SIOUX FALLS, S.D. (AP) - As he addressed his employees and guests one day this month, Sanford Health’s new president and CEO Bill Gassen said he hoped the vaccines that were about to be administered to his first employees would help the world turn a corner on the coronavirus pandemic.
It was also a chance for Sanford to turn the corner on a tumultuous month.
Sanford’s vaccination ceremony was typical pomp and circumstance for an organization that has loomed large in Sioux Falls and South Dakota. An organization that has thrown lavish parties, hosted famous musicians and planted new buildings around the city over the last decade. A heavyweight in the city’s business community, Sanford has also been a generous source of philanthropy to the region’s nonprofits and universities.
But even the Sanford’s of the world can have a bad run. And the ceremony was the organization’s opportunity to move on from a hectic and disorienting month, one that included the departure of its longtime leader following a public relations debacle, a monetary fine related to a surgeon accused of performing unnecessary surgeries, the shuttering of a much-ballyhooed merger deal with another hospital system and the departure of its chief medical officer “to pursue new opportunities.”
Amid this was the backdrop of a global pandemic.
When he sat down with his counterpart from Intermountain Health on Oct. 26 to announce Sanford’s merger with Intermountain, former Sanford CEO and president Kelby Krabbenhoft had the full backing of his board to create a $15 billion a year health system. The merger hadn’t been Krabbenhoft freelancing on his own. His board and executive team had been involved in the merger details.
It was big news for the local communities with Sanford and Intermountain facilities, and it was news in an industry that has seen rapid consolidation. The merger would create a sprawling system from Nevada to the Upper Great Plains, with pockets for future expansion in the Rocky Mountains, the Sioux Falls Argus Leader reported.
As he went through the details of the merger, Krabbenhoft nonchalantly mentioned that the new entity would be headquartered in Salt Lake City, Utah. It didn’t matter, he said, where the new system would be chartered and headquartered.
But there were many in the city’s business community who didn’t share Krabbenhoft’s casual indifference to that detail. Losing the headquarters would likely mean a loss of jobs in Sioux Falls, which was bad. But even worse, it would mean a loss of prestige for the city, with Sioux Falls becoming a mere outpost in a large medical empire.
The significance of that was not lost on the political establishment in South Dakota, including the governor’s office. For a state that has touted its business-friendly environment for decades, South Dakota has struggled to attract large companies to locate here, even among industries that would fit in with the state’s culture, such as agriculture and firearms. Losing the headquarters of a regional health system was not optimum, even if Krabbenhoft said it wasn’t a big deal.
Three weeks after the merger announcement, Krabbenhoft and Gassen were guest speakers at the Downtown Rotary Club, where they explained the upcoming merger to a group whose membership includes the city’s business elite.
During the conversation, Krabbenhoft talked about Sanford’s role in the business community, with its commitment over the years to funding economic development efforts, universities and nonprofits.
“I never want to be seen as someone who just did a little bit,” he said. “I wanted our organization, if we were going to be a community leader, to act like one.”
Suddenly, Krabbenhoft veered onto a subject that irritated him. A week earlier, the board at the Minnehaha Country Club had decided not to approve a two-year extension to the Sanford Invitational golf tournament. The board made the decision after the club’s voting members deadlocked on the extension.
Krabbenhoft said the decision was ironic given Sanford’s role as community benefactor.
“To vote not to extend it there because some tee times were interrupted for seven days, it was very difficult to swallow,” he said, adding that Fargo, North Dakota would be happy to host the tournament.
The Minnehaha Country Club vote had been about more than just a few days of tee times. Those members who opposed the extension argued the economic losses to hosting the event outweighed the money the club received. The event itself, as well as the weeks of set-up and tear down, disrupted the club and closed a window of golf in a state where good weather is a scarcity. Some members were also not impressed with the extensive branding of Sanford around the club.
The vote was a rare rebuke to Sanford, and Krabbenhoft.
Two days later, he wrote the email.
It wasn’t just that he questioned the use of masks, which he pointed out have become a symbol, it was the tone of the email. There were 593 people with COVID-19 in state hospitals that day, just 14 shy of the peak. In the past week before, 10,000 people had tested positive and more than 100 had died.
The following day, he told the Argus Leader in an interview that the worst of the pandemic would soon be over – which has so far proven true. He also rejected the need for mask mandates.
“At this point, we feel we’ve got this under control,” he said. “There’s not a crisis.”
But that’s not what his beleaguered frontline health workers were thinking as they tended to hundreds of sick patients. In an extraordinary move, Sanford’s executive team, the one that had been handpicked by Krabbenhoft over the years, broke with him in a public email to Sanford’s employees.
At that point it was probably a foregone conclusion Krabbenhoft was a goner. The only thing that could have saved him would have been a public apology and a plea for mercy. But anyone who knows Kelby Krabbenhoft knows he’s not one to put his tail between his legs.
The end came on Nov. 26. Krabbenhoft and Sanford issued independent statements, with Krabbenhoft framing it as a retirement. The board named Gassen as his replacement. Significantly, Gassen was not named as an interim leader.
With Krabbenhoft’s departure, with a raging pandemic, with employee dissatisfaction, with all the noise, it wasn’t the right time to go through with the Intermountain merger, and Sanford bailed on Dec. 4.
Less than a week later, Sanford parted ways with its chief medical officer, Dr. Allison Suttle. A statement from the health system said Suttle was leaving to “pursue new opportunities.” It was the capstone to a turbulent 44 days for one of the region’s largest employers.
Gassen has focused his early weeks at reconciling the hospital system’s leadership with its employees. On Thanksgiving he visited hospital workers who were busy tending to sick patients.
And he thanked them again at the vaccination ceremony. He also let them know that the first rounds of vaccines were for the workers in the trenches and Sanford’s patients. Not for him or his executive team.
“We’re going to do so at the right time,” he said. “We’re going to take our proper place in the line.”
Please read our comment policy before commenting.