updated 4/7/2008 2:32:39 PM ET 2008-04-07T18:32:39

For chronically ill patients in their last two years of life, Medicare spends an average of $59,379 in New Jersey but only $32,523 in North Dakota. The difference is primarily a result of patients getting more hospital care, but not necessarily better care, according to a new report.

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Researchers at Dartmouth Medical School say that vast differences in spending patterns nationally points to why policymakers need to focus on volume when it comes to restraining costs — not just on the price of a particular service or on expanding health coverage to the uninsured.

The national average for spending on such chronically ill patients was $46,412.

A large share of Medicare's expenses— about $1 out of every $3 spent — is generated by enrollees with chronic conditions in their final two years of life. That's the group of patients that researchers focused on when compiling the Dartmouth Atlas of Health Care, which comes out every two years. For this year's version, they examined the records of 4.7 million patients who died during 2001-2005.

They found that the number of days those patients spent in the hospital varied greatly depending upon where they lived. For example, chronically ill patients in Bend, Oregon, spent 10.6 days in the hospital. Patients in Manhattan spent 34.9 days in the hospital.

In New Jersey, patients in their last two years of life spent 27.1 days in the hospital, which was the highest state rate in the nation, followed by New York, 27 days. At the other end of the scale, patients in Utah spent 11.6 days in the hospital.

Dr. Elliott Fisher, who led the study, said that more days in the hospital did not necessarily lead to better outcomes. Those patients were usually seen by more specialists, and they spent more time in the intensive care unit, but they did not live longer, on average.

"We know that hospitals are dangerous places if you don't need to be there," Fisher said.

So, what led patients to visit the hospital more often? The report says it's the supply of beds — not how sick patients are — that is the key driver. Fisher said patients in the low-cost regions still got care, but they were more likely to get their care at the doctor's office or at home because there was a smaller supply of hospital beds per patient.

"We tend to assume, both patients and physicians, it's safer to have patients in the hospital, that more is better," Fisher said.

Physicians appear to adapt their practice style to the resources available. The trend doesn't apply to just hospital beds. The more cardiologists there are on a per capita basis, the more often Medicare beneficiaries will see a cardiologist. The more CT scanners available, the more CT scans they will get, the report said.

Besides comparing states, the researchers compared the cost of treating chronically ill patients at well-respected hospitals. Again, there were huge variations in costs. Medicare spent about $34,372 for the chronically ill at the Mayo Clinic's St. Mary's Hospital in Rochester, Minn. Medicare spent $63,900 for the chronically ill at UCLA Medical Center in Los Angeles.

Some of the difference can be explained through higher reimbursement rates, but volume was the key factor, Fisher said.

The patients at UCLA Medical Center spent 11.6 days in the intensive care unit on average versus 4.2 days at the Mayo Clinic's hospital. The average patient at UCLA was visited by a doctor nearly 53 times, versus 24 physician visits at the Mayo Clinic.

Total Medicare spending for the population in the study came to about $289 billion. If the spending per patient for the entire population mirrored the rates in Rochester, Medicare could have saved $50 billion.

Dartmouth's researchers have been tracking outcomes for Medicare patients for several years and the Dartmouth Atlas of Health Care has been frequently cited as evidence of a fragmented system. This year's report also looked at whether hospitalizations would be reduced if patients used less costly alternatives to hospitals, such as nursing homes or rehabilitation centers. But those alternatives actually led to higher rates of hospitalization. Spending for hospice care was the only exception, the report said.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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