SIOUX FALLS, S.D. — Kelby Krabbenhoft is out as the long-time president and CEO of Sanford Health after an email he sent to employees last week about COVID-19 and masks drew national attention and scorn.

Sanford Health and Krabbenhoft have "mutually agreed to part ways," the South Dakota-based health system announced Tuesday, Nov. 24.

The notice didn't mention a reason for Krabbenhoft's departure or his email, first reported by Forum News Service, in which Krabbenhoft said he refused to wear a mask because he had recovered from COVID-19, he believed himself to be immune from the virus, and considered doing so a "symbolic gesture."

“Kelby’s impact on the organization and the communities it serves will be felt for generations to come,” said Brent Teiken, chair of the Sanford Health Board of Trustees, in a news release.

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Krabbenhoft issued his own statement minutes later to address the move, ending his 25-year career at Sanford Health and 40 years in the healthcare business.

"We decided that today was a good time to retire. Sanford is in a good place, strongest ever," he wrote. "It is Thanksgiving week and almost exactly 25 years since my family came here. It is a good time to say 'goodbye.'”

Terms of Krabbenhoft's departure would not be released, a Sanford Health spokesman said.

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Bill Gassen, chief administrative officer, has been selected by the board of trustees as president and CEO.

“Bill is the right person to lead Sanford Health through these unprecedented times because of his substantial experience with many aspects of the organization and his deep commitment to our workforce,” said Teiken. “We’re extremely optimistic about having his steady hand at the wheel in partnership with our existing leadership team.”

Besides Gassen, the health system's executive leadership team remains in place: Executive Vice President Micah Aberson, Chief Medical Officer Dr. Allison Suttle, Chief Operating Officer Matt Hocks, Chief of Staff Nathan Peterson and Chief Finance Officer Bill Marlette.

Sanford Health is one of the nation's largest non-profit health systems, with about 48,000 employees and major medical centers and hundreds of clinics in South Dakota, North Dakota and Minnesota.

Email caused controversy, confusion

Krabbenhoft, who is not a physician, drew national attention last week after emailing employees Nov. 18 to tell them he wouldn't wear a mask because he had recovered from COVID-19 and considered himself immune for at least seven months, if not longer.

"For me to wear a mask defies the efficacy and purpose of a mask and sends an untruthful message that I am susceptible to infection or could transmit it," he wrote. "I have no interest in using masks as a symbolic gesture when I consider that my actions in support of our family leave zero doubt as to my support of all 50,000 of you."

North Dakota State University athletic director Gene Taylor announces the $10 million gift from Sanford Health to help renovate the Bison Sports Arena as Sanford Health COE Kelby Krabbenhoft and NDSU President Dean L. Bresciani listen during the ceremonies on Sept. 27, 2010 in Fargo. David Samson / Forum News Service
North Dakota State University athletic director Gene Taylor announces the $10 million gift from Sanford Health to help renovate the Bison Sports Arena as Sanford Health COE Kelby Krabbenhoft and NDSU President Dean L. Bresciani listen during the ceremonies on Sept. 27, 2010 in Fargo. David Samson / Forum News Service

The email quickly raised concerns about the health system CEO's views on COVID-19 and masking, in a state where nearly half of the pandemic's death toll have died in the past month and its hospitals and health workers are struggling to keep up with a surge of hospitalizations.

Sanford Health top executives quickly disavowed their CEO's statement and his immunity claims, which are not backed up by the best available scientific evidence.

"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," wrote system Executive Vice President Micah Aberson.

Meanwhile, Krabbenhoft gave interviews in local news outlets to say he would in fact wear a mask, following guidelines from the U.S. Centers for Disease Control and Prevention. But he also said he didn't support mask mandates — a possible explanation why Sanford Health, a major health system in South Dakota, hasn't backed the pandemic measure unlike cross-town rival Avera Health.

It was another stance quickly disavowed by a top Sanford executive. In an interview aired Monday by CBS News, Sanford Health Chief Medical Officer, Dr. Suttle, called on Gov. Kristi Noem to institute a statewide mask mandate.

The back and forth raised ongoing questions about Sanford Health's official position on health-related policies amid a surging pandemic.

Krabbenhoft's tenure marked by growth

Krabbenhoft was a singular figure in the history of Sanford Health, growing it into a regional integrated health system with nationally known research and other initiatives.

