Long-time OSF HealthCare employee will become president of Dixon’s KSB Hospital

DIXON — In anticipation of OSF HealthCare taking over operations at KSB Hospital in Dixon on Jan. 1, 2025, a long-time OSF employee was selected as president and a long-time KSB Hospital employee was selected as vice president, according to a Tuesday news release from OSF.

Jackie Kernan, who has been a part of OSF since 2009, will become president of OSF HealthCare Saint Katharine Medical Center, which will be KSB Hospital’s new name. It will be the third time that Kernan has led a community hospital undergoing a merger with OSF.

As president, Kernan, who is replacing KSB President and CEO David Schreiner, will take the lead aligning the hospital with OSF HealthCare’s overall strategy. She will also be responsible for directing all internal operations “while continuing to ensure that high quality and cost-effective health care is delivered to all patients,” the release said.

“Jackie [Kernan] has been a trusted and respected leader for the communities of Princeton and Kewanee, and I know she will do the same for the Sauk Valley communities,” AJ Querciagrossa, CEO of OSF HealthCare’s western region, said.

Kernan earned her bachelor of science degree in nursing from the University of St. Francis and her master of science in nursing management leadership degree from the Saint Francis College of Nursing.

Kernan currently serves as president of OSF Saint Luke Medical Center in Kewanee, formerly known as Kewanee Hospital. The hospital affiliated with OSF in 2014, according to osfhealthcare.org, and Kernan became president in 2018.

She also is president of OSF HealthCare Saint Clare Medical Center in Princeton, which was formerly known as Perry Memorial Hospital. That hospital officially became part of OSF in 2021, which is the same year that Kernan became president.

According to the release, she will continue to act as interim president at these locations until a new president is named.

As for vice president, Drew Fenner, former vice president and chief quality officer of KSB Hospital, was selected for the position. Fenner has been a part of KSB for over 10 years. At OSF Saint Katharine he will oversee operations and special projects, according to the release.

The partnership between KSB and OSF HealthCare was made official May 10 when the two organizations announced in a news release that they’d signed a term sheet and anticipated a full merger. KSB will be renamed OSF HealthCare Saint Katharine Medical Center, in honor of Catholic Saint Katharine Drexel, as it becomes the 17th hospital in the OSF ministry, the release said.

KSB Hospital, which employs 920 people, is an independent, nonprofit 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 agreement includes $40 million in funding for facility renovations, to improve access to care locally and to create seamless referrals to subspecialties. With the affiliation, KSB expects the continued employment of its staff, significant investments in building and technology and enhanced access to specialty resources in the local community.

KSB began formally exploring potential partnerships back in February because of escalating operating and staffing costs, as well as changes to health care financing and how patients use health care.

According to a resolution presented to the Dixon City Council on Aug. 5, KSB’s board analyzed the feasibility of continuing to operate the hospital independently and found that it would likely lead to its closure.

Following the COVID-19 pandemic, the hospital experienced an increase in expenses including wages, pharmaceuticals, utilities, facility costs and medical supplies. Those increased expenses were not covered by increased reimbursement rates because KSB, like other rural hospitals, serves a large portion of patients on Medicare and Medicaid, which reimburse at a lower rate than commercial insurance, according to the resolution.

As a result, KSB operated with negative margins in 2022 and 2023. Those operating margin challenges led to the erosion of the balance sheet and in January 2024, the hospital’s cash on hand dropped to five days, which made it impossible to borrow funds and reinvest in the organization, according to the resolution.

OSF HealthCare, headquartered in Peoria, has 16 hospitals with 2,131 licensed beds throughout Illinois and Michigan. OSF has about 24,000 employees, known as “mission partners,” across more than 150 locations. It operates OSF OnCall, a digital health operating unit; OSF Home Care Services, an extensive network of home health and hospice services; OSF HealthCare Foundation; and OSF Ventures, which provides investment capital for promising health care innovation startups.