The shock news another a Sheffield care home is closing came just days after councillors were warned about the low fees being paid in the city, it has emerged.
Sheffield pays up to £100 a week less than comparable cities for elderly people living in care homes, and the private firms running them had previously warned they were struggling to make ends meet.
Bosses at Hartwell Residential Home, in Ecclesfield, announced last Friday that it was shutting because it had been 'operating at a substantial loss'.
Four Seasons Health Care, which runs the home, said the fees it received did not cover its operating costs.
The decision came in the week council leaders approved a 3.2 per cent increase in the fees it pays for residents of private care homes.
But that still leaves the amount it pays care providers lagging well behind other 'core' cities like Liverpool, Leeds and Newcastle.
Sheffield Council, like other local authorities across the country, pays private firms to provide care as well as running its own care homes, and sets a maximum rate it is prepared to offer providers.
Including the 3.2 per cent increase, the weekly figure available for someone requiring standard care in a residential home in the city is now £389.
In Liverpool, the council offers up to £489 a week, and local authorities in Newcastle (£462), Leeds (£441) and Birmingham (£437) also pay substantially more than Sheffield.
A council report which went before cabinet members before they approved the rise last Wednesday included a warning from care providers about the money available.
"Providers feel that Sheffield fee levels are low and that this has a direct impact on the viability of their businesses," the report stated.
That report also showed fees in Sheffield were lower than those being paid by local authorities elsewhere in South Yorkshire, like Doncaster (£439), Rotherham (£417), Barnsley (£401) and Wakefield (£465).
There are currently 12,700 Sheffielders aged over 85 but the council estimates that number will pass 20,000 by 2030.
A number of private care homes in Sheffield have closed over the last year and the report, which was published before the announcement about Hartwell, warned about the impact of further closures.
"The data indicates there is sufficient capacity for the short- to medium-term but the market could not be described as “stable” and any further unexpected closures could create significant instability," it stated.
Providers responding to a council survey had told how increases in the national living wage, steep wages for agency staff and the rising cost of maintaining buildings were making it more expensive to run care homes. Some had warned that low fees could affect the quality of care being provided.
Councillor Cate McDonald, Sheffield Council's cabinet member for health and social care, said: "Residential and nursing home providers are facing increasing challenges and we are working with them on things we can do together to relieve the very real pressures we know they are under."
However, the council says there are still plenty of places in residential and nursing care homes across the city, with more than 250 available last week.
It has promised to support the 28 people currently living at Hartwell, 11 of whose places it funds, to find new accommodation.
Coun McDonald said: "I was concerned to learn about Hartwell’s closure, and I share in the upset it will undoubtedly cause residents and their carers.
"I would like to reassure them that, although this is distressing and upsetting, there are places available in residential and nursing homes across the city and we are confident new homes will be found."
Sheffield Council's budget for residential care this year is £25.6m, and for nursing care it is £18.2m.