Professor Louisa Jorm from the University of Western Sydney, and her co-authors from the NSW Department of Health, conducted a study to estimate the hospital costs for end-of-life care of older people in NSW between 2002 and 2003.
They found that hospital costs decreased for older patients, with people aged 95 years or over incurring less than half the average costs per person for patients who died aged 65-74 years.
Prof Jorm says this difference is partially related to place of death.
"Almost three-quarters of people who died aged 95 years or more died outside of hospital, and one-fifth had not used any inpatient hospital services in their last year of life," Prof Jorm says.
"The likelihood of living in residential care increases with age, and the threshold for admission to hospital is likely to be higher for these residents."
Prof Jorm says this shift from hospital care to residential aged care will impact on the supply, organisation, and funding for both sectors.
"Our study provides a baseline from which to assess the impacts of demographic change and of health system reforms - including the current Council of Australian Governments' initiative to improve care for older people in hospitals - on hospital costs in NSW."
The study also showed that people aged 65 years or more who were in their last year of life consumed about 9 per cent of total hospital inpatient costs.
Inpatient costs increased greatly in the six months before death, and cardiovascular diseases and cancer had the highest costs in the 12 months before death.
The Medical Journal of Australia is a publication of the Australian Medical Association.