Sanford Health parted ways with longtime president and CEO Kelby Krabbenhoft on Tuesday, ending a 24-year run of leadership for Krabbenhoft at the health system formerly known as Sioux Valley. Here’s a look at some notable milestones that occurred during that time:
Getting his start
The Mankato, Minn., native embarked on a hospital administration career in 1982 and started at a small rural facility in Iowa before becoming president of St. Margaret’s Hospital in Spring Valley, Ill., and executive vice president for Sisters of Mary of the Presentation Health Corporation in Fargo.
Krabbenhoft’s vision and leadership style took shape when he headed to Joplin, Mo., to run Freeman Hospital, which had 145 beds and $32 million in annual revenue at the time in a city of 40,000. The new boss transformed it into Freeman Health System, a 389-bed, three-hospital network that brought in $270 million a year.
Many of Krabbenhoft’s efforts – adding heart and cancer components, boosting orthopedic care, seeking mergers – foreshadowed his success in Sioux Falls.
Coming to Sioux Falls
Krabbenhoft was 38 years old when he was hired as president and CEO of Sioux Valley Hospital in Sioux Falls in December of 1996.
Sioux Valley was a formidable regional health care entity with $260 million in annual revenue when longtime chief executive Lyle Schroeder resigned after 36 years at the helm.
“I was familiar with Sioux Valley because Lyle Schroeder was an iconic figure in our business, and it offered (me and my family) a chance to go home,” Krabbenhoft said of his Upper Midwest roots.
Dealing with tragedy
Krabbenhoft’s leadership was put to the test in August of 1998, when a Sioux Valley trauma helicopter crashed in a cornfield near Spencer, Iowa, killing the pilot, a paramedic and a nurse.
Krabbenhoft called the tragedy a “cold shock” and did his best to comfort family members and hospital employees at a memorial service several days later at Augustana College’s Elmen Center.
“Every day, lives are begun and lost in large hospitals,” he said at the time. “But this represents the saddest day in Sioux Valley’s history.”
Rivalry with Avera
Competition with Avera flared when Sioux Valley made a deal with the University of South Dakota School of Medicine in 1999 to become Sioux Valley Hospital and University Medical Center. When the neighboring system became Avera McKennan Hospital and University Health Center a year later, Krabbenhoft poked fun at the move.
“What university are they talking about?” he asked a reporter. “University of Okoboji?”
Tensions rose again a year later, when Sioux Valley reached a deal to purchase financially troubled Central Plains Clinic, located on the Avera campus, and hire its physicians. Avera later tried to thwart the deal by making an offer of its own, but Krabbenhoft won out and created a 270-physician group under the umbrella of Sioux Valley Clinic.
Avera pushed back when it became a partner in the Avera Heart Hospital of South Dakota that opened in southwestern Sioux Falls in 2001, teaming with the North Central Heart Institute, a group of former Sioux Valley cardiologists who were seeking more autonomy.
The end result was a success for Avera and North Central Heart, and Krabbenhoft admitted as much. His organization ultimately opened the $75 million Sanford Heart Hospital on its main campus in 2012.
“If I’m the Minnesota Vikings, I’m not going to say good things about another team, but sometimes you learn something,” Krabbenhoft said a few years back. “These guys built a unique entity called a heart hospital and we learned from that and how much the market appreciated that.”
Courting the Vikings
In 2003, when the Minnesota Vikings’ contract with Mankato as training camp host expired, Krabbenhoft teamed with South Dakota governor Mike Rounds to try to lure the lucrative summer event to Sioux Falls.
The initial proposal included about $7.5 million of city, state and school board money to refurbish Howard Wood Field by adding at least two synthetic turf practice fields and constructing a 30,000-square foot fieldhouse with locker rooms, weight rooms and a training facility.
The bid was taken seriously enough to warrant a meeting at Vikings’ headquarters in Eden Prairie, but Minnesota’s governor stepped in and a new agreement with Mankato was reached. In 2017, the team moved training camp to its new practice facility in Eagan, Minn.
“I never got any negative backlash from the work we put in to get the Vikings,” says Krabbenhoft, who chaired the steering committee and placed the projected annual economic impact of the camp at around $3 million. “In retrospect, I believe it planted a seed or added another dose of adrenaline to a community that needed to believe in itself and say, ‘Yes we can.'”
Landmark gift sparks change
On Feb. 3, 2007, Krabbenhoft stood on the stage of the Washington Pavilion and announced one of the largest donations ever given to a medical institution and the most significant in state history.
The $400 million gift from billionaire T. Denny Sanford, the former Citibank executive who founded First Premier Bank, changed the name of Sioux Valley to Sanford Health and created a vast network with clinics around the globe and a Sanford Project research center formed with the stated goal of curing a major disease, which turned out to be Type 1 diabetes.
Sanford Health opened clinics around the country and internationally in Ghana and China. It invested heavily in children’s care and established a program to combine genomic medicine with primary care for adults, with T. Denny’s Sanford’s total donations to the health system surpassing $1 billion.
