Care homes could close if a review launched by Devon County Council following its defeat in the High Court fails to lead to higher fees, an operator's campaign group has warned.
A judge ruled this week that the council had failed to meet its public sector quality duty in setting the banded fee rates for residential and nursing homes in 2012/13.
As a result of the hearing, it emerged that the council had conducted its own investigation into private care homes, concluding that 25 were at "greater risk of closure".
The Devon Quality Care Forum (DQCF), which challenged a decision to raise fees by 6.6% this year by way of a judicial review, says the homes, and others, could close unless the authority radically increases its payments.
The DQCF, which represents 14 care home owners in the South West, is calling for an uplift of between 15% and 20% in fees for residential and nursing care.
Otherwise, it predicts, hundreds of elderly and vulnerable residents could be uprooted and moved.
Alan Beale, managing director of South West Care Homes and the DQCF spokesman, said homes were "hanging on" as banks circled, waiting to pick them off.
Devon County Council said it might decide to raise fees but moved to reassure residents and their families there would be no problem finding suitable alternative accommodation.
A council spokesman said: "We try to set our fees at a fair level, currently higher than other authorities, so that well-run and efficient homes are sustainable. We have a duty to use public money wisely."
The review will be complete by the end of the month.