SILOAM SPRINGS MEMORIAL HOSPITAL
1. Target Overview & Investment Thesis
SILOAM SPRINGS MEMORIAL HOSPITAL is a 64-bed suburban community hospital in BENTON, AR with $85.0M in net patient revenue and a 8.4% operating margin. The hospital serves a payer mix of 22.7% Medicare, 11.0% Medicaid, and 66.3% commercial.
Thesis: Turnaround. Our ML models identify $6.3M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 8.4% to 15.8% (+736bps).
| Net Revenue HCRIS | $85.0M |
| Current EBITDA COMPUTED | $7.2M |
| Operating Margin COMPUTED | 8.4% |
| Occupancy HCRIS | 22.1% |
| Revenue / Bed COMPUTED | $1.3M |
| Net-to-Gross HCRIS | 17.3% |
| Distress Probability ML | 54.4% |
2. Market Context & Competitive Position
AR has 108 Medicare-certified hospitals with a median operating margin of -7.6%. The target's margin of 8.4% places it above the state median. Among 38 size-comparable peers (32-128 beds), the median margin is -3.8%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (32-128), prioritizing same-state peers. 38 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| SILOAM SPRINGS MEMORIAL HOSPIT (Target) | AR | 64 | $85.0M | 8.4% |
| ARKANSAS HEART HOSPITAL | AR | 112 | $205.9M | 1.2% |
| NATIONAL PARK MEDICAL CENTER | AR | 126 | $118.8M | 2.6% |
| BHMC-CONWAY | AR | 108 | $94.7M | -15.6% |
| NORTH ARKANSAS REGIONAL MEDICA | AR | 120 | $89.1M | -13.9% |
| ARKANSAS SURGICAL HOSPITAL | AR | 47 | $75.1M | 11.7% |
| ST VINCENT NORTH | AR | 68 | $72.1M | -18.7% |
| ARKANSAS METHODIST MEDICAL CEN | AR | 114 | $68.8M | -11.8% |
| MEDICAL CENTER OF ARKANSAS | AR | 105 | $62.1M | -11.6% |
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: $6.3M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $1.8M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $1.7M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $1.7M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.0M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $54K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $7.2M |
| + RCM Uplift | +$6.3M |
| Pro Forma EBITDA | $13.4M |
| Current Margin | 8.4% |
| Pro Forma Margin | 15.8% |
| WC Released (1x) | $3.3M |
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 | $11.0M | $109.9M | 9.95x | 58.3% |
| Base (11x exit) | 10.0x | 11.0x | $11.0M | $124.5M | 11.27x | 62.3% |
| Bull Case | 9.0x | 11.0x | $9.9M | $148.8M | 14.96x | 71.8% |
| Bull (12x exit) | 9.0x | 12.0x | $9.9M | $165.2M | 16.62x | 75.4% |
| Bear Case | 11.0x | 10.0x | $12.2M | $75.1M | 6.18x | 43.9% |
| Bear (11x exit) | 11.0x | 11.0x | $12.2M | $86.5M | 7.12x | 48.1% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Low occupancy | At 22.1%, 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 54.4% 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
- 38 hospitals with 32-128 beds
- Same-state prioritization (n=39)
- Comp margins: P25=-17.6% / P50=-3.8% / P75=10.5%
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.