Wahiawa General Hospital’s chief executive will retire by year’s end as a new management firm has assumed control of the struggling rural hospital.

Don Olden, who has been at the forefront of a search for a larger hospital to take over the ailing facility, told employees in a letter Friday of his retirement and the new management firm contracted to run the hospital.

Wahiawa General’s board of directors entered a three-year management contract with Community Hospital Corp., based in Plano, Texas, near Dallas. The management company has agreed to assess current operations, develop a new business model and bring in new chief executive and chief financial officers.

The hospital is struggling to meet new quality requirements, as well as costs associated with the federal Affordable Care Act, also known as Obamacare, and has yet to develop a sustainable business model.

“Wahiawa General Hospital needs the assistance of a larger hospital system to meet the challenges and changes occurring in health care,” Olden said in the letter to employees. “Small, standalone community hospitals cannot survive without becoming part of a larger health care system that has the professional management needed to adapt to constant changes introduced by federal and state governments.”

In recent years Wahiawa General has unsuccessfully attempted to merge or affiliate with larger hospital groups.

“Over the past two years, Wahiawa hospital unsuccessfully attempted to form an affiliation with Queen’s, Hawaii Pacific Health, Castle Medical Center and Sutter Health, which we believed was essential for future development of the hospital and the Koa Ridge project (a 3,500-unit residential development),” he said. “The real plan is to try and stabilize Wahiawa hospital until the Koa Ridge project is developed probably over a five-year time frame.”

Castle & Cooke, developer of the Koa Ridge project, is donating 28 acres to Wahiawa General to build a new hospital.

Community Hospital Corp. is a nonprofit that owns four acute-care facilities and manages 10 long-term acute-care providers. It specializes in restructuring rural hospitals struggling to survive in a changing medical landscape. The group signed an agreement to manage the Wahiawa hospital Oct. 21, and CHC staff last week began interviewing hospital managers about operations.

“CHC will be responsible for providing management services to Wahiawa hospital and is not involved in an ownership relationship,” said Olden, who has been CEO for the past 10 years. “Working with the hospital board, they will have full authority to recommend and implement changes to the daily operations of the hospital.”

The hospital loses $3.5 million annually and has not found a way to stem those losses. The Legislature approved in April $2.5 million to keep Wahiawa General Hospital afloat for at least another year.

“You must change to survive, but you’ve also got to survive to change,” Olden said. “I wanted to give it the best chance of reorganization and changing to survive. With all the new requirements that have come down under Obamacare, it has just cost us millions of dollars per year to run the hospital.”

The struggling former plantation hospital appealed to the Legislature for $6 million over two years — or $3 million annually — to continue operations while officials worked to develop a sustainable business plan.

Wahiawa General officials warned that the hospital, which has about 600 full- and part-time workers, could shut down in six months if the state did not step in.

Over the years it has closed OB-GYN services, home health and outpatient physical therapy services and had to transfer its more than 20-year residency program to Hawaii Pacific Health because it could no longer support the program.

In addition, the hospital had to reduce the equivalent of 75 full-time workers in recent years. Almost 85 percent of Wahiawa’s patients are on Medicaid or Medicare, which reimburse the hospital at a much lower rate than private insurance.

Wahiawa General started in 1944 as an outpatient clinic for plantation workers, military personnel and other Central Oahu and North Shore residents. The hospital is now licensed for 160 beds — 53 acute-care and 107 skilled-nursing. The emergency room sees about 20,000 people per year.