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December 04, 2020 09:07 PM

Sanford ends merger talks with Intermountain after CEO's abrupt departure

Tara Bannow
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    Intermountain CEO Dr. Marc Harrison and Sanford Health CEO Kelby Krabbenhoft

    The merger talks are off between Sanford Health and Intermountain Healthcare, just a month after an agreement was announced and just over a week after Sanford's CEO abruptly stepped down.

    Former Sanford CEO Kelby Krabbenhoft left Nov. 24 in what the board called a mutual decision after making the controversial claim that he didn't need to wear a mask because he can't transmit COVID-19 after contracting the coronavirus. Sioux Falls, S.D.-based Sanford cited the leadership change in its decision to pause current merger and acquisition activity while they address other needs.

    "With this leadership change, it's an important time to refocus our efforts internally as we assess the future direction of our organization," Sanford's new CEO, Bill Gassen, said in a statement. "We continue to prioritize taking care of our patients, our people, and the communities we serve as we look to shape our path forward."

    The doomed deal would've formed a 70-hospital system with $15 billion in annual revenue, making it the seventh largest not-for-profit health system by revenue. Salt Lake City-based Intermountain's CEO, Dr. Marc Harrison, was poised to become CEO of the new system.

    In a statement, Harrison said Intermountain is disappointed but understands the recent leadership change at Sanford influenced its priorities.

    "There's so much to admire about the work that Sanford Health is doing," he said. "We continue to share a strong vision for the future of healthcare."

    Intermountain initially said Krabbenhoft's retirement did not change its plans to finalize the merger by mid-2021.

    Krabbenhoft, who had been Sanford's CEO since 1996, came under scrutiny in late November after writing in an internal email to Sanford's 50,000 employees that mask wearing "defies its efficacy and purpose" and sends an "untruthful message that I am susceptible to infection or could transmit it." The next day, Sanford employees received another email from a group of Sanford executives that said they regretted that the CEO's message "left many frustrated and disappointed."

    Sanford has 46 hospitals and operates in North Dakota, South Dakota, Northwest Iowa and Western Minnesota. The system drew almost $7 billion in total revenue in 2019. Intermountain, which drew $7.6 billion in revenue last year, has 24 hospitals and operates in Utah, Idaho and Nevada.

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