The fire, which is believed to have started in one of the dormitories at St Michael’s Hospice in St Leonards, East Sussex left three patients dead, reports have revealed.
A 62-year-old woman and an 81-year-old man who were being treated for smoke inhalation after the incident have since died.
And another 78-year-old woman also passed away over the weekend, although it remains unclear as to whether her death was caused by the fire.
According to BBC News, Sussex Police have said that they are treating the fire as deliberate.
The 67-year-old man being held is from St Leonards and is known to the hospice.
He is being questioned on suspicion of arson with intent to endanger life.
Officers are not looking for anyone else in connection with the investigation.
Detective Chief Inspector Mark Preston of the Surrey and Sussex Major Crime Team said: "This is an extremely difficult time for the residents and staff of St Michael's Hospice and for the families of the residents who have sadly passed away.
"We are now treating this as murder and a 67-year-old man arrested on suspicion of arson has now been further arrested on suspicion of two counts of murder."
Staff are currently searching for more appropriate accommodation for the other residents.