MH: How so?
Krabbenhoft: There are no TV shows about long-term care organizations. It's humble. You've got shows about emergency rooms and the new one, “New Amsterdam.” It's sexy stuff. When you get close to long-term care, you see the gravity of what's involved for people and the lives they're affecting.
MH: Let's circle back to growth. Sanford has expanded internationally, why is that good for the organization?
Krabbenhoft: This country beats itself up so badly on the periphery, and we don't pay attention to the quality that exists here.
So No. 1, we wanted to be a voice, but one of substance. We didn't want to just open one hospital somewhere in Arabia. We wanted to go about it quietly, and then emerge with many countries, many clinics and be able to talk about, not only clinical issues and business issues, but also issues of comparability between our country and what we're seeing out there. We've been at it now for a decade, in nine countries with 45 clinics. It's working. People want what America has in terms of primary care. Ghana is slated to some day have 300 Sanford clinics. We'd like to be involved when they create a national health plan there.
There were three goals: We wanted to learn; we wanted to assist our research, because there are things that are going on in the rest of the world that don't happen in the Dakotas; and the last thing we wanted to do was get some street credibility. We wanted our reputation to be one of substance.
MH: Could you have done all of that domestically?
Krabbenhoft: No. The world is smaller now and the things that are going on in the European Union and the European (regulatory) infrastructure allowed us, for example, to get involved in stem cells and bring that kind of thing back to the U.S. and use it as evidence, in terms of safety and efficacy.
MH: Are there other big lessons from your international work?
Krabbenhoft: Telemedicine. When you go out into the bush in Ghana and you're able to use iPads and iPhones to communicate with a doctor in the urban settings, now you've accomplished something.
The clinical stuff is just gigantic for us. Advising them and them advising us. It's really collaborative.
MH: This leads into the idea of innovation. You made a splash by hiring former Veterans Affairs Secretary Dr. David Shulkin. What are you expecting from him?
Krabbenhoft: He brings that cachet or celebrity value to the organization, I guess. But more than that is we got to know him as a person and he has some great ideas. He knows how to navigate through some gantlets that we wouldn't have in terms of our work with the government. We have an agreement with the VA trying to provide precision medicine to veterans.
It's in its infancy, but we are moving forward with Sanford Imagenetics (the integration of genomics and primary care), another area we're trying to carve out.
MH: Are there a handful of areas where you're expecting growth in the next year or two from the innovation center?
Krabbenhoft: We set a goal of taking 10% of our reserves (to the center). We just took an equity stake in a company out of Israel. We have an equity stake in Germany in a hospital there. It's those kinds of things that are coming forward all the time.
MH: And Profile by Sanford, the weight-loss venture, is expecting pretty big growth, right?
Krabbenhoft: It started as just an idea. (Philanthropist) Denny (Sanford) and I were trying to lose weight. He said “Why don't you just buy a company?” He liked one and we started looking at it and said “Why don't we create our own?” And so six years ago we started. We didn't have a name for it and today we have 82 stores with plans to open about 320 more.
We've actually had people interested about acquiring it, because it was one of the most successful franchises. But, at least while I'm here, I'm going to stay true to what we said—to see it be a $1 billion business.
MH: How do you decide on setting limits for these investments?
Krabbenhoft: I wanted to get 25% of our revenue coming from things like Profile, the world clinics, medical devices. I just don't think the industry is going to be a healthy one when you can only get 2% margins or 3% margins.
MH: So where are you now on that 25% goal?
Krabbenhoft: I haven't taken inventory. We were a $4 billion enterprise two years ago.
MH: Where are you in terms of your appetite for risk and taking on risk contracts in your provider space?
Krabbenhoft: We're a full-fledged insurance company, Sanford Health Plan. Have been for 22 years. We bid against Blue Cross and Blue Shield and everybody else and have been very successful in those bids. Right now, 25% of our revenue is at risk.