Many senior doctors are ''disgruntled'' because they feel they lack the ability to influence the direction of the board, Dr Knight says.
However, he is not criticising board management, saying: ''It's a tough place to work.''
Everyone at Southern is under constant pressure to reduce costs, diverting people's energy into conflict and worry, he says.
The 49-year-old is medical director of the mental health, addictions and intellectual disability service, director of area mental health services (under the Mental Health Act), and chairman of the Dunedin Hospital general medical staff.
He leaves at the end of next month, and will start a new job in Hawkes Bay after a six-week break.
Raised in Auckland, he moved to Dunedin in 1983 to attend medical school, and went on to practise psychiatry in the city.
''It's been my home for a long time. Dunedin's been very good to me,'' Dr Knight said.
His next role is wholly clinical practice, rather than administration.
''I feel like I've done my bit, and I'm worn out. And I want someone else to take on and keep on advocating for the things I've been really passionate about. There are some really important battles to keep on fighting.''
Being chairman of the general medical staff gave him an insight into specialties outside of mental health.
''What I see at the moment is a lot of disgruntled people.
''A lot of senior doctors still feel that we've got a long way to go with clinical engagement.''
The organisation had been restructured to give doctors more say, but that had not really worked, Dr Knight said.
Many felt frustrated, and this was reflected in high-level resignations from medical leadership posts recently.
''That constant obsession with trying to improve the finances takes over, so all the other good things that we could be thinking about, and talking about, kind of get lost.
''The atmosphere becomes quite toxic.
''Everyone's stressed, everyone's worried about money.
''And, naturally, people start getting into conflict with each other, because they've been pushed into an environment that's almost guaranteed to generate conflict.''
He acknowledged the board had to live within its means, but the way pressure was exerted worked against people finding creative solutions.
''The people who are in charge here spend a lot of time running around looking for these alleged inefficiencies to fix. And they're simply not there - it's like they're chasing butterflies.''
The huge effort to merge the Otago and Southland health boards had not been adequately recognised, he believes.
The boards that merged in 2010 to form Southern had financial issues because of their static and ageing populations, which meant they did not prosper under the Government's funding model.
Much was now working well, he said, citing mental health as an area in which the combined teams had thrived. However, it took much energy and resources to get to that point.
There was also the ''dreadful state'' of the leaking and rundown Dunedin Hospital.
''I see a lot of people working really hard with very meagre resources.''
The hospital played a crucial role in training New Zealand's health workforce, a contribution not adequately acknowledged.
In his new role he will work for the Hawkes Bay District Health Board and Capital and Coast District Health Board.
He was especially looking forward to the Capital and Coast role, in its regional youth forensic service, his main clinical interest.
