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Medical researchers should have the freedom to pay hospitals other than their own to send them patients, according to Malcolm Green, the director of the British Postgraduate Medical Federation.

This could only be done if the Government gave hospitals active in research flexibility over what they can do with their funds, Mr Green told the House of Lords select committee on science and technology.

Dr Green said that there were "severe dangers and increasing difficulties" for researchers because of a shortage of patients. Hospital trusts have a financial incentive to keep their patients rather than send them to a hospital which wants to do research on them.

If hospitals were allowed this "absolutely fundamental" freedom over their "packaged contracts money", the money a hospital is allocated for costs such as facilities, infrastructure and services, they could subsidise patients "partially or completely", he said.

"It is even conceivable that they might wish to subsidise them so that they were sometimes paying the costs for those patients to be sent to them."

Dr Green also said that hospitals should set up insurance schemes. These would pay out when they were asked to transfer a patient with a rare disease for research purposes.