The Audit Commission has reported that hospital costs rose by 7% in 2008/09 compared with a 4% rise in the cost of primary care compared with the previous year.
Its More for Less report warns that PCTs have failed to shift investment from hospitals into the community, and that the cost of inpatient and day care is continuing to increase.
Figures from the NHS Information Centre showing that hospital prescribing made up 29% of the £112bn NHS drugs bill last year compared with 26% in 2007, it says.
Meanwhile, foundation trusts have seen the biggest increases in cash flows, with incomes up 8% compared with 6% for non-foundation trusts.
It says: "The national figures for 2008/09 suggest that there was no shift from hospitals to care closer to home in the community, either in terms of investment or activity.
"These trends seem to be continuing into 2009/10, with inpatient and day-case activity continuing to grow at the same rate, largely fuelled by less complex cases."
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