Nursing Homes Ireland has said the Government expects private and voluntary homes to provide complex care to residents each week, at an average of half what it costs the State in public nursing homes.
Chief Executive Tadhg Daly said private homes wanted to be paid a fair price for care to remain viable.
He said he was concerned about "a race to the bottom" in terms of what the State will pay for care in homes.
He told the association's annual conference in Dublin that waiting lists for the Fair Deal scheme continued to rise and that long-term care was at a critical juncture.
Around 2,500 people are waiting to access a Fair Deal nursing home bed.
Mr Daly also said that private homes were facing a crisis in terms of recruiting nurses.
He said that while NHI members embrace the HIQA regulation regime, most cite compliance with HIQA standards as the area where cost increases have been most significant over the past three years.
The association represents 440 private and voluntary nursing homes caring for over 22,500 older people.
Meanwhile, there are 500 people in acute hospital beds at a high daily cost who are ready for a nursing home bed, but cannot get one due to Fair Deal delays.
This is contributing to the worsening trolley wait figures, up 34% this October, compared to October last year, according to new figures today from the Irish Nurses and Midwives' Organisation.
It said almost 7,000 patients, who were admitted to hospital, found themselves on trolleys during October, either in overcrowded emergency departments or wards.
Responding to the criticism, Minister for Health Leo Varadkar said he wanted to use extra funding for the Fair Deal scheme to reduce waiting lists, rather than increasing profits for private homes.
He said he was looking to have the Budget cap on the Fair Deal scheme lifted and the first priority will be to bring waiting lists down.
Mr Varadkar said the review of the Fair Deal scheme is well advanced and should be completed early next year.
It is looking at many issues, including funding and the range of care provided.
Mr Varadkar also said he wanted to see increased spending for community nursing homes, using the Public-Private Partnership model.
