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The Launceston General Hospital will suspend the program on January 6 as part of drastic measures to save $28 million this financial year.

Sophie Hill, of Save It Tasmania, said she had contacted Mr Lyons after it was announced that the service would be axed in mid-December and was disappointed by Mr Lyons's response.

The former LGH spokesman and surgical business manager forwarded the concerns on to Ms O'Byrne.

Yesterday, Mr Lyons said he had been involved in securing a federal government grant to get the program started in the mid-1990s but understood why it had to go.

''If you have got plenty of money, Hospital in the Home is nice,'' Mr Lyons said.

''It's an expensive way of looking after people. You don't see too many GPs running their practice by making home visits.''

He said people still had access to a community nursing service.

However, supporters of the service say it saves money in the long run by keeping people out of hospital and frees up beds for other people.

Professor Sarah Breier, who founded the program, said it was a false economy.

''It's a quick fix to save money, but it's only going to end up costing more,'' she said.

Acting federal Health Minister Nicola Roxon declined to comment on the axeing of the Hospital in the Home program, but her spokesman said:

''The Gillard government is providing record funding to Tasmania for its health and hospital system and we remain concerned about the government's decision to reduce the funding to health services in the state, the impact it will have on Tasmanians' access to hospital care, and the potential effect this may have on health outcomes.''