Elderly people waiting for nursing home beds were reportedly stuck at the LGH for months at a time before a transitional unit was introduced at The Manor aged care facility at Kings Meadows in 2009.

Unions say the 12-bed unit, run by OneCare and funded by the federal government, will be cut at the end of next month.

Health and Community Services Union state secretary Tim Jacobson said the facility offered care to elderly patients well enough to leave hospital but not fit to be sent home.

Before the unit was introduced five years ago, patients were reportedly left on hospital trolleys for up to five days, as the LGH struggled with chronic bed block and occupancy rates rose to more than 110 per cent.

At the time, Tasmanian Health Organisation North chief executive John Kirwan said that one of the biggest challenges in tackling bed block was the number of elderly patients stuck at the hospital.

At one point the average length of stay for such patients was 70 days.

Australian Medical Association state president Dr Tim Greenaway said the transitional unit had made a noticeable difference since then, and its closure would likely see problems escalate again.

Australian Nursing and Midwifery Federation state secretary Neroli Ellis said the John L. Grove Centre, a Launceston subacute rehabilitation facility opened last year, would also lose funding in about 12 months under the federal budget.

``This is the beginning of what we'll see as many additional pressures now back onto the LGH resulting from the reduction of different programs,'' Mrs Ellis said.

``This will not be sustainable.''

A state government spokesman said it was still working through the implications of the federal budget, and would be consulting with OneCare.