Board Chair Bill Daniel said the board decided "to part ways" with Schaengold in a disagreement over responses to questions involving the health care system's financial situation.
Margaret "Maggie" Gill, hospital chief operating officer, was asked to step in as acting CEO while the board begins the process of selecting a replacement.
That process is already under way, Daniel said Wednesday night.
"It just got to the point where we were in disagreement with the direction we wanted to go,'' Daniel said.
The action came after the Memorial Health board met for more than two and a half hours over the issue Wednesday night. The board passed this resolution during its meeting: "RESOLVED, the Board of Directors of Memorial Health has determined that circumstances warrant the termination of its employment contract with Phillip Schaengold as Chief Executive Officer of the corporation."
"We recognize Phil had many positive contributions to the quality successes at Memorial,'' Daniel said.
Memorial Health is the parent corporation for Memorial University Medical Center, the county's largest health-care provider and the region's only Trauma One care hospital.
The system has battled red ink for a number of years because of uncompensated care and charity.
Schaengold was named president/CEO in March 2009 to succeed acting CEO Charles "Chuck" Neumann.