AVENIR BEHAVIORAL HEALTH CENTER
1. Target Overview & Investment Thesis
AVENIR BEHAVIORAL HEALTH CENTER is a 32-bed community hospital in MARICOPA, AZ with $9.1M in net patient revenue and a 19.3% operating margin. The hospital serves a payer mix of 18.4% Medicare, 0.0% Medicaid, and 81.6% commercial.
Thesis: Turnaround. Our ML models identify $677K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 19.3% to 26.7% (+744bps).
| Net Revenue HCRIS | $9.1M |
| Current EBITDA COMPUTED | $1.8M |
| Operating Margin COMPUTED | 19.3% |
| Occupancy HCRIS | 77.6% |
| Revenue / Bed COMPUTED | $284K |
| Net-to-Gross HCRIS | 54.8% |
| Distress Probability ML | nan% |
2. Market Context & Competitive Position
AZ has 124 Medicare-certified hospitals with a median operating margin of -0.8%. The target's margin of 19.3% places it above the state median. Among 48 size-comparable peers (16-64 beds), the median margin is -3.1%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (16-64), prioritizing same-state peers. 48 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| AVENIR BEHAVIORAL HEALTH CENTE (Target) | AZ | 32 | $9.1M | 19.3% |
| ARIZONA GENERAL HOSPITAL | AZ | 50 | $116.2M | -6.6% |
| ARIZONA GENERAL HOSPITAL | AZ | 16 | $97.1M | 10.4% |
| THE CORE INSTITUTE SPECIALTY H | AZ | 28 | $91.2M | 9.2% |
| MT. GRAHAM REGIONAL MEDICAL CE | AZ | 25 | $75.2M | -2.8% |
| COBRE VALLEY REG. MEDICAL CENT | AZ | 25 | $74.9M | -10.3% |
| OASIS HOSPITAL | AZ | 64 | $66.1M | 3.3% |
| MT. GRAHAM REGIONAL MEDICAL CE | AZ | 25 | $49.4M | -6.8% |
| BANNER PAYSON MEDICAL CENTER | AZ | 25 | $49.3M | 0.0% |
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: $677K (744bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $191K | +210bp | 18mo |
| Denial Rate Reduction | 12.0% | 6.5% | $183K | +202bp | 12mo |
| Cost to Collect | 4.5% | 2.5% | $182K | +200bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $111K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +11bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $1.8M |
| + RCM Uplift | +$677K |
| Pro Forma EBITDA | $2.4M |
| Current Margin | 19.3% |
| Pro Forma Margin | 26.7% |
| WC Released (1x) | $349K |
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 | $2.7M | $18.4M | 6.79x | 46.7% |
| Base (11x exit) | 10.0x | 11.0x | $2.7M | $21.1M | 7.80x | 50.8% |
| Bull Case | 9.0x | 11.0x | $2.4M | $24.2M | 9.94x | 58.3% |
| Bull (12x exit) | 9.0x | 12.0x | $2.4M | $27.1M | 11.14x | 62.0% |
| Bear Case | 11.0x | 10.0x | $3.0M | $14.1M | 4.74x | 36.5% |
| Bear (11x exit) | 11.0x | 11.0x | $3.0M | $16.5M | 5.54x | 40.8% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Standard execution risk | RCM improvement requires management buy-in and 12-18 month implementation timeline |
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
- 48 hospitals with 16-64 beds
- Same-state prioritization (n=49)
- Comp margins: P25=-11.3% / P50=-3.1% / 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.