Rest-home providers claim the knock-on effects from aged care workers' pay equity settlement could lead to job cuts, and closures - with smaller rest homes in smaller centres the hardest hit.
Tens of thousands of aged-care and disability workers got a hefty wage rise on 1 July as the $2 billion pay equity settlement took effect.
Care Association represents some of the smaller rest homes in Auckland, and director Victoria Brown said it was dire straits for many of their members.
"We have got providers who are thinking of closing. We've got providers who are trying to cut their number of staff. We've got providers who are trying to lose - I mean, fire - people who are too highly qualified.
"It's unfair and it's not in the spirit of the settlement. We were looking at wanting to increase wages for the sector and it's a good thing. There's no doubt about that. But the averaging has meant that we just can't make it work."
She said one of the problems was a shift in the supply and demand of beds at rest homes, and the trend of people preferring to age at home rather than at a provider was making life difficult for the sector.
"If you look back in 2014 we were probably 128 percent over occupied. We had so many people."
"Now we're down to about 86 percent occupancy," she said. "Too many beds in the sector, ageing in place means they're kept at home for too long."
"I run Dementia Care - I've got a small facility. By the time they come to me they're half dead. They're actually hospital-level care and you just can't do anything with them.
"Besides that, the DHBs take so long to assess them to get them in so we can't keep our beds full. For the Waitemata where I am it's taking eight to 12 weeks to assess someone to come into aged-care.
"I mean, it's nonsense. You can't keep your beds as full as you need to have them full in order to make this pay equity work."
Aged Care Association chief executive Simon Wallace said the pay equity deal was affecting the whole sector - including the closure of three or four homes around the country.
"We have a range of members from the very large ... to very small members and they're all around the country.
"A number of our members are facing difficulty as a result of the pay equity settlement since it was implemented. They are having to look at their business model as they go forward. That means restructuring. That means job losses potentially. That means cutting back care hours, and in some cases that means closing."
Mr Wallace said it was not just smaller rural operations were struggling.
"I'm now hearing from our larger members ... some with more than 100 beds. It's not just the small and the rural and the not-for-profit and the faith-based.
"We are now seeing this with some larger operators as well and we have seen in recent months the closure of Caughey Preston in Auckland, which is a large 200-bed facility in Remuera. This is affecting broadly, the whole sector."
He said there was a "perfect storm" of factors crippling many operators in the sector.
"We've had the pay equity settlement, we've got the DHB ageing in place.
"We've got an immigration policy which doesn't support the recruitment or the retention of many of our caregivers. So it's not just pay equity here, we've got a range of factors.
"We've also got an ageing demographic, we can't forget that. We've got 38,000 beds in the sector now and we're going to need 52,000 by 2026."