MARY S HARPER GERIATRIC PSYCH CEN
1. Target Overview & Investment Thesis
MARY S HARPER GERIATRIC PSYCH CEN is a 126-bed safety-net/medicaid heavy in TUSCALOOSA, AL with $24.3M in net patient revenue and a 8.9% operating margin. The hospital serves a payer mix of 1.6% Medicare, 47.9% Medicaid, and 50.5% commercial.
Thesis: Turnaround. Our ML models identify $1.8M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 8.9% to 16.3% (+736bps).
| Net Revenue HCRIS | $24.3M |
| Current EBITDA COMPUTED | $2.2M |
| Operating Margin COMPUTED | 8.9% |
| Occupancy HCRIS | 49.9% |
| Revenue / Bed COMPUTED | $193K |
| Net-to-Gross HCRIS | 100.0% |
| Distress Probability ML | 66.7% |
2. Market Context & Competitive Position
AL has 115 Medicare-certified hospitals with a median operating margin of -8.5%. The target's margin of 8.9% places it above the state median. Among 33 size-comparable peers (63-252 beds), the median margin is -3.7%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (63-252), prioritizing same-state peers. 33 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| MARY S HARPER GERIATRIC PSYCH (Target) | AL | 126 | $24.3M | 8.9% |
| USA HEALTH UNIVERSITY HOSPITAL | AL | 242 | $348.5M | -6.4% |
| NORTH ALABAMA MEDICAL CENTER | AL | 223 | $259.5M | 0.5% |
| CRESTWOOD MEDICAL CENTER | AL | 164 | $258.9M | 14.6% |
| THOMAS HOSPITAL | AL | 164 | $244.7M | 6.2% |
| FLOWERS HOSPITAL | AL | 193 | $235.5M | 14.2% |
| USA CHILDRENS AND WOMENS HOSPI | AL | 249 | $228.8M | -0.3% |
| SPRINGHILL MEMORIAL HOSPITAL | AL | 179 | $216.2M | -3.8% |
| MARSHALL MEDICAL CENTERS SOUTH | AL | 178 | $186.9M | -6.3% |
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: $1.8M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $511K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $486K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $481K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $296K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $16K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $2.2M |
| + RCM Uplift | +$1.8M |
| Pro Forma EBITDA | $4.0M |
| Current Margin | 8.9% |
| Pro Forma Margin | 16.3% |
| WC Released (1x) | $933K |
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 | $3.3M | $32.2M | 9.65x | 57.4% |
| Base (11x exit) | 10.0x | 11.0x | $3.3M | $36.5M | 10.94x | 61.4% |
| Bull Case | 9.0x | 11.0x | $3.0M | $43.5M | 14.48x | 70.7% |
| Bull (12x exit) | 9.0x | 12.0x | $3.0M | $48.3M | 16.09x | 74.3% |
| Bear Case | 11.0x | 10.0x | $3.7M | $22.2M | 6.04x | 43.3% |
| Bear (11x exit) | 11.0x | 11.0x | $3.7M | $25.6M | 6.97x | 47.4% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Elevated Medicaid exposure (47.9%) | Medicaid reimburses below cost in most states. Mitigant: denial reduction lever has highest impact on Medicaid claims |
| High | Elevated distress probability | Model estimates 66.7% probability of financial distress. Mitigant: distressed entry pricing (7-9x) compensates for risk |
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
- 33 hospitals with 63-252 beds
- Same-state prioritization (n=34)
- Comp margins: P25=-11.9% / P50=-3.7% / P75=5.7%
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.