Southern Cross Care NSW and ACT (SCC) will close its Harden Residential Aged Care Facility (St Lawrence) in the coming months.
SCC currently operates three Residential Aged Care Facilities within the region in Harden, Young and Cootamundra with 185 aged care beds.
Including other providers, there are 330 aged care beds in total in the Hilltops region, according to SCC.
In a statement released on Tuesday, a SSC spokesperson said despite an increasingly ageing population in Australia, the demand for aged care beds at St Lawrence has been below the industry average over the past three years.
The spokesperson said this reflects Harden's smaller population and the oversupply of services in the area.
The necessary and significant capital investment in the Murrumburrah-Harden Health Service has delivered a local modern aged care service with 24-hour clinical care with up to 33 beds, the spokesperson added.
SCC said there is also an industry-wide shortage of skilled health professionals and aged care staff in regional areas, including towns like Harden.
"We understand this is a difficult time for our residents and staff, and we recognise the impact this has had and will have on the community," said SCC CEO Helen Emmerson.
"As a not for profit provider of aged care services, SCC remains committed to our mission of providing quality care services to regional NSW, including the Hilltops area. Consequently, we will maximise our focus on our Young and Cootamundra homes.
"Supporting our residents, their families and staff is a key focus at this time. We will work closely with residents and their families to identify alternative accommodation and care services during this transition - either within Southern Cross Care NSW and ACT facilities or with other providers."
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