Mr Sharplin said patients with severe arthritis and other chronic disorders might need a carer during the night and that would have to be provided by the health board or a family member.
He said QE night staff had been fully consulted about the change. "There are four nursing staff affected we are looking to find new positions for," Mr Sharplin said.
"If we can shift everyone as we would like, we are looking at a maximum of two to three job losses."
He said closing the 35-bed residential wards would save QE $500,000 a year. Last year QE Health housed 30 patients for an average of three weeks.
He said new rehabilitation contracts worth $500,000 had also been secured with the ministry and the Lakes and Waikato health boards.
The Wallis Wing and Ward 3 would be "mothballed" for the time being, Mr Sharplin said. Possible future uses included accommodation for the newly renovated medi-health spa (due to open on April 6), re-opening if demand for residential services grew again, or developing the buildings as part of the spa complex.
Mr Sharplin said he expected the QE workforce to grow.
"It's a relief ... I'm not worried about survival any more," he said.
Mr McClay said he was delighted QE's "world-class treatment" would continue.
"The next challenge is for the community to come forward and show they value QE by providing ongoing support and patronage."
QE Health Patients Association president Margaret Parker said she was delighted a way forward had been secured.
"Had we lost this vital [rehabilitation] service, hundreds of chronically ill people would be left without treatment."
