The centres are likely to be replaced by larger regional health organisations with stronger links to local hospital networks and GPs.

The review found while there were a few high-performing offices, "a great many" were not fulfilling their intended role.

Medicare Locals were meant to better co-ordinate the care of chronically ill patients in the community.

Professor John Horvath, who led the review, also found a lack of clarity about what Medicare Locals were trying to achieve.

"This has resulted in inconsistent outcomes ... dispirited stakeholder engagement, poor network cohesion, and reduced sector influence," he said in a report released yesterday.

The lack of clear purpose had perpetuated a sense of confusion and relevance with service sectors, governments and the community.

About 60 Medicare Local offices - a Labor government initiative - and clinics have been established around the country since 2011 including Orange, Bathurst, Oberon, Cowra, Parkes, Forbes and Mudgee.

Prof Horvath said Medicare Locals had disempowered local doctors by failing to appropriately engage with GPs.

The report called for a fundamental restructure of the health facilities, recommending they be renamed Primary Health Organisations because of confusion surrounding the term Medicare Local.

Regional boards, advised by new clinical councils involving GPs, would run the offices.

The release of the report, ahead of today’s federal budget, has led to speculation the government will implement many of its recommendations.

The coalition initially promised during the election campaign that it would not shut any Medicare Locals, only to say later it could not guarantee they would "stay exactly the same".

Labor says if a single Medicare Local is closed, Prime Minister Tony Abbott will have broken an election pledge.