CHI ST. VINCENT HOT SPRINGS REHABILI
1. Target Overview & Investment Thesis
CHI ST. VINCENT HOT SPRINGS REHABILI is a 48-bed suburban community hospital in GARLAND, AR with $25.0M in net patient revenue and a 27.4% operating margin. The hospital serves a payer mix of 73.9% Medicare, 5.5% Medicaid, and 20.7% commercial.
Thesis: Turnaround. Our ML models identify $1.8M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 27.4% to 34.7% (+736bps).
| Net Revenue HCRIS | $25.0M |
| Current EBITDA COMPUTED | $6.8M |
| Operating Margin COMPUTED | 27.4% |
| Occupancy HCRIS | 87.9% |
| Revenue / Bed COMPUTED | $520K |
| Net-to-Gross HCRIS | 67.7% |
| Distress Probability ML | 46.7% |
2. Market Context & Competitive Position
AR has 108 Medicare-certified hospitals with a median operating margin of -7.6%. The target's margin of 27.4% places it above the state median. Among 62 size-comparable peers (24-96 beds), the median margin is -12.4%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (24-96), prioritizing same-state peers. 62 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| CHI ST. VINCENT HOT SPRINGS RE (Target) | AR | 48 | $25.0M | 27.4% |
| ARKANSAS CHILDRENS NORTHWEST | AR | 24 | $113.6M | 7.2% |
| SILOAM SPRINGS MEMORIAL HOSPIT | AR | 64 | $85.0M | 8.4% |
| ARKANSAS SURGICAL HOSPITAL | AR | 47 | $75.1M | 11.7% |
| ST VINCENT NORTH | AR | 68 | $72.1M | -18.7% |
| ENCORE MEDICAL CENTER | AR | 25 | $55.7M | -4.7% |
| OZARKS COMMUNITY HOSPITAL OF G | AR | 25 | $48.6M | -21.0% |
| ENCOMPASS HEALTH REHABILITATIO | AR | 80 | $36.3M | 27.9% |
| DREW MEMORIAL HOSPITAL INC | AR | 49 | $35.3M | -27.2% |
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: $1.8M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $524K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $499K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $494K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $304K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $16K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $6.8M |
| + RCM Uplift | +$1.8M |
| Pro Forma EBITDA | $8.7M |
| Current Margin | 27.4% |
| Pro Forma Margin | 34.7% |
| WC Released (1x) | $957K |
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 | $10.5M | $63.4M | 6.04x | 43.3% |
| Base (11x exit) | 10.0x | 11.0x | $10.5M | $73.2M | 6.96x | 47.4% |
| Bull Case | 9.0x | 11.0x | $9.5M | $82.7M | 8.74x | 54.3% |
| Bull (12x exit) | 9.0x | 12.0x | $9.5M | $93.0M | 9.83x | 58.0% |
| Bear Case | 11.0x | 10.0x | $11.6M | $50.8M | 4.40x | 34.5% |
| Bear (11x exit) | 11.0x | 11.0x | $11.6M | $59.7M | 5.16x | 38.9% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Heavy Medicare dependence | Medicare comprises 73.9% of days; rate updates may lag inflation. Mitigant: CDI/CMI lever directly increases Medicare reimbursement |
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
- 62 hospitals with 24-96 beds
- Same-state prioritization (n=63)
- Comp margins: P25=-24.2% / P50=-12.4% / P75=5.4%
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.