The entire board has been sacked at the Bacchus Marsh hospital where seven avoidable baby deaths in two years have been identified.
The eight board members of the Djerriwarrh Health Services were given until earlier this month to plead their case.
This morning Health Minister Jill Hennessy said she had met with all the board members but nothing had persuaded her that they should stay on.
"This is one of the greatest clinical governance failures that we've seen in the Victorian health system," Ms Hennessy said.
Dr John Ballard, former chief executive of Mercy Health, has been appointed administrator. The Bacchus Marsh hospital also has a new chief executive.
Ms Hennessy said there were "no financial consequences" for the government terminating the board's tenure.
In March, an analysis by the Consultative Council on Obstetric and Paediatric Mortality and Morbidity found the death rate at the Bacchus Marsh Hospital was higher than average.
It also showed that the hospital's practices may have contributed to seven of 10 infant deaths over two years.
The deaths occurred while Surinder Parhar was head of obstetrics at the hospital but he has since been struck from the register. Dr Parhar resigned from the service in June and is believed to have left Australia.