PSO chairman Frazer Barton said legal action would be launched against the health board late on Friday afternoon unless a resolution was reached.
''We're not the sort of organisation that lightly embarks upon this course of action.''
PSO's board was ''gravely concerned'' about the situation. The concerns were over principle and philosophy, rather than money, and PSO would cope without the $5.5 million annual contract, Mr Barton said. The health board is reducing home-support providers from 17 to three, and rejigging the service towards a ''restorative'' model.
PSO and regional partner Disabilities Resource Centre Southland (DRCS) provide 42% of the home-support service for older people in Otago and Southland, but from next month the organisations will be phased out.
Southern DHB chairman Joe Butterfield said it would be ''churlish'' for the board not to engage with the long-standing provider, but that did not mean there would be a change of heart.
''While I say I'm sympathetic to PSO's position, there's a big difference between listening [and] considering, and changing our mind.
Reinstating PSO would have ''significant downsides'', including potential legal action from the successful tenderers.
It would also make the service more expensive, he said.
''It would certainly increase costs, but what's just as important is it would reduce the efficiency of the front-line management of looking after the people, and that's our first priority, to make sure we provide a good service.''
Service quality could be affected if the board relented, he suggested.
''We would be running a service that is not as efficient or beneficial as the structure that has been designed.
''It's to do with the way in which the service is to be organised. It's not any fault of the Presbyterians.''
Asked if the board preferred single providers, rather than joint Otago-Southland bids such as PSO and DRCS, he said he could not comment further. The tender process had been independently audited, he said.
Board members would discuss PSO's concerns at the meeting after excluding members of the public. PSO would address the board in the public section of the meeting, and would present its petition, which yesterday had nearly 13,000 signatures. Other submitters had also requested a say at the meeting, and they, too, would be heard, Mr Butterfield said.
He met Mr Barton this week to discuss the situation, and there could be a further meeting next week between representatives of the organisations before Friday's board meeting.
