefits of this type of information provision has been discussed by Greenberg (1991) and Sisk et al. (1990), little empirical work has been done on the effects of these ratings. One study by Wholey et al. (1992) found an association between the competition in HMO markets and the willingness of HMOs to disseminate performance information. Another study by Rudd and Glanz (1991) found that articles about the 1986 HCFA hospital mortality data received moderately high "news play," but it did not examine how patient behavior was affected. Future research could examine the content and format of this information to identify approaches that encourage consumers to use the information to help them make better decisions.


While it is difficult to draw any general conclusions about the effects of health information programs given the great diversity of these programs and the limited amount of relevant research, a few basic findings or propositions can be offered. The first propositions have to do with which features of a program seem to lead to effectiveness. Most of these ideas come from the work on labeling. The second propositions have to do with features of markets that tend to make them more receptive to information programs. These ideas primarily come from the work on advertising, social marketing, and labeling. All of these propositions are meant to be somewhat general, applying to more than a single type of program but less than all of them.

First, it is proposed that the more effective programs offer information that is:

- easy and low-cost for consumers to access (Bettman, Payne, and Staelin 1986).

- displayed in formats that are easy for consumers to process, with reference points that facilitate comparisons across choices (Moorman 1990, Bettman, Payne, and Staelin 1986).

- credible to consumers (Stewart and Martin 1994), and not unduly alarmist (Viscusi 1993).

- new to consumers rather than old material that they might tune out or discount (Stewart and Martin 1994, Viscusi 1993).

- unambiguous to consumers, presenting accurate probabilities of outcomes and specific guidance on how to avoid negative outcomes (Moorman 1990).

- personally-relevant to consumers (Stewart and Martin 1994), with data "tailored" to their needs and tastes (Rimer and Orleans 1994, Strecher et al. 1994).

Second, possible features of markets that would make them more amenable to the use of information programs can be proposed.: The more effective information programs should appear in markets that have:

- offerings that are relatively high in "search" properties and low in "credence" properties. The amount of information asymmetry that exists between providers and consumers could be low in such markets, thereby allowing consumers to be more capable of using information to locate desired attributes before finalizing purchases (Nelson 1970, 1974, Darby and Karni 1973).

- frequently-purchased offerings (Drumwright and Kane 1988).$ many varied, competing offerings that are confusing and costly to evaluate (Drumwright and Kane 1988).

- low levels of insurance coverage (Pauly 1986). Consumers would have greater incentives to search for better options in such markets.

- offerings that provide consumers with mostly personal benefits rather than mostly benefits for society (Stewart and Martin 1994).

- segments of consumers who respond to increased information very aggressively, perhaps because they possess greater motivation, higher knowledge levels, self-efficacy, or other individual traits.

Examining this last feature would help in gaining an understanding of whether information programs can be effective even if only small segments of a market respond to them, "policing" the market for others (Viscusi 1993, Beales, Craswell, and Salop 1981).


Given the shift to managed care, it seems that it would be particularly useful for research to be done on how information programs and remedies can be designed to help people make more informed and satisfying choices about (1) which managed care organization to join and (2) how to interact with their chosen managed care system. Research on the effects of advertising by managed care systems would be especially instructive. Questions could be addressed such as:

- Are consumers being deceived by managed care advertising, expecting services and coverages that they cannot obtain?

- Does heavy advertising of brand names (e.g., Kaiser, Harvard) help to create brand equity, making it difficult for lighter advertising providers to compete effectively?

- Has advertising helped to encourage consumers to take advantage of any of the preventive health programs and services of managed care organizations?

- Has advertising helped to create additional mistrust and suspicion about doctors and managed care organizations?

Research might also investigate how to design a label or rating system that could help consumers choose a managed care option that best meets their needs. Additionally, the effectiveness of social marketing and hotline programs conducted by managed care organizations could be evaluated.

Beyond the issues surrounding managed care, there are a host of other important consumer research questions related to health information. Among the most timely topics to investigate are the effects of direct-to-consumer advertising of prescription drugs, the effects on behavior of various types of social marketing appeals (e.g., highly tailored), the effects of new types of remote communications programs (e.g., two-way interactive video), and the effects of new types of warning and informational labels (e.g., the rating system for television programs). In exploring these topics, consideration could be given to testing empirically some of the propositions presented in the previous section.


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