Nicholas Jermyn is to resign from his post as Chief Executive of St Vincent's Public Hospital on Monday.
However, he will remain as Chief Executive of the St Vincent's Healthcare Group as part of measures to ensure compliance with public pay policy and new governance structures.
Mr Jermyn has a salary of €292,669 and in future will be paid entirely from private funding.
In a note to all hospital staff today, Mr Jermyn said he was in discussions with the board of the St Vincent's Healthcare Group about his future.
He said he had taken the decision to step down as CEO of St Vincent's University Hospital in light of the developments in recent months.
Mr Jermyn said he wanted to ensure that all the staff in the hospital can continue to focus on providing patients with the care and attention they deserve.
He has been CEO of St Vincent's for 20 years.
Kilian McGrane is being appointed as interim Chief Executive at St Vincent's Public Hospital. This is pending the appointment of a permanent CEO.
The pay for this post, which is funded by the Health Service Executive, will be within public pay rules.
The changes will separate the management of the public and private hospitals.
The part-private funding of two other senior staff salaries will also come to an end and these posts will be regularised in line with public pay policy.
A spokesperson for the group said it was in ongoing discussions with the HSE and was not aware of any outstanding compliance issues in relation to Section 38 pay policy.
The St Vincent's Healthcare Group has been in the spotlight at the Public Accounts Committee as the last remaining Section 38 agency deemed not to be in compliance with public pay scales.
The group comprises St Vincent's University Hospital, St Vincent's Private and St Michael's Hospital in Dún Laoghaire.
The HSE had threatened to withhold 20% of its monthly funding unless it met public pay scales.
A deadline of 31 March had been set for compliance.
No charitable funds were used to pay for salaries in the group, which had insisted that it was compliant.
The HSE said this afternoon it is still examining all of the Section 38 agencies regarding compliance with public pay policy.
It said no decisions would be made until that process is completed.
Many agencies have made business cases for their pay arrangements and these are being examined.
The HSE is due to give the PAC an update on the issue early next month.