MARICOPA COMMUNITY HOSPITAL
1. Target Overview & Investment Thesis
MARICOPA COMMUNITY HOSPITAL is a 9-bed safety-net/medicaid heavy in PINAL, AZ with $8.9M in net patient revenue and a 6.5% operating margin. The hospital serves a payer mix of 16.0% Medicare, 28.4% Medicaid, and 55.6% commercial.
Thesis: Turnaround. Our ML models identify $665K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 6.5% to 13.9% (+744bps).
| Net Revenue HCRIS | $8.9M |
| Current EBITDA COMPUTED | $579K |
| Operating Margin COMPUTED | 6.5% |
| Occupancy HCRIS | 9.3% |
| Revenue / Bed COMPUTED | $993K |
| Net-to-Gross HCRIS | 7.1% |
| Distress Probability ML | 60.4% |
2. Market Context & Competitive Position
AZ has 124 Medicare-certified hospitals with a median operating margin of -0.8%. The target's margin of 6.5% places it above the state median. Among 483 size-comparable peers (4-18 beds), the median margin is -8.4%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (4-18), prioritizing same-state peers. 483 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| MARICOPA COMMUNITY HOSPITAL (Target) | AZ | 9 | $8.9M | 6.5% |
| WENATCHEE VALLEY HOSPITAL | WA | 11 | $277.5M | -4.9% |
| PORTERVILLE DEVELOPMENTAL CENT | CA | 17 | $193.6M | -6.0% |
| NATIONAL JEWISH HEALTH | CO | 13 | $150.4M | -50.0% |
| NORTON SOUND REGIONAL HOSPITAL | AK | 18 | $148.7M | -28.6% |
| FRANCISCAN HEALTH HAMMOND | IN | 10 | $117.7M | -4.3% |
| NEW YORK EYE AND EAR INFIRMARY | NY | 15 | $112.8M | -28.0% |
| OAK LEAF SURGICAL HOSPITAL LLC | WI | 13 | $109.8M | 34.1% |
| SOUTHERN MONO HEALTH CARE DIST | CA | 17 | $99.1M | 4.1% |
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: $665K (744bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $188K | +210bp | 18mo |
| Denial Rate Reduction | 12.0% | 6.5% | $180K | +202bp | 12mo |
| Cost to Collect | 4.5% | 2.5% | $179K | +200bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $109K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +11bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $579K |
| + RCM Uplift | +$665K |
| Pro Forma EBITDA | $1.2M |
| Current Margin | 6.5% |
| Pro Forma Margin | 13.9% |
| WC Released (1x) | $343K |
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 | $891K | $10.5M | 11.75x | 63.7% |
| Base (11x exit) | 10.0x | 11.0x | $891K | $11.8M | 13.24x | 67.7% |
| Bull Case | 9.0x | 11.0x | $802K | $14.3M | 17.81x | 77.9% |
| Bull (12x exit) | 9.0x | 12.0x | $802K | $15.8M | 19.73x | 81.6% |
| Bear Case | 11.0x | 10.0x | $981K | $6.9M | 6.99x | 47.5% |
| Bear (11x exit) | 11.0x | 11.0x | $981K | $7.9M | 8.02x | 51.6% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Elevated Medicaid exposure (28.4%) | Medicaid reimburses below cost in most states. Mitigant: denial reduction lever has highest impact on Medicaid claims |
| Medium | Low occupancy | At 9.3%, fixed costs are spread over fewer patient days. Mitigant: volume growth is an additional upside lever not modeled in base case |
| High | Elevated distress probability | Model estimates 60.4% probability of financial distress. Mitigant: distressed entry pricing (7-9x) compensates for risk |
| 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
- 483 hospitals with 4-18 beds
- Same-state prioritization (n=9)
- Comp margins: P25=-25.1% / P50=-8.4% / P75=2.5%
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.