VIA LINDA BEHAVIORAL HOSPITAL
1. Target Overview & Investment Thesis
VIA LINDA BEHAVIORAL HOSPITAL is a 52-bed community hospital in MARICOPA, AZ with $11.3M in net patient revenue and a -25.9% operating margin. The hospital serves a payer mix of 2.6% Medicare, 0.0% Medicaid, and 97.4% commercial.
Thesis: Turnaround. Our ML models identify $835K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -25.9% to -18.5% (+740bps).
| Net Revenue HCRIS | $11.3M |
| Current EBITDA COMPUTED | $-2.9M |
| Operating Margin COMPUTED | -25.9% |
| Occupancy HCRIS | 72.3% |
| Revenue / Bed COMPUTED | $217K |
| Net-to-Gross HCRIS | 36.1% |
| 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 -25.9% places it below the state median. Among 44 size-comparable peers (26-104 beds), the median margin is 3.3%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (26-104), prioritizing same-state peers. 44 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| VIA LINDA BEHAVIORAL HOSPITAL (Target) | AZ | 52 | $11.3M | -25.9% |
| SUMMIT HEALTHCARE | AZ | 89 | $254.1M | -2.9% |
| VERDE VALLEY MEDICAL CENTER | AZ | 87 | $172.5M | 4.3% |
| NORTHWEST MEDICAL CENTER ORO V | AZ | 96 | $145.8M | 10.6% |
| CANYON VISTA MEDICAL CENTER | AZ | 74 | $132.6M | 1.9% |
| ARIZONA GENERAL HOSPITAL | AZ | 50 | $116.2M | -6.6% |
| BANNER IRONWOOD MEDICAL CENTER | AZ | 89 | $115.5M | -1.7% |
| WESTERN ARIZONA REGIONAL MEDIC | AZ | 93 | $114.3M | 62.0% |
| HONORHEALTH SONORAN CROSSING M | AZ | 70 | $94.4M | -6.6% |
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: $835K (740bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $237K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $226K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $226K | +200bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $137K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +9bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-2.9M |
| + RCM Uplift | +$835K |
| Pro Forma EBITDA | $-2.1M |
| Current Margin | -25.9% |
| Pro Forma Margin | -18.5% |
| WC Released (1x) | $433K |
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 | $-4.5M | $-10.9M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-4.5M | $-13.5M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-4.1M | $-12.2M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-4.1M | $-14.5M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-5.0M | $-13.7M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-5.0M | $-16.6M | 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 |
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
- 44 hospitals with 26-104 beds
- Same-state prioritization (n=45)
- Comp margins: P25=-8.8% / P50=3.3% / P75=8.4%
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.