Citing the need for stronger financial leadership, Eastern Maine Healthcare Systems President Michelle Hood announced Wednesday that Blue Hill Memorial Hospital is under new management. Effective Wednesday, Dr. Erik Steele, chief medical officer for EMHS, will serve as interim chief executive officer of the 25-bed coastal hospital, taking over from former CEO Tim Garrity, who has served in the position for about five years.

Hood said the hospital has made “significant progress” under Garrity’s leadership, but the combination of delayed payments from Maine’s Medicaid program, changes in health care reimbursements, and the national economic crisis has taken its toll.

“I’m restructuring the leadership requirements,” Hood said. “The two of us [Hood and Garrity] agreed he didn’t have the skill set to take the hospital to the next level.”

Steele said that like most small, rural hospitals, Blue Hill Memorial has been struggling financially. Last year, he said, the institution made up a budget deficit of about $2 million by drawing funds from its endowment. Commending the Blue Hill community for its generous support of the endowment fund, Steele said using it to pay for routine operational costs is an unsustainable solution.

Steele, who also writes a column for the Bangor Daily News, said he did not know what steps he would take to improve the hospital’s financial status, but that it would include creating efficiencies in some programs and services and possibly eliminating others. Steele will continue to serve as CMO of EMHS, but the Blue Hill hospital will be his top priority, he said.

“This hospital’s survival is critical to the health care system on the Blue Hill peninsula,” he said. Steele, who performed his medical residency in obstetrics at Blue Hill Memorial Hospital from 1988 to 1991, said he looks forward to serving the hospital and the community.

Hood said there would be no search for Garrity’s permanent replacement until the hospital recovers its financial equilibrium. “We will not pursue a search until the hospital is on stable footing so we can adequately represent what the new CEO is coming into,” she said.

Hood said Garrity would support the transition while considering other career options, which might include a different position with EMHS. Efforts on Wednesday to reach Garrity at his home and through EMHS were unsuccessful.

mhaskell@bangordailynews.net

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