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.

Sanford Health CEO out after two decades following mask controversy

Sanford Health, CEO Kelby Krabbenhoft part ways
  • Sanford Health’s CEO Kelby Krabbenhoft is leaving the top exec role after almost 25 years, according to a Tuesday announcement from the Sioux Falls, South Dakota-based system, following controversial statements the outgoing CEO made about mask wearing during the coronavirus pandemic.

Krabbenhoft, who has served as CEO since 1996, sent an internal memo to Sanford’s 50,000 employees on Wednesday arguing wearing a mask would defeat its purpose, as he’d already contracted COVID-19 and was therefore immune for at least seven months, as first reported by Forum News Service.

Experts dispute, however, that people previously infected with the novel coronavirus are entirely immune, as the data is not yet definitiveOther Sanford executives sent an email to employees Friday recommending mask wearing and contradicting Krabbenhoft’s claims.

On the heels of the news, Sanford’s board of trustees and Krabbenhoft have now “mutually agreed to part ways,” according to the release. The turnover comes at an acutely crucial time for the major Midwest health system, as it signed a letter of intent last month to merge with Salt Lake City-based Intermountain Healthcare.

If the deal closes, the two would operate 70 hospitals and 435 clinics — many of which will be located in rural communities across the country — and insure 1.1 million people. The merger would form one of the nation’s largest nonprofit health systems with more than $13 billion in combined annual revenue. It’s expected to close in 2021, pending regulatory approvals.

While Intermountain CEO Marc Harrison is slated to lead the combined organization, Krabbenhoft was poised to serve as president emeritus. It’s unclear what the plans are now after Krabbenhoft’s exit.

Sanford, which operates 46 hospitals in 26 states, did not reply to requests for comment by time of publication.