We measured geographic differences in the use of medical and surgical services during 1981 by Medicare beneficiaries (age greater than or equal to 65) in 13 large areas of the United States. The average number of Medicare beneficiaries per site was 340,000. We found large and significant differences in the use of services provided by all medical and surgical specialties. Of 123 procedures studied, 67 showed at least threefold differences between sites with the highest and lowest rates of use. Use rates were not consistently high in one site, but rates for procedures used to diagnose and treat a specific disease varied together, as did alternative treatments for the same condition. These results cannot be explained by the actions of a small number of physicians. We do not know whether physicians in high-use areas performed too many procedures, whether physicians in low-use areas performed too few, or whether neither or both of these explanations are accurate. However, we do know that the differences are too large to ignore and that unless they are understood at a clinical level, uninformed policy decisions that have adverse effects on the health of the elderly may be made.