A new, in-depth report estimates that 30 percent of health care spending in the United States is completely wasted — and the overall numbers are so big, that 30 percent equates to $750 billion.

The report from the Institute of Medicine says America's health care system has become too complex and costly to continue business as usual. Inefficiencies, an overwhelming amount of data, and other economic and quality barriers hinder progress in improving health and threaten the nation's economic stability and global competitiveness, the report says. However, the knowledge and tools exist to put the health system on the right course to achieve continuous improvement and better quality care at lower cost, added the committee that wrote the report.

The costs of the system's current inefficiency underscore the urgent need for a systemwide transformation. The committee calculated that about 30 percent of health spending in 2009 — roughly $750 billion — was wasted on unnecessary services, excessive administrative costs, fraud and other problems. Moreover, inefficiencies cause needless suffering. By one estimate, roughly 75,000 deaths might have been averted in 2005 if every state had delivered care at the quality level of the best performing state.

Incremental upgrades and changes by individual hospitals or providers will not suffice, the committee said. Achieving higher quality care at lower cost will require an across-the-board commitment to transform the U.S. health system into a "learning" system that continuously improves by systematically capturing and broadly disseminating lessons from every care experience and new research discovery. It will necessitate embracing new technologies to collect and tap clinical data at the point of care, engaging patients and their families as partners, and establishing greater teamwork and transparency within health care organizations. Also, incentives and payment systems should emphasize the value and outcomes of care.

"The threats to Americans' health and economic security are clear and compelling, and it's time to get all hands on deck," said committee chair Mark D. Smith, President and CEO of the California HealthCare Foundation. "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."

The report was sponsored by the Blue Shield of California Foundation, the Charina Endowment Fund and the Robert Wood Johnson Foundation. Established in 1970 under the charter of the National Academy of Sciences, the Institute of Medicine provides objective, evidence-based advice to policymakers, health professionals, the private sector and the public.