This report is the fourth in a series of papers. It focuses on the costs and financing of intermediate care services. Previous work has dealt with a conceptual framework to clarify understanding of intermediate care, and with issues of implementation and evaluation. In the past few years, intermediate care has burgeoned, but funding has tended to be patchwork and piecemeal, reflecting an opportunistic rather than a planned approach to meeting people's intermediate care needs. This report is the product of a workshop convened by the King's Fund to discuss the possibility of reconfiguring services to fulfil patients' transitional needs, with special reference to financing. The workshop focused on finding out what local commissioners of health and social care have been able to achieve in terms of funding intermediate care, what they have wanted to do but been unable to because of difficulties with financial or contractual arrangements, what they have learned about costs and savings associated with intermediate care, and what the most creative solutions to common problems appear to be. In this report, the main proceedings of the day are summarised.