Holme Hall Neurological Care Centre, which is based at Holme on Spalding Moor, will close by the end of March next year.
The decision, which affects 85 members of staff, has been announced by charity Sue Ryder.
The charity has been caring for people with life-changing neurological conditions at the site for 36 years.
Sue Ryder said that due to Holme Hall’s location it was struggling to recruit staff, thus making it hard to maintain a quality service.
Consultation with the hall’s staff starts next week (from Monday 27 November) and will last 30 days.
The charity is working closely with all of its residents, families and the local commissioners to ensure the best alternative care provider can be found to meet their needs.
A Sue Ryder spokesman said: “We have considered all factors before making this difficult decision.
“The centre currently has a CQC rating of good but the geographical location of Holme Hall means staff recruitment is difficult and therefore maintaining a quality service is a constant challenge.
“We have also struggled to establish a strong referral stream which results in the centre being under occupied.
“This gives the added complexity of operating at a deficit, a situation that is no longer sustainable.
“We have a team of nurses, physiotherapists, healthcare assistants and domestic staff. The team is made up of 85 staff, of which 67 are on permanent contract, the rest are bank staff.
“Following the announcement to all staff we will be supporting them to select representatives who will take part in a process of consultation with the management team.
“Collective consultation with representatives and the RCN will start the week commencing Monday 27 November and will last for 30 days.
“This will be followed by individual consultation with all staff. The people team will work alongside management to support staff during this difficult time.
“We remain committed to upholding the highest possible standards of care at Holme Hall until we close.”
Sue Ryder offers a range of personalised care, advice, education and support services in local communities to help improve the lives of individuals – including their carers and families – with conditions such as cancer; heart failure; respiratory failure; dementia; acquired brain injury; multiple sclerosis; Huntington’s disease; Parkinson’s disease and Motor Neurone disease.