Krabbenhoft, Sanford Health agree to ‘part ways’
Nov. 24, 2020
Kelby Krabbenhoft has resigned his role as president and CEO of Sanford Health, retiring two years earlier than originally planned.
“It’s been a good long and steady run, and I’m in a good position,” he said in an interview with SiouxFalls.Business of the decision to step down.
“Maybe this is the time. It just fits. It all comes together.”
As he departs, Sioux Falls-based Sanford is the nation’s largest rural nonprofit health care system, with 46 hospitals, 210 clinics and 1,500 employed providers. It spans 26 states and 10 countries.
“Kelby’s impact on the organization and the communities it serves will be felt for generations to come,” Brent Teiken, board chair, said in a statement that Sanford and Krabbenhoft “mutually agreed to part ways.”
The move follows an email Krabbenhoft sent last week to the system’s more than 50,000 employees that included the fact that he would not be wearing a face mask at work because he had recovered from COVID-19 and believes he cannot transmit it.
“The information, science, truth, advice and growing evidence is that I am immune for at least seven months and perhaps for years to come, similar to that of chicken pox, measles, etc.,” he wrote.
“For me to wear a mask defies the efficacy and purpose of a mask and sends an untruthful message that I am susceptible to infection or could transmit it. I have no interest in using masks as a symbolic gesture when I consider that my actions in support of our family leave zero doubt as to my support of all 50,000 of you. My team and I have a duty to express the truth and facts and reality and not feed the opposite.”
While the email drew national media attention and prompted Sanford Health to issue a statement clarifying that it reflected Krabbenhoft’s personal opinion about the virus and masking, he said it played only a minor role in his decision.
He previously had announced plans to retire in two years, when he would have been 65.
“I’ve been here and done this, whether it was the upcoming mergers, knowing we’ve had a great run in terms of a business year and we’ve been busy. Everybody’s in demand. We don’t have any operational problems,” he said.
“And, of course, all the furor and the noise, which is not a stranger to me. I think I just decided this is a good time to step away. A good group of people I’ve had a big hand in bringing into the leadership there, they will do a great job. You start sizing up just whatever situation you’re in. I’ve always done that, and I compare that to where I’m at in my life.”
Krabbenhoft will be replaced by Bill Gassen, Sanford’s chief administrative officer.
Gassen began his career at Sanford Health in 2012 as corporate counsel and transitioned to the human resources department two years later as vice president of human resource integration. He later served as chief human resources officer before his promotion to chief administrative officer.
“Bill is the right person to lead Sanford Health through these unprecedented times because of his substantial experience with many aspects of the organization and his deep commitment to our workforce,” Teiken said. “We’re extremely optimistic about having his steady hand at the wheel in partnership with our existing leadership team.”
Before joining Sanford, Gassen spent four years in private legal practice. He holds a bachelor’s degree in criminal justice and a law degree, both from the University of South Dakota.
“I’m honored to have the opportunity to work on behalf of the Sanford family and help lead this organization and its life-changing work,” Gassen said in a statement. “Our system’s priorities will be focused on taking care of our people, our patients and the communities we serve.”
Krabbenhoft plans to spend more time with his family, which now includes seven grandchildren.
Krabbenhoft became CEO of then-Sioux Valley Hospital in 1996 at age 38. At the time, the former team captain of the basketball team at Concordia College had been dubbed a rising star by the publication Modern Healthcare, which noted his passion for integration in health care in its 1994 list of up-and-coming leaders.
“If Kelby were in the military, he’d be a four-star general,” it quoted Dr. Charles Bentlage, a staff physician in Freeman, Mo., where he worked at the time. “If we had a war, he’d be a five-star general.”
With the move to Sioux Falls, then-CEO “Lyle Schroeder handed me a precious egg, and my No. 1 job was not to drop that egg,” Krabbenhoft said. “And then I went about the business, dealing with stuff that comes at all of us in terms of challenges but also tried to build the system. It’s been a good run.”
Under Krabbenhoft’s tenure, the system was renamed Sanford Health in 2007 following a $400 million donation from philanthropist Denny Sanford.
It completed multiple mergers in recent years, including one with North Dakota-based MeritCare and Sioux Falls-based The Evangelical Lutheran Good Samaritan Society.
The system’s presence in Sioux Falls multiplied dramatically under Krabbenhoft’s leadership, including development of the corporate office in northeast Sioux Falls, Sanford Research and the Sanford Sports Complex.
Earlier this year, Sanford announced more than $200 million in planned capital improvements in the Sioux Falls market.
It was a career that included growing a global network of clinics, meeting Pope Francis at a research conference in Rome and a long list of other accomplishments.
“I could go down that list for a while, but I think more important to me, and in all sincerity, is it’s harder to get 25 straight years without doing an organizationwide layoff or having a union come and establish itself in the organization,” he said.
“Those aren’t sexy and aren’t high profile, but that’s the mark, I think, that I was always in pursuit of. I loved the fact that the children of our employees are under scholarship to come here and work. Those are really big deals to me.”
Sanford’s announced merger with Utah-based Intermountain Healthcare, expected to be finalized next year, continues to move forward despite the leadership change, Sanford said. It will create an organization in excess of $17 billion in annual revenue, one of the largest in the nation.
Post-merger, Intermountain CEO Dr. Marc Harrison is expected to lead the system.
Krabbenhoft’s role as president emeritus in a merged Sanford-Intermountain organization would have involved him in continuing to grow the larger system.
“With the momentum these things generate, don’t be surprised if there’s another one right on the heels of this when it gets consummated,” he said in a recent interview. “We have to put our shoulders into getting this delivered. We have to get this in the end zone. The game isn’t over.”
He also talked about his hope for his successors, showing some of the leadership style that defined him.
“I think people want Sanford to keep putting on a good show,” he said in October. “I don’t hide. And I hope the next crew doesn’t hide. I hope they don’t get scared of criticism. You’re going to get it either way.”
Today, he was more reflective. By spring, the fate of the pandemic and the effectiveness of everything from mitigation efforts to treatments and vaccines will be better known, he said.
“I hope we all get together next Easter when the full effect of the vaccine and everything else will have probably made its way to a point where we can have a civil discussion,” he said.
“I tried to be in the middle. Maybe that was the most dangerous place.”
He’s not an “anti-masker,” he added.
“All people have to do is read the letter. And at the same time, as a leader I don’t think I should pull the fire alarm, so I have to keep things calm. But I’ve got to be honest: That’s not what made my decision. Did it contribute to a chance to sit back over the weekend and yesterday and think, ‘Do I want to keep doing this?’ It contributed. But a bigger thing for me was Thanksgiving. The holidays have always been a period when I reflect and put things in place, and maybe it’s just not as fun as it used to be.”
In the past nearly 25 years, Krabbenhoft has made a lot of noise in the community and the health care field. But it didn’t start like that. And he said he prefers it not end like that.
“I remember the first day I came to work here, the very first day: October 1996. There was a horrible snowstorm around Halloween. It was about this time. We had no idea really about the community,” he said.
He took his young son and daughter to a Sioux Falls Skyforce game. They sat high up in the bleachers until someone recognized him and motioned for them to come down.
“And I’m reflecting on that today because it’s kind of how I want to go out,” he said.
“I like that anonymity. I know it’s been quite a show for 25 years, but that wasn’t my intention. I came into town real quiet with my kids and my wife, and today there’s a chance for me to go out quiet, and I really like that. That’s really important to me.”
His message to the community: “It doesn’t sound like that big of a deal, but everything is going to be OK. Everything’s going to be OK.”
