Dixon’s KSB Hospital exploring financial partnerships to ensure continued delivery of medical services

DIXON – Citing escalating operating and staffing costs, as well as changes to health care financing and how patients use health care, KSB Hospital’s board of directors announced Thursday it has voted to formally explore potential partnerships to make sure quality medical services continue to be delivered in the greater Dixon community.

“Our announcement today is that KSB believes that it’s best going-forward strategy to meet the health care needs and expectations of Lee and southern Ogle County residents is to do so in partnership with an organization that can bring new investment and capabilities to our current operations,” hospital spokesman Kevin Marx said.

KSB Hospital, which employs 920 people and was established by community leaders in the late 1800s, is an independent, not-for-profit organization. The hospital is an 80-bed facility that offers traditional inpatient and outpatient services in downtown Dixon. KSB also operates an integrated medical group with 70 practitioners providing medical services in primary and select specialty areas at six locations in Lee and southern Ogle counties.

“The health care landscape has changed significantly in recent years, and rural hospitals across the country are facing increased challenges to how we have historically operated,” KSB president and CEO David Schreiner said in making the announcement. “Changes to health care financing systems, along with the COVID-19 pandemic, have impacted the way in which patients use health care. At the same time, inflation has significantly increased operating and staffing costs.”

Marx spoke to those challenges, which come in the form of how the hospital is paid for patient services and how patients are utilizing care.

“On the Medicare side, it is the ongoing shift as to how procedures are classified for payment,” he said. “As an example, surgical procedures that historically were paid on an inpatient basis have been shifted to reimbursement as outpatients, thereby reducing payments to the hospital. Private insurance then follows the Medicare guidelines, which reduces reimbursement for a specific service across the board.”

He said the COVID-19 pandemic also decreased the number of patients seeking services by putting off elective procedures or accessing care in other settings.

“While most of that patient volume has rebounded, it has not returned to pre-pandemic levels,” Marx said.

As to the hospital’s current financial health, Marx said KSB’s financials for the 2023 calendar year are under a routine year-end audit, so the organization is not yet making those numbers available.

KSB Hospital laid off 20 workers in April 2023, citing financial headwinds that began impacting the industry at the beginning of the COVID-19 pandemic. The employees laid off at that time worked mainly in administrative support areas and not in direct patient care, according to the hospital.

“Staffing levels will be evaluated as a part of our dialogue with potential partners, so it is premature to predict any impact on employment levels,” Marx said Thursday

As part of the exploration process, the hospital will proactively consider partners that would invest in the community to maintain and improve access to local health care, according to hospital officials.

The process of identifying and vetting potential partners is expected to take two to three months, Marx said.

“Once a partner is identified and an affiliation agreement reached, we would hope to have them on board yet this year.”

In the meantime, all health care operations at KSB and Medical Group clinics will go on as usual, according to the release. Existing appointments will continue to be honored and new services scheduled. Existing phone numbers and contact points still can be accessed.

KSB Board Chairman David Hellmich said the hospital’s board is beginning the effort in a thoughtful and proactive way to ensure they consider relationships that would be the best possible fit for KSB employees and the community.

“The expected outcome of this effort is not only continued local access to high quality hospital care, but also additional capital investment, patient care options, and physician coordination for those we serve,” he said.

Hospital officials said that collaboration with other health care entities in the past few years has resulted in expanded local services in areas such as wound care, urgent care and oncology.

“We have a lot to offer in the equation,” Marx said. “KSB’s inpatient beds were full this morning. We have good support from our patients and community. Preliminary conversation with several potential partners have indicated interest on their part for further discussion.”