Annette Sergeant oversaw the merger of two health trusts
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A £231,000 payoff to an NHS trust chief executive when she left is "impossible to justify" an MP has said.
The "termination payment" to Annette Sergeant was revealed in East Sussex Hospitals NHS Trust's accounts.
Eastbourne MP Nigel Waterson called it "yet another example of the NHS rewarding failure".
The trust said new leadership was seen as the way forward and the payment was in recognition of the need to draw the matter to a speedy conclusion.
Chairman John Lewis said Ms Sergeant had overseen the merger of Eastbourne Hospitals and Hastings and Rother NHS trusts.
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New leadership was considered the way forward
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He said: "Annette Sergeant served this trust for a period of over three years whilst managing the challenges of merging two acute trusts.
"However, new leadership was considered the way forward for the trust to succeed with the new challenges we faced.
"The sum paid was in recognition of the need to draw the leadership matter to a speedy conclusion and thus allow the trust to move forward."
He said the trust took advice from the Department of Health on the process.
But Mr Waterson said people would be "staggered" to learn of the size of the payment.
He said: "The scale of this payment seems to me impossible to justify, especially as Ms Sergeant later took on the role of chief executive in another hospital's trust.
"This seems to be yet another example of the NHS rewarding failure."
The trust had not disclosed the sum paid to Ms Sergeant, but the figure emerged in annual reports on Wednesday.
Campaigners are currently fighting cuts at the district general hospital in Eastbourne. The trust currently has a £1.9m deficit.