Speaking during a podcast for the Doctor's Net website, Lord Warner said there was no point allocating NHS funding on the basis of health needs if areas with the greatest need were rescuing those with deficits.
'What you are seeing is the NHS cleaning up its act,' he said. 'For too long, people in some parts of the country have been obscuring their financial position through brokerage from other parts of the NHS.'
He added that there was no point in health need allocation 'if you end up in the situation where some poorer parts with deprivation are repatriating money to those parts of the country with less health need.
'It is undermining the allocation system, so we've got to have more transparency in those parts of the country where a minority of trusts are living beyond their means.'
He criticised trusts in deficit for excessive use of agency staff, unnecessary hospital admissions and allowing patients to stay in hospital for too long.
Lord Warner added: 'Many of them are not doing what other parts of the NHS have done.'
He said a lot of GPs thought they could provide a better service for their patients through practice-based commissioning, and he was confident that there was backing for the aim of transferring more services from hospital to the community.