Hawaii Health Systems Corp., the state public hospital system, has ousted its chief executive officer, Bruce Anderson, amid pressure to keep up with technological demands and secure new cash for the struggling facilities.

HHSC board Chairman Avery Chumbley confirmed Tuesday that the board removed Anderson as president and CEO of the nation’s fourth-largest public health system, which continues to lose money annually and seek public funding to stay afloat.

"We felt the organization was at a point where it needed to go in a different direction," said Chumbley, who was named acting CEO on Monday. "I don’t want to get into the specific details of why we mutually agreed to part. It’s in both parties’ best interest at this time."

Anderson was HHSC’s highest-paid employee, earning a salary of $242,250. His cellphone was disconnected Tuesday, and he couldn’t be reached for comment.

Anderson had been at odds with the board over a controversial move to privatize part of the system, according to sources involved with the organization who asked not to be identified because they weren’t authorized to speak.

Lawmakers shot down legislation this year that would have enabled the privatization of eight financially troubled "safety net" hospitals, options supported by the HHSC board.

Facilities on Maui, Lanai and Hawaii island have been exploring a deal with Phoenix-based Banner Health for a possible acquisition, lease or operating agreements that could bring new cash flow to the rural facilities.

"From my perspective Bruce has been doing a good job, though I do know that he and some of the board have differed on some points as to the direction for HHSC," said state Sen. Josh Green (D, Kona-Kau), a physician and chairman of the Senate Committee on Health. Green added that the system had improved under Anderson’s direction over the past two years. "He did do a very professional job and represented HHSC well in his tenure. They have lost an important asset, and I’m going to need some straight answers about why they separated."

Anderson, former head of the state Department of Health, took the helm of the 14-member network in April 2011, succeeding interim CEO Alice Hall. Chumbley said Tuesday in a memo to employees that Anderson will continue to provide services to the organization as a special project consultant as needed.

"The HHSC corporate board of directors would like to express its deep appreciation to Dr. Anderson for his dedication and tremendous efforts devoted to caring for HHSC patients, employees, staff and island communities," he said.

The public hospital system posted an operating loss of $143.5 million last year, while the state contributed $73.4 million in general fund subsidies. HHSC’s total annual operating budget is $611 million.

HHSC also has faced scrutiny because the cost to convert to electronic medical records at its 14 public hospitals has nearly doubled earlier projections, likely exceeding $100 million over five years.

The change in leadership could set back HHSC’s efforts at the Legislature next year, as Anderson was an integral part of its lobbying force.

"Bruce was respected at the Capitol and always was very helpful to the health committee with information, so if they have large decisions going into next year, this is a very short window to bring somebody up to speed and that will be a big challenge for HHSC," Green said. "They’re faced with major decisions about their strategic direction. I am very curious as to why he and HHSC would be separating now."

HHSC has said it will need to seek additional funds from the Legislature next year for operations as well as the electronic medical records project, originally budgeted at $58 million over five years. It also will continue to explore privatization of the facilities.

"We’re not a sustainable model as it is today, and we need to make some changes and if a public-private partnership is going to bring better health care to our communities, then that’s something we need to explore," Chumbley said. "Our business model needs to change in order to sustain ourselves. We need to take a pause, catch our breath and figure out what the next steps are."

Anderson has a doctorate in biomedical sciences from the University of Hawaii and a Master of Public Health from Yale University. He was previously president of the Oceanic Institute and director of health and science programs at Hawaii Pacific University.