ST VINCENT NORTH
1. Target Overview & Investment Thesis
ST VINCENT NORTH is a 68-bed under-performing / distressed in PULASKI, AR with $72.1M in net patient revenue and a -18.7% operating margin. The hospital serves a payer mix of 29.5% Medicare, 6.2% Medicaid, and 64.3% commercial.
Thesis: Turnaround. Our ML models identify $5.3M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -18.7% to -11.3% (+736bps).
| Net Revenue HCRIS | $72.1M |
| Current EBITDA COMPUTED | $-13.5M |
| Operating Margin COMPUTED | -18.7% |
| Occupancy HCRIS | 71.5% |
| Revenue / Bed COMPUTED | $1.1M |
| Net-to-Gross HCRIS | 17.7% |
| Distress Probability ML | 42.5% |
2. Market Context & Competitive Position
AR has 108 Medicare-certified hospitals with a median operating margin of -7.6%. The target's margin of -18.7% places it below the state median. Among 39 size-comparable peers (34-136 beds), the median margin is -2.9%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (34-136), prioritizing same-state peers. 39 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ST VINCENT NORTH (Target) | AR | 68 | $72.1M | -18.7% |
| 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% |
| SALINE MEMORIAL HOSPITAL | AR | 130 | $91.4M | -8.0% |
| NORTH ARKANSAS REGIONAL MEDICA | AR | 120 | $89.1M | -13.9% |
| SILOAM SPRINGS MEMORIAL HOSPIT | AR | 64 | $85.0M | 8.4% |
| ARKANSAS SURGICAL HOSPITAL | AR | 47 | $75.1M | 11.7% |
| ARKANSAS METHODIST MEDICAL CEN | AR | 114 | $68.8M | -11.8% |
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: $5.3M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $1.5M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $1.4M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $1.4M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $878K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $46K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-13.5M |
| + RCM Uplift | +$5.3M |
| Pro Forma EBITDA | $-8.1M |
| Current Margin | -18.7% |
| Pro Forma Margin | -11.3% |
| WC Released (1x) | $2.8M |
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 | $-20.7M | $-35.7M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-20.7M | $-45.9M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-18.6M | $-35.2M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-18.6M | $-43.8M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-22.8M | $-55.5M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-22.8M | $-68.4M | 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 |
| 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
- 39 hospitals with 34-136 beds
- Same-state prioritization (n=40)
- Comp margins: P25=-16.6% / P50=-2.9% / P75=10.0%
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.