FULTON COUNTY HOSPITAL
1. Target Overview & Investment Thesis
FULTON COUNTY HOSPITAL is a 25-bed under-performing / distressed in FULTON, AR with $5.9M in net patient revenue and a -84.1% operating margin. The hospital serves a payer mix of 47.7% Medicare, 5.6% Medicaid, and 46.7% commercial.
Thesis: Turnaround. Our ML models identify $443K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -84.1% to -76.6% (+755bps).
| Net Revenue HCRIS | $5.9M |
| Current EBITDA COMPUTED | $-4.9M |
| Operating Margin COMPUTED | -84.1% |
| Occupancy HCRIS | 20.3% |
| Revenue / Bed COMPUTED | $235K |
| Net-to-Gross HCRIS | 32.4% |
| Distress Probability ML | 57.6% |
2. Market Context & Competitive Position
AR has 108 Medicare-certified hospitals with a median operating margin of -7.6%. The target's margin of -84.1% places it below the state median. Among 52 size-comparable peers (12-50 beds), the median margin is -14.2%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (12-50), prioritizing same-state peers. 52 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| FULTON COUNTY HOSPITAL (Target) | AR | 25 | $5.9M | -84.1% |
| ARKANSAS CHILDRENS NORTHWEST | AR | 24 | $113.6M | 7.2% |
| ARKANSAS SURGICAL HOSPITAL | AR | 47 | $75.1M | 11.7% |
| ENCORE MEDICAL CENTER | AR | 25 | $55.7M | -4.7% |
| OZARKS COMMUNITY HOSPITAL OF G | AR | 25 | $48.6M | -21.0% |
| DREW MEMORIAL HOSPITAL INC | AR | 49 | $35.3M | -27.2% |
| ASHLEY COUNTY MEDICAL CENTER | AR | 25 | $33.7M | -23.0% |
| OZARK HEALTH INC | AR | 25 | $32.3M | -4.7% |
| FORREST CITY MEDICAL CENTER | AR | 48 | $30.3M | -17.3% |
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: $443K (755bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $123K | +210bp | 18mo |
| Denial Rate Reduction | 12.0% | 6.5% | $121K | +207bp | 12mo |
| Cost to Collect | 4.5% | 2.5% | $117K | +200bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $71K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +16bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-4.9M |
| + RCM Uplift | +$443K |
| Pro Forma EBITDA | $-4.5M |
| Current Margin | -84.1% |
| Pro Forma Margin | -76.6% |
| WC Released (1x) | $225K |
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 | $-7.6M | $-28.1M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-7.6M | $-33.4M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-6.8M | $-34.4M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-6.8M | $-39.6M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-8.4M | $-27.9M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-8.4M | $-33.4M | 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 |
| Medium | Low occupancy | At 20.3%, 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 57.6% probability of financial distress. Mitigant: distressed entry pricing (7-9x) compensates for risk |
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
- 52 hospitals with 12-50 beds
- Same-state prioritization (n=53)
- Comp margins: P25=-23.9% / P50=-14.2% / P75=-0.5%
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 27, 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.