CENTURA ST. MARY CORWIN HOSPITAL
1. Target Overview & Investment Thesis
CENTURA ST. MARY CORWIN HOSPITAL is a 42-bed safety-net/medicaid heavy in PUEBLO, CO with $121.8M in net patient revenue and a -12.0% operating margin. The hospital serves a payer mix of 22.4% Medicare, 24.5% Medicaid, and 53.1% commercial.
Thesis: Turnaround. Our ML models identify $9.0M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -12.0% to -4.7% (+736bps).
| Net Revenue HCRIS | $121.8M |
| Current EBITDA COMPUTED | $-14.7M |
| Operating Margin COMPUTED | -12.0% |
| Occupancy HCRIS | 51.1% |
| Revenue / Bed COMPUTED | $2.9M |
| Net-to-Gross HCRIS | 16.3% |
| Distress Probability ML | 48.5% |
2. Market Context & Competitive Position
CO has 108 Medicare-certified hospitals with a median operating margin of -3.6%. The target's margin of -12.0% places it below the state median. Among 44 size-comparable peers (21-84 beds), the median margin is -3.4%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (21-84), prioritizing same-state peers. 44 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| CENTURA ST. MARY CORWIN HOSPIT (Target) | CO | 42 | $121.8M | -12.0% |
| VALLEY VIEW HOSPITAL | CO | 31 | $285.3M | -3.1% |
| CENTURA MERCY HOSPITAL | CO | 73 | $270.4M | 10.0% |
| COMMUNITY HOSPITAL | CO | 44 | $216.5M | -5.5% |
| VAIL VALLEY MEDICAL CENTER | CO | 54 | $214.4M | -28.1% |
| UCHEALTH LONGS PEAK HOSPITAL | CO | 83 | $181.8M | -1.7% |
| UCHEALTH GREELEY HOSPITAL | CO | 79 | $163.6M | -9.7% |
| MONTROSE MEMORIAL HOSPITAL | CO | 47 | $147.2M | -0.7% |
| ASPEN VALLEY HOSPITAL DISTRICT | CO | 25 | $130.1M | 0.4% |
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: $9.0M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $2.6M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $2.4M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $2.4M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.5M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $78K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-14.7M |
| + RCM Uplift | +$9.0M |
| Pro Forma EBITDA | $-5.7M |
| Current Margin | -12.0% |
| Pro Forma Margin | -4.7% |
| WC Released (1x) | $4.7M |
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 | $-22.6M | $-7.1M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-22.6M | $-15.1M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-20.3M | $7.1M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-20.3M | $1.8M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-24.8M | $-44.6M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-24.8M | $-57.1M | 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 | Elevated Medicaid exposure (24.5%) | Medicaid reimburses below cost in most states. Mitigant: denial reduction lever has highest impact on Medicaid claims |
| 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
- 44 hospitals with 21-84 beds
- Same-state prioritization (n=45)
- Comp margins: P25=-8.6% / P50=-3.4% / P75=3.1%
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.