SSH - BIRMINGHAM
1. Target Overview & Investment Thesis
SSH - BIRMINGHAM is a 38-bed community hospital in JEFFERSON, AL with $17.2M in net patient revenue and a -2.0% operating margin. The hospital serves a payer mix of 35.6% Medicare, 0.0% Medicaid, and 64.4% commercial.
Thesis: Turnaround. Our ML models identify $1.3M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -2.0% to 5.4% (+736bps).
| Net Revenue HCRIS | $17.2M |
| Current EBITDA COMPUTED | $-337K |
| Operating Margin COMPUTED | -2.0% |
| Occupancy HCRIS | 75.2% |
| Revenue / Bed COMPUTED | $453K |
| Net-to-Gross HCRIS | 9.7% |
| Distress Probability ML | nan% |
2. Market Context & Competitive Position
AL has 115 Medicare-certified hospitals with a median operating margin of -8.5%. The target's margin of -2.0% places it above the state median. Among 58 size-comparable peers (19-76 beds), the median margin is -16.3%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (19-76), prioritizing same-state peers. 58 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| SSH - BIRMINGHAM (Target) | AL | 38 | $17.2M | -2.0% |
| ATHENS LIMESTONE | AL | 66 | $88.9M | -20.9% |
| RUSSELL MEDICAL CENTER | AL | 45 | $75.3M | -14.8% |
| JACK HUGHSTON MEMORIAL HOSPITA | AL | 47 | $75.2M | 6.5% |
| EASTPOINTE HOSPITAL | AL | 66 | $56.6M | -50.0% |
| NORTH BALDWIN INFIRMARY | AL | 35 | $55.3M | -3.3% |
| PRATTVILLE BAPTIST HOSPITAL | AL | 55 | $53.5M | -16.2% |
| HIGHLANDS MEDICAL CENTER | AL | 45 | $45.9M | -30.2% |
| ST. VINCENTS ST. CLAIR | AL | 40 | $40.8M | 8.7% |
4. Predicted Improvement Opportunities
Improvement targets set at P75 of comparable peers with 60% gap closure assumption. Coefficients calibrated to published research bands. Total EBITDA uplift: $1.3M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $362K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $344K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $341K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $210K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $11K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-337K |
| + RCM Uplift | +$1.3M |
| Pro Forma EBITDA | $930K |
| Current Margin | -2.0% |
| Pro Forma Margin | 5.4% |
| WC Released (1x) | $660K |
6. Returns Analysis — Scenario Matrix
5-year hold, 5.5x leverage, 3% organic growth, 10%/yr debt paydown. Base case uses 100% of predicted RCM uplift. Bull case: 130% uplift at lower entry. Bear case: 50% uplift at higher entry.
| Scenario | Entry | Exit | Equity In | Equity Out | MOIC | IRR |
|---|---|---|---|---|---|---|
| Base Case | 10.0x | 10.0x | $-519K | $10.4M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-519K | $11.3M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-467K | $15.3M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-467K | $16.6M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-571K | $4.3M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-571K | $4.5M | 0.00x | -100.0% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| High | Negative operating margin | RCM uplift bridge shows clear path to profitability; working capital release provides near-term cash cushion |
| Low | Low net-to-gross ratio | Large contractual allowances suggest pricing discipline issues. Mitigant: payer renegotiation is an additional upside lever |
8. Data Sources & Methodology Appendix
Data Sources
- CMS HCRIS Cost Reports (Medicare-certified hospitals)
- CMS Medicare Utilization (DRG-level volumes)
- CMS Chronic Conditions (county-level disease prevalence)
- HCRIS multi-year trend data (financial time series)
Comparable Selection
- 58 hospitals with 19-76 beds
- Same-state prioritization (n=59)
- Comp margins: P25=-29.2% / P50=-16.3% / P75=-2.8%
Bridge Methodology
- Targets: P75 of comparable peers (60% gap closure)
- Denial: avoidable share = 35% of delta × NPR
- AR: bad debt coefficient = $0.65 per day per $1K NPR
- NCR: 60% coefficient on collection rate improvement
- CDI: 0.75% of Medicare revenue per 0.01 CMI point
Returns Assumptions
- Leverage: 5.5x entry (84.6% debt / 15.4% equity)
- Organic growth: 3% annual EBITDA growth
- Debt paydown: 10% of principal per year
- Hold period: 5 years
Generated by SeekingChartis on April 26, 2026. All predictions use public data only. Confidence intervals calibrated via split conformal prediction (90% coverage target). This memo is for informational purposes and does not constitute investment advice.