Prof Jane Cummings writes in the Daily Telegraph that freeing up the money put into "old and expensive buildings" is one way the health service can improve.
Staying in hospital too long can often make patients more ill, she claims.
The Patients' Association said social care and the NHS needed to integrate.
Prof Cummings said "outdated models of care" needed to change.
The article is in response to a review set up by the NHS which split England into 44 areas, ordering local managers and councils to come up with sustainability and transformation plans to improve efficiency.
Describing an NHS organisation in Devon, Prof Cummings said: "[It] wants to invest in home-based care, but it struggles because resources are currently tied up in hospital beds.
Media captionJane Cummings, England's chief nursing officer, speaking to the BBC in December about treating patients with "compassion, respect and dignity"
"Many patients stay in those beds for too long, because home care is not available, often becoming more ill as a result.
"With more care provided at home, the NHS can spend more cash on patients rather than maintaining old and expensive buildings.
"And more people can be better looked after, with care personalised to their needs."
Dr Mike Smith, a Patients' Association trustee, said figures showed that patients recover more quickly if they are in a place they are happy with.
"In most cases, when they are not in need of acute services, this is in their own home," he said.
"Quite often, out of hours and at weekends, the only way they can talk to a health care professional is to go to an A&E department and two out of five do not need to be there."
He said the current system "had to change", adding that NHS England was making "great strides" to integrate social care treatment.
NHS England is estimated to spend about £820m a year treating older patients in hospital when they no longer need acute clinical care.
Prof Cummings said there would always be "vigorous debate" over how much money the government puts into the system.
She said the job of health professionals was to "squeeze the maximum value" from the budgets they were given.
"That means changing outdated models of care so that patients don't fall into cracks between different parts of the system and ensuring that we provide care based around their needs, and not those of NHS organisations," she said.
"Since 1948, the NHS has adapted itself constantly and it must continue to do so as the world and our health needs will continue to change."