“What you see and hear today will be chronicled in books,” Krabbenhoft told the assembled crowd at the Pavilion that day in 2007. “Pay careful attention. History is being made, and you are witnessing it.”
Building a sports empire
In 2008, Krabbenhoft spearheaded the purchase of a plot of land near where Interstate 29 meets Benson Road and helped turn it into the Sanford Sports Complex with a multi-purpose fieldhouse, football fields, hotel, restaurant and later hockey, tennis and gymnastics facilities.
But the crown jewel for the Sanford CEO was the Pentagon, a five-sided, $19 million basketball wonderland featuring an old-fashioned Heritage Court that seats 3,250 and harkens back to “Hoosiers” with its throwback décor.
Long before the facility became reality and drew national attention by hosting an NBA preseason game, it was a vision that struck Krabbenhoft while he watched his son, Joe, play summer basketball. Joe is now an assistant coach at Wisconsin, one of many Division I teams that has played at the Pentagon.
“It was a ‘Field of Dreams’ kind of thing,” he said on the night the facility hosted an NBA preseason game as a high-profile debut in 2013. “When we recruit high-end physicians, they always ask if they can see the children’s hospital and the sports complex. It benefits us and everybody when we can boost the community like that.”
Merger with Fargo health system
In 2009, Sanford completed a merger with MeritCare health system in Fargo to create a network with 17,400 employees, 800 physicians and top officers with roots evenly divided between the two cities.
“People will talk about us much as they talk about the Cleveland Clinic, Kaiser, Johns Hopkins,” Krabbenhoft said of the merger at the time. “This is a new place for us. Not to crash anybody’s party, but it’s an expectation for us.”
Though several other regional mergers fell through, Sanford did combine last year with the Good Samaritan Society, which provides senior care in 26 states and nine countries. Following the Good Sam merger, Sanford had revenues of about $7.5 billion.
Investigation causes friction
In the fall of 2020, news reports revealed that a child pornography investigation centered around T. Denny Sanford had started the previous year in South Dakota and expanded to other jurisdictions such as Arizona and California, with the case currently pending with the U.S. Department of Justice.
Once the news broke, Krabbenhoft sent an email distancing Sanford Health from the man he has called “the single largest health care philanthropist in the world.”
“Some of you may have already learned through a recent media report of an investigation related to Denny Sanford, a long-time donor to Sanford Health and many other non-profit organizations across the country,” Krabbenhoft said in a statement that was also released to the media. “Like you, I’m deeply concerned about these reports. There’s nothing more sacred than the innocence of children, and our dedication to their care remains at the very core of who we are as a family.”
Merger with Intermountain
Last month, Krabbenhoft announced that Sanford is planning to merge with Intermountain Health, a Salt Lake City based health system and Utah’s largest private employer.
The alliance shifts top leadership to Intermountain Health, as Krabbenhoft serves as president emeritus and Marc Harrison, president and CEO of Intermountain, serves as president and CEO. Headquarters will also move to Utah while corporate offices will be in Sioux Falls.
“We got to the point where it was asked, ‘Kelby, what would your role be?’” Krabbenhoft recalled. “And I said, ‘I already made my plan. I’m leaving in two years. You can call me chief of the maintenance department for all I care.’ I left the room and they came up with the title of emeritus.”
The merger would create a sprawling $15 billion health system whose service area spans the western United States and Upper Midwest.
Controversy over mask comments
Krabbenhoft drew national headlines last week by informing Sanford Health employees that he has recovered from COVID-19 and is back in the office and not wearing a mask. He said that he is immune to the disease for “at least seven months and perhaps years to come” and that he isn’t a threat to transmit it to anyone, so wearing a mask would be merely symbolic.
Sanford Health followed up with a statement that distanced the health system from its own CEO – perhaps a sign of things to come.
“Kelby Krabbenhoft’s email was based on his own experience with COVID-19 and his personal opinions about the virus. They do not reflect the views of our health system as a whole,” the statement read. “Sanford Health’s position is the same as it has always been – consistently wearing masks, avoiding crowds and staying home if you’re sick are critical to preventing the spread of the virus. It is important to follow CDC guidelines. We continue to be incredibly grateful to our frontline workers who are stepping up every day to take care of our patients.”
Sanford, Krabbenhoft part ways
On Tuesday evening, Sanford Health announced the resignation of Krabbenhoft, marking the end of a run that started in 1996 when Krabbenhoft took over what was then Sioux Valley Hospital.
“We decided that today was a good time to retire,” Krabbenhoft said in a statement to the Argus Leader. “Sanford is in a good place, strongest ever. It is Thanksgiving week and almost exactly 25 years since my family came here. It is a good time to say “goodbye.” I came here quietly with three little kids 25 years ago, and now they have given me three great spouses, whom I adore, and seven little ones who I can spoil and love.”
The organization announced that the Board of Trustees appointed Bill Gassen president and CEO. Gassen has been with the organization since 2012, most recently serving as chief administrative officer, Sanford Health said. His appointment is effective immediately.