The government needs to rethink the way it funds hospital care if patients are to be looked after closer to their homes, says a report out this week.

The system of payment by results, which has been gradually introduced into hospital trusts over the past four years as a means of linking payments to activity, may actually hamper government plans to deliver care closer to patients’ homes, says a working party made up of representatives from the Royal College of Physicians, the Royal College of General Practitioners, and the Royal College of Paediatrics and Child Health.

Instead of the block payments hospitals used to receive to provide certain services, payment by results means that …