MARSHALL HOSPITAL
1. Target Overview & Investment Thesis
MARSHALL HOSPITAL is a 111-bed suburban community hospital in EL DORADO, CA with $286.0M in net patient revenue and a -5.9% operating margin. The hospital serves a payer mix of 42.1% Medicare, 6.3% Medicaid, and 51.6% commercial.
Thesis: Undervalued. Our ML models identify $21.1M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -5.9% to 1.4% (+736bps).
| Net Revenue HCRIS | $286.0M |
| Current EBITDA COMPUTED | $-17.0M |
| Operating Margin COMPUTED | -5.9% |
| Occupancy HCRIS | 47.5% |
| Revenue / Bed COMPUTED | $2.6M |
| Net-to-Gross HCRIS | 21.1% |
| Distress Probability ML | 46.9% |
2. Market Context & Competitive Position
CA has 414 Medicare-certified hospitals with a median operating margin of -4.9%. The target's margin of -5.9% places it below the state median. Among 179 size-comparable peers (56-222 beds), the median margin is -4.5%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (56-222), prioritizing same-state peers. 179 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| MARSHALL HOSPITAL (Target) | CA | 111 | $286.0M | -5.9% |
| CITY OF HOPE NATIONAL MEDICAL | CA | 217 | $1.83B | -10.7% |
| KFH - MANTECA | CA | 213 | $796.8M | 15.2% |
| CHILDRENS HOSP & RES CNTR OAKL | CA | 155 | $687.9M | -7.1% |
| KFH - WALNUT CREEK | CA | 219 | $681.0M | -3.4% |
| NORTHBAY HOSPITAL GROUP | CA | 204 | $676.6M | -8.2% |
| KFH - SAN LEANDRO | CA | 216 | $663.8M | 10.3% |
| CONTRA COSTA REGIONAL MEDICAL | CA | 124 | $595.0M | -29.2% |
| KFH - VALLEJO | CA | 184 | $531.7M | 0.3% |
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: $21.1M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $6.0M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $5.7M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $5.7M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $3.5M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $183K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-17.0M |
| + RCM Uplift | +$21.1M |
| Pro Forma EBITDA | $4.0M |
| Current Margin | -5.9% |
| Pro Forma Margin | 1.4% |
| WC Released (1x) | $11.0M |
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 | $-26.2M | $98.3M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-26.2M | $99.6M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-23.6M | $160.6M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-23.6M | $168.2M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-28.8M | $1.5M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-28.8M | $-7.7M | 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
- 179 hospitals with 56-222 beds
- Same-state prioritization (n=180)
- Comp margins: P25=-21.0% / P50=-4.5% / P75=4.5%
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.