The contract of John Parkes, general manager of the Alexandra Hospital at Redditch, Hereford and Worcester, since June 1991, was terminated by mutual consent by the North Worcestershire Health Authority.
His departure was announced two days after the health authority apologised to a pensioner whose operation was cancelled as she was being prepared for theatre and who was then left to make her own way home when she was partially drugged.
A number of wards at the hospital have been closed down recently because of a financial shortfall, reported to be about pounds 1m.
Another controversy involved the enforced redundancy of a consultant, Dr Helen Zeitlin, three months before Mr Parkes arrived at the hospital after she spoke out at a public meeting about staff shortages. She was reinstated last November on the orders of Virginia Bottomley, Secretary of State for Health, but it was another four months before a formula was agreed to get her back to work.
There was also a public protest in the nearby town of Droitwich when Mr Parkes put forward a plan for closing Highfield Hospital - a nationally acclaimed centre for the treatment of rheumatism - and transferring its work to the Alexandra.
Yesterday, Malcolm Cooper, the health authority chairman, said in a statement: 'Following discussion with Mr Parkes regarding his performance under the terms of his contract, it was mutually agreed that his contract be terminated with immediate effect.
'It remains a priority for the health authority to achieve an income and expenditure balance for the acute unit which covers the Alexandra and Highfield hospitals.'
Mr Parkes was not available for comment yesterday. His post is being taken over until further notice by Jean Rigby, the Alexandra's director of quality.