Thousands of U.S. residents die annually as a direct result of the billions of dollars wasted by the nation’s health care system, according to a new report.

The report, released Sept. 6 by the Institute of Medicine, found that about 30 percent of medical spending—a total of $750 billion in 2009—is squandered on fraud, unnecessary care, convoluted paperwork and other excessive administrative costs and other inefficiencies. The report was created by an 18-member panel of prominent experts, including doctors, business people, and public officials.

That waste translates into lost lives. In 2005, approximately 75,000 lives might have been saved if every state delivered the level of quality care provided by the best performing state.

“Health care in America presents a fundamental paradox,” the report, titled “Best Care at Lower Cost,” stated. “The past 50 years have seen an explosion in biomedical knowledge, dramatic innovation in therapies and surgical procedures, and management of conditions that previously were fatal…Yet, American health care is falling short on basic dimensions of quality, outcomes, costs and equity.

Counter to common belief, the panel wrote that significant cuts to health care funding can be made without diminishing services, cuts which could lead to higher quality care. But that may be a difficult concept for the public to readily accept, experts acknowledged.

“Rationing , to me, is when we are denying medical care that is helpful to patients, on the basis of costs,” cardiologist Dr. Rita Redberg, a medical school professor at the University of California, San Francisco, told the Associated Press. “We have a lot of medical care that is not helpful to patients, and some of it is harmful. The problem is when you talk about getting rid of any type of health care, someone yells, ‘Rationing.’”

The report identified six major areas of waste: unnecessary services ($210 billion annually); inefficient delivery of care ($130 billion); excess administrative costs ($190 billion); inflated prices ($105 billion); prevention failures ($55 billion), and fraud ($75 billion).

Eighteen months in the making, the report offered several solutions including: using mobile technologies and electronic health records to make capturing and sharing patient data between different providers easier; designing new payment models that reward quality outcomes instead of paying for each procedure; facilitating more cooperative relationships between patients, their families and providers to manage care; and educating patients to become more savvy customers.

The main message, the report said, is that improving the system will require an across-the-board commitment.

“The threats to Americans’ health and economic security are clear and compelling, and it’s time
to get all hands on deck,” committee chair Mark D. Smith, president and CEO of the California HealthCare Foundation said in a statement. “Our health care system lags in its ability to adapt, affordably meet patients’ needs, and consistently achieve better outcomes. But we have the know-how and technology to make substantial improvement on costs and quality. Our report offers the vision and road map to create a learning health care system that will provide higher quality and greater value.”