Spaces in nursing and care homes in Sussex are being taken up by people from outside the county because their councils pay more.
Some homes in Sussex are taking in patients from London boroughs because of the extra money.
They say they would prefer to take in local people but the amount being offered by social services is not enough to keep their business going.
The news was revealed during a health forum organised by the South East England Regional Assembly (Seera) to discuss NHS and social services.
Low payments, coupled with new Government nursing and care homes standards which come into force in April, have led to dozens of homes closing.
This has led to a "bed-blocking" crisis in hospitals, with hundreds of patients stranded on wards while waiting for a place in a home.
A spokesman for East Sussex County Council said: "We are aware this happens but the homes are privately owned and are entitled to take in what patients they want."
The county is reviewing its policy on nursing and care homes and a report is expected in the New Year.
The East Sussex branch of the Nursing Home Association says it believes some of its members have taken on patients from outside the area but the number is small.
It says the industry is facing a major crisis because of the difficulties in meeting the new Government standards.
It says homes are being offered about £330 a week to look after patients while it costs more than £1,000 a week to keep them in hospitals.
The association says homes need to be paid at least £450 a week to provide the service needed and stay open.
Lucy Hadfield, director of development at NHS South East regional office, says plenty is being done to ease the region's bed blocking.
Mrs Hadfield said: "There has been a seven per cent decrease in the number of residential care home and nursing home places in the South-East.
"We have put a number of both short-term and long-term actions in place to help stem any further deterioration and move it towards improvement."
Seera chief executive Paul Bevan said: "Many of the problems facing the NHS in the South-East are very complex and are often beyond the direct control of the local health and social care systems.
"An example of this is the effect which London, and its health service demands, have on the region.
"London councils are allocated more to spend per head than their neighbouring South-East councils.
"We intend to work with the region's local authorities to develop a constructive dialogue with London on these critical issues."
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