He became the leader of Sioux Valley Hospital in Sioux Falls in 1996, growing out what became the Sioux Valley Health System. Sioux Valley's growth got a big jumpstart when Krabbenhoft formed a bond with T. Denny Sanford, a billionaire sub-prime credit card mogul, whose business is based in South Dakota.

Sanford provided a matching gift of $16 million toward construction of what became Sanford Children's Hospital in Sioux Falls. In 2007, Sanford donated $400 million to the health system, which was then renamed in his honor.

On a stage above scores of honored guests with shovels, Kelby Krabbenhoft, Sanford Health president & CEO and T. Denny Sanford, founding philanthropist, break ground for the new $541 million Sanford Health hospital Tuesday, July 31, 2012, in Fargo. Dave Wallis / Forum News Service
On a stage above scores of honored guests with shovels, Kelby Krabbenhoft, Sanford Health president & CEO and T. Denny Sanford, founding philanthropist, break ground for the new $541 million Sanford Health hospital Tuesday, July 31, 2012, in Fargo. Dave Wallis / Forum News Service

In 2009, Krabbenhoft led a merger with Fargo-based MeritCare Health System, greatly expanding Sanford's footprint and operations, followed by additional mergers with health systems in Bemidji, Minnesota and Bismarck, North Dakota. A planned merger with Fairview Health System in Minnesota fell through. in 2013, as did one with UnityPoint Health based in Iowa.

But recent years have come with some troubles for Krabbenhoft. In 2018, Krabbenhoft batted down swirling rumors he was either on his way out as CEO, or had been fired from the position, for a variety of claimed actions. He said then he planned to retired sometime in 2023 at age 65.

Earlier this year, ProPublica published a report that T. Denny Sanford, Krabbenhoft's friend and the health system's main patron, was being investigated for possible possession of child pornography.

Krabbenhoft's departure comes at a delicate time for Sanford Health. Krabbenhoft and his counterpart, Dr. Marc Harrison at Intermountain Healthcare of Utah, announced merger plans for the two health systems Oct. 26.

Intermountain Healthcare didn't immediately respond to a request for comment about Krabbenhoft's departure.

The merger, which is expected to close next year, would create an organization with 89,000 employees, 70 hospitals, 435 clinics and 336 senior care facilities, creating perhaps the nation's sixth or seventh largest health system.

Krabbenhoft said then his role would be as CEO emeritus for two years, during which would help with planning strategy and possible future growth for the combined system. He would also join the organization's combined board.

“I’m really comfortable with this,” Krabbenhoft told Forum News Service when discussing the merger last month. “I’ve been doing this for 40 years and am anticipating my retirement in a couple of years."

Instead, a month later after his COVID-19 email, Krabbenhoft was out as CEO.

The full press release from Sanford is below:

Sanford Health and CEO Kelby Krabbenhoft mutually agree to part ways

Bill Gassen named new president and chief executive officer

SIOUX FALLS, S.D. –The Board of Trustees has announced that Sanford Health and longtime CEO Kelby Krabbenhoft have mutually agreed to part ways.

The Board of Trustees recognized Krabbenhoft’s contributions to the organization over his long tenure. Krabbenhoft assumed the role of president and CEO in 1996 and built the organization from a community hospital into the largest rural non-profit health system in the country, now spanning 26 states and 10 countries. “Kelby’s impact on the organization and the communities it serves will be felt for generations to come,” said Brent Teiken, Board Chair.

The Board of Trustees has appointed Bill Gassen president and CEO of Sanford Health. Bill has been with the organization since 2012, most recently serving as chief administrative officer. His appointment is effective immediately.

“Bill is the right person to lead Sanford Health through these unprecedented times because of his substantial experience with many aspects of the organization and his deep commitment to our workforce,” said Teiken. “We’re extremely optimistic about having his steady hand at the wheel in partnership with our existing leadership team.”

“I’m honored to have the opportunity to work on behalf of the Sanford family and help lead this organization and its life-changing work. Our system’s priorities will be focused on taking care of our people, our patients and the communities we serve,” said Gassen.

Gassen began his career at Sanford Health in 2012 as corporate counsel and transitioned to human resources two years later as vice president of human resource integration. He later served as chief human resources officer before his promotion to chief administrative officer.

Gassen and his wife, Jill, have five children.

The executive leadership team of Executive Vice President Micah Aberson, Chief Medical Officer Allison Suttle, Chief Operating Officer Matt Hocks, Chief of Staff Nathan Peterson and Chief Finance Officer Bill Marlette, will continue to assist with the duties of overseeing the organization.