The national average for spending on chronically ill patients in their last two years of life is approximately $46,412. However, spending varies by region and by institution.

In New Jersey, Medicare spends an average of $59,379; while in North Dakota, the figure is $32,523. According to a new report by researchers at Dartmouth Medical School, this difference is mostly because of more hospital care, but not necessarily better care.

The researchers say that vast differences in spending patterns nationally point 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.

Researchers focused on enrollees with chronic conditions in the last two years of their lives whose Medicare expenses total about $1 out of every $3. The data was complied in a report that is published every two years by the Dartmouth Atlas of Health Care. The researchers examined the records of 4.7 million patients who died 2001 to 2005 and found that the number of days those patients spent in the hospital varied greatly depending upon where the patients lived. As an example, patients in New Jersey spent 27.1 days in the hospital the last two years of their life --- the highest state rate in the nation - while patients in Utah spent 11.6 days in the hospital.

The reason why some patients visited the hospital more often seems to be the number of beds available and not how sick the patients are. Dr. Elliott Fisher, who headed the study said that patients in the low-cost regions got care, but more likely than not received that care in a doctor's office or at home because there were not as many beds available per patient.

According to the report, the same goes for other medical practices. For example, the more cardiologists there are on a per-capita bass, the more likely Medicare beneficiaries will see a cardiologist. The more CT scanners available, the more CT scans given. The report indicated that physicians seem to adapt their ways of practicing to the resources that are readily available.

Not only were states compared in this study, the researchers looked at the cost of treating chronically ill patients at top-notch hospitals. Once again the researchers found significant variation. Medicare expenses for the chronically ill at the Mayo Clinic's St. Mary's Hospital in Rochester, MN, averaged $34,372 while Medicare's coverage at UCLA Medical Center in Los Angeles totaled somewhere around $63,000.

Higher reimbursement rates explain some of the difference; however volume seems to be the main factor. UCLA Medial Center patients spend about 11.6 in the intensive care unit, while Mayo Clinic patients averaged 4.2 days. Doctors visited patients at UCLA approximately 53 times compared to 24 physician visits at the Mayo Clinic.

Total Medicare spending for the study's population was approximately $289 billion, and if the spending per patient for the entire population mirrored the rates in Rochester, Medicare could have saved $50 billion.

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