SOUTH PENINSULA HOSPITAL
1. Target Overview & Investment Thesis
SOUTH PENINSULA HOSPITAL is a 21-bed rural/critical access in nan, AK with $112.1M in net patient revenue and a -3.4% operating margin. The hospital serves a payer mix of 64.8% Medicare, 19.9% Medicaid, and 15.3% commercial.
Thesis: Turnaround. Our ML models identify $8.3M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -3.4% to 3.9% (+736bps).
| Net Revenue HCRIS | $112.1M |
| Current EBITDA COMPUTED | $-3.8M |
| Operating Margin COMPUTED | -3.4% |
| Occupancy HCRIS | 46.1% |
| Revenue / Bed COMPUTED | $5.3M |
| Net-to-Gross HCRIS | 57.2% |
| Distress Probability ML | 51.2% |
2. Market Context & Competitive Position
AK has 24 Medicare-certified hospitals with a median operating margin of -2.1%. The target's margin of -3.4% places it below the state median. Among 11 size-comparable peers (10-42 beds), the median margin is -10.7%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (10-42), prioritizing same-state peers. 11 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| SOUTH PENINSULA HOSPITAL (Target) | AK | 21 | $112.1M | -3.4% |
| NORTON SOUND REGIONAL HOSPITAL | AK | 18 | $148.7M | -28.6% |
| KETCHIKAN MEDICAL CENTER | AK | 25 | $92.4M | -13.1% |
| PROV. KODIAK ISLAND MEDICAL CE | AK | 24 | $59.6M | -0.6% |
| ALASKA SPECIALTY HOSPITAL LLC | AK | 26 | $38.7M | -29.0% |
| PROVIDENCE VALDEZ MEDICAL CENT | AK | 11 | $20.0M | 8.4% |
| PETERSBURG MEDICAL CENTER | AK | 12 | $19.5M | -10.7% |
| CORDOVA COMMUNITY MEDICAL CENT | AK | 13 | $12.3M | -5.5% |
| YK DELTA REGIONAL HOSPITAL | AK | 34 | $nan | nan% |
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: $8.3M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $2.4M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $2.2M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $2.2M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.4M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $72K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-3.8M |
| + RCM Uplift | +$8.3M |
| Pro Forma EBITDA | $4.4M |
| Current Margin | -3.4% |
| Pro Forma Margin | 3.9% |
| WC Released (1x) | $4.3M |
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 | $-5.9M | $57.2M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-5.9M | $61.0M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-5.3M | $86.3M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-5.3M | $92.5M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-6.5M | $17.8M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-6.5M | $17.5M | 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 |
| Medium | Heavy Medicare dependence | Medicare comprises 64.8% of days; rate updates may lag inflation. Mitigant: CDI/CMI lever directly increases Medicare reimbursement |
| High | Elevated distress probability | Model estimates 51.2% 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
- 11 hospitals with 10-42 beds
- Same-state prioritization (n=12)
- Comp margins: P25=-20.9% / P50=-10.7% / P75=-3.1%
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.