A quarter of hospital care admissions could be avoided, say researchers after Sunderland study
And part of the problem is caused by health professionals bending to "undue influence" exerted by patients, their families or carers.
The research was carried out by the Local Government Association (LGA), which represents more than 370 councils in England and Wales.
It commissioned the study to explore if better integration of care services could save money - and, if so, where the savings would come from.
Attendance and admission data from the past two years was analysed, and researchers talked to GPs, district nurses and discharge coordinators.
Case notes were drawn from five different parts of the country, including Sunderland. The others were Kent, Lancashire, Greenwich and Swindon.
The report found practitioners pinpointed a "significant lack of consistency in decision-making" and estimated up to 45% care "pathway" decisions could be improved.
"There are penalties and ramifications for missed diagnoses, but no penalties for widespread over-provision of care," it read.
It claimed helping more people receive home or community care could save more than £1billion nationally, achieved by "shifting resources to support people living more independently".
The most money could be saved by avoiding unnecessary attendances and emergency admissions.
More preventative work could be done on things like falls prevention and tackling loneliness, it said.
The report said that in 26% of the cases where people had been admitted to hospital, there had been missed opportunities to make interventions that would have avoided it.
Councillor Izzi Seccombe, chairman of the LGA's community wellbeing board, said the study highlighted the need for "robust reviews" by different professionals at critical decision-making points.
She added: "Councils, care providers, charities and the NHS are all united around the need for central Government to fully fund adult social care.
"This is essential if we are to move away from just trying to keep people alive to ensuring they can live independent, fulfilling lives, as well as alleviating the pressure on the NHS.
"We must all aspire to ensuring the care our loved ones receive goes beyond just helping them to get washed, dressed and fed - but to supporting them to live dignified, independent lives."
The LGA-commissioned research comes after the The Academy of Medical Royal Colleges (AMRC) recorded 40 regularly-used medical procedures as largely pointless.
A study carried out last year also found 82% of doctors admitted prescribing or carrying out a treatment that they knew to be unnecessary.
A Department of Health spokesman said: "Patients should never be in hospital unnecessarily, and we are determined to make health and social care more integrated so they get relevant, high-quality care in hospital and community settings.
"That's why we have given local authorities access to up to £3.5billion to spend on social care, and we will be investing an extra £10billion a year so the NHS can introduce its own plan for the future."
"Nice (National Institute for Health and Care Excellence) has guidelines for better coordination between health and social care, and we are working with NHS England, NHS Improvement and local government on wide-ranging support to improve quality and efficiency."