Sanford Health halts merger talks with Intermountain ‘indefinitely’

The South Dakota-based health system has suspended talks related to its planned merger with Utah-based Intermountain Healthcare after the sudden departure of its CEO, Kelby Krabbenhoft. Sanford and its new CEO will instead focus on organizational needs, the system said.

Sanford Health has indefinitely suspended talks with Intermountain Healthcare about their planned merger.

The decision to halt merger talks comes about two weeks after Sanford Health and President and CEO Kelby Krabbenhoft mutually agreed to part ways. Krabbenhoft led the 46-hospital system for 24 years, assuming the top position in 1996. A press release noted his contributions to the Sioux Falls, South Dakota-based organization’s growth from a community hospital into a large rural nonprofit spanning 26 states.

Sanford Health did not give an official reason for Krabbenhoft’s sudden departure, but days before the announcement, CNN obtained an email sent by the former CEO to health system staff telling them that he had contracted Covid-19 and recovered. He also said he would not be wearing a mask.

Krabbenhoft said there was “growing evidence” of immunity to the new coronavirus and that wearing a mask “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,” CNN reported. But evidence regarding immunity after recovery from Covid-19 is still limited and some reinfections have been reported.

Bill Gassen, previously serving as chief administrative officer, succeeded Krabbenhoft as the organization’s new leader.

The health system decided to stop merger activity to address other organizational needs as Gassen takes over, according to a press release.

“With this leadership change, it’s an important time to refocus our efforts internally as we assess the future direction of our organization,” Gassen said in the press release. “We continue to prioritize taking care of our patients, our people, and the communities we serve as we look to shape our path forward.”

Sanford and Intermountain declined to comment on whether the organizations are planning to resume talks in the future.

“We are disappointed but understand the recent leadership change at Sanford Health has influenced their priorities,” said Dr. Marc Harrison, president and CEO of Salt Lake City-based Intermountain Healthcare, in the press release. “There’s much to admire about the work that Sanford Health is doing. We continue to share a strong vision for the future of healthcare.”

Had the talks continued and the merger been approved, the combined organization would have included 70 hospitals, 435 clinics and 233 senior care locations. It was expected to generate about $15 billion in total annual revenue.

Intermountain’s Harrison was slated to serve as the combined system’s leader, while Krabbenhoft was to serve as president emeritus.

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