MACHIAS, Maine — Wayne Dodwell, president and CEO of Down East Community Hospital since 2002, was placed on administrative leave Friday, just hours after federal authorities notified the hospital it would be cutting off Medicaid reimbursements in less than two weeks.

In a terse, four-sentence statement Monday, DECH announced that “experienced hospital administrator Craig Jesiolowski has been appointed interim chief executive officer.”

Jesiolowski is a regional vice president with Quorum Health Resources, a national firm that provides management services to numerous hospitals, including DECH.

Calls to Jesiolowski had not been returned by Monday evening.

The internal shake-up comes on the heels of an announcement last Friday that the Centers for Medicare and Medicaid Services, the federal licensing authority for hospitals, informed DECH that as of July 10 the hospital will no longer be able to accept Medicare reimbursements. A state takeover is being considered.

Jesiolowski will serve as administrator of the hospital while discussions continue with the Maine Department of Health and Human Services and the CMMS regarding the hospital’s future operations, according to Julie Hixson of DECH’s public relations office.

“As those discussions progress, DECH continues to provide both scheduled and emergent inpatient and outpatient care,” Hixson said in a phone interview Monday.

She said she did not know the process by which Dodson was placed on administrative leave.

No further information was provided by the hospital Monday.

In a statement last week, Quorum indicated that its suggestions for better management had not been followed by the hospital’s board of trustees.

“Over the last 18 months, the DECH board has developed a clear preference in how they desire to manage the hospital, particularly in relation to regulatory compliance,” spokeswoman Susan Hassell said in the statement. “In some instances, their preference differs from our company’s approach to hospital management. More recently, the board has made numerous decisions inconsistent with [Quorum] recommendations.”

Hassell said the DECH board refused to allow Quorum consultants to be involved in federal and state surveys and rejected Quorum’s proposals for a change in hospital leadership.

Dodwell has been a lightning rod for criticism by local groups that have called for his resignation for more than a year, pointing to mismanagement and poor leadership as the reasons the hospital has come under state and federal scrutiny.

Annie Dickinson, one of the principals in the Committee to Save Our Hospital, said Monday she wasn’t surprised at the recent hospital situation.

“We felt it was coming,” she said. “We never had any problems with the staff — the doctors, nurses or other professionals — just with the way the hospital was managed. It was purely a management issue.”

Dickinson said she hopes the state puts DECH into receivership. “We will then be able to get back to business and treat our community,” she said.

Janet O’Neal, a member of the Committee to Save Our Hospital, said removing Dodson was just a beginning.

“We have no confidence in the board [of trustees],” she said Monday. “The board is the boss, not Dodwell. We wanted him and the board to go.”

Attempts on Monday to reach Walter Plaut, chairman of the DECH board of trustees, were unsuccessful.

Just one month ago, at the hospital’s annual meeting, Dodwell reported the hospital experienced another strong year on the quality, patient satisfaction and financial fronts, despite some challenging times.

“In 2008, we experienced some of life’s best and most difficult moments,” Dodwell said at the meeting, according to a press release from the hospital. “We are an organization of human beings and just when we believe we are operating at our very best, life reminds us that we can always do better. Despite these difficult moments, our hospital continued to perform well in regional and national quality, patient satisfaction and financial indicators.”

Dodwell reported that during 2008, Down East Community Hospital earned two blue ribbons from the Maine Health Management Coalition for its patient safety and quality of care initiatives, and the hospital’s National Quality Alliance scores outperformed the majority of Maine and U.S. hospitals.

Also, the hospital’s patient satisfaction scores rose to the top quartile for in-patient and emergency department services, according to Press Ganey, an independent company that measures patient satisfaction for more than 1,000 hospitals nationwide.

At the same time, the hospital showed a positive operating margin for the fourth consecutive year. “While approximately one-third of Maine hospitals lost money from operations in 2007 and 2008, Down East Community Hospital continued its strong financial performance,” Dodwell said.

But that optimistic view didn’t help when it came to dealing with federal and state regulations. Last April, CMMS informed the hospital that it was prepared to terminate DECH’s participation in the Medicare program.

The sanction came on the heels of a recent investigation that revealed numerous failures in emergency room procedures at the Machias hospital after an incident last fall.

It was the third federal survey in about 15 months that found DECH out of compliance and required drastic changes in various procedures at the hospital.

Down East Community Hospital has been under close federal scrutiny for more than a year, after the high-profile death of Reid Emery in January 2008. Emery of Eastport was a DECH patient who checked out of the hospital against doctors’ wishes on a cold, snowy evening and, heavily drugged from his stay at the hospital, was found dead the next day in a nearby snowbank.

The Maine Department of Health and Human Services also has kept a close eye on concerns at the hospital recently, and in February the state demoted DECH to a conditional license.