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Mr Millar, who became the Otago chairman in February 2009 after the sacking of Richard Thomson and then took the helm of the newly merged super-board this May, made the announcement at the end of the board meeting's public session in Invercargill yesterday.
His voice occasionally caught with emotion during a brief speech in which he drew smiles and then applause when he reminded members of the proverb, "one day a cock rooster, the next day a feather duster".
Mr Ryall said Mr Millar had done a notable job for nearly eight years, particularly in "bringing the two boards together".
A different set of skills was now needed, he said in a brief statement. He said he had appreciated working with Mr Millar and was sure he had "more to offer the health service" in future.
Mr Ryall is not expected to make an announcement about Mr Millar's replacement until the end of this month.
Asked whether the move indicated concern about the direction of the board and management, Mr Ryall's office replied: "It's not unusual for governments to refresh leadership of various boards, and this is part of that".
Mr Millar, who had served as an appointed member to both Otago and Southland boards at various times from 2002, said while previous boards had made savings in that time totalling about $40 million a year, "we still keep coming home with this solid $15 million deficit".
He said he was not convinced it was "anything to do with our efficiency".
Among the successes of the boards he had served on was the creation of the community laboratories contract, a first for New Zealand which had been an outstanding success and which others had tried to copy and "successfully stuffed up".
The two boards were also the first to rationalise their number of primary health organisations (PHOs), moving from nine to one. While this had taken longer than expected, it was still an example to the rest of the country of "what could be done".
The board was exceeding elective surgery targets set by the ministry, despite its financial difficulties, he said; noting Southern's was the only cardiac service in the country that regularly met performance targets.
The board continued to be a leader with cancer treatment waiting-time targets, and was among the most successful B4 School Check providers.
Several board members paid tribute to Mr Millar at the meeting, including deputy Paul Menzies, who said he had been very disappointed to hear the news and Mr Millar could hold his head up high for serving the board and community "with distinction".
Tahu Potiki said the board's iwi governance group wished to convey its great disappointment at the decision, an indication of the esteem in which Mr Millar was held and the contribution he had made.
Speaking later, Mr Millar said he had mixed emotions about his impending departure.
He felt his leaving left him with "unfinished business" in the recently merged board.
In other ways it was a "a bit of a relief" - his wife and the golf course might see more of him.
During the next month, he will work to ensure the transition to the new board, on December 6, is as smooth as possible.
Mr Millar, who began his career as a chartered accountant in Dunedin, has considerable experience of change management and mergers.
Change in health services was hard work - getting the right balance between the clinical imperative and the managerial or financial imperative, he said.
Mr Millar, who lives near Patearoa, said he still served on five boards. He chaired the Philips Search and Rescue Trust, and he was managing director of consulting company Aquestra.