He said there were major concerns for the 75 residents and 125 staff.

Mr Danaher said urgent inquiries for alternative accommodation had revealed no beds were available in the local area, Blue Mountains or Bathurst and more applications were coming in every day, even during sanctions.

Meantime, due to sanctions, the Lithgow facility has been prevented from accepting residents in a new $3.6 million wing completed last year with more than 30 beds.

"Frail and elderly residents will be forced far away from family support into confusing foreign situations. Our fear is that many would not survive the change," he said.

Mr Danaher also believes the Commission wants to force community nursing homes into corporate ownership with serious consequences for local communities.

"Lithgow Aged Care has a caring and loving staff but the award wages are low compared to the mainstream hospitals.

"Governments provide $1100 per patient per day for public hospitals and $360 per inmate per day in our jails. We get just $200 a day," he said.

"We're were forced to operate on the smell of an oily rag."

Mr Danaher described many issues raised by inspectors as 'pin pricking''.

Black marks have been imposed, he said, for cobwebs and not enough garden furniture.

He said the sanctions that were imposed in August 2019, were lifted in July last year then re-imposed as soon as the new board was elected in November. He too believes Lithgow is being singled out as 'cannon fodder' for the Royal Commission.

Lithgow has until April to work through the dilemma.