CENTURA AVISTA ADVENTIST HOSPITAL
1. Target Overview & Investment Thesis
CENTURA AVISTA ADVENTIST HOSPITAL is a 108-bed safety-net/medicaid heavy in BOULDER, CO with $181.3M in net patient revenue and a 8.4% operating margin. The hospital serves a payer mix of 10.1% Medicare, 27.1% Medicaid, and 62.7% commercial.
Thesis: Turnaround. Our ML models identify $13.3M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 8.4% to 15.8% (+736bps).
| Net Revenue HCRIS | $181.3M |
| Current EBITDA COMPUTED | $15.3M |
| Operating Margin COMPUTED | 8.4% |
| Occupancy HCRIS | 42.1% |
| Revenue / Bed COMPUTED | $1.7M |
| Net-to-Gross HCRIS | 24.0% |
| Distress Probability ML | 53.6% |
2. Market Context & Competitive Position
CO has 108 Medicare-certified hospitals with a median operating margin of -3.6%. The target's margin of 8.4% places it above the state median. Among 34 size-comparable peers (54-216 beds), the median margin is -1.8%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (54-216), prioritizing same-state peers. 34 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| CENTURA AVISTA ADVENTIST HOSPI (Target) | CO | 108 | $181.3M | 8.4% |
| MEDICAL CENTER OF THE ROCKIES | CO | 180 | $541.1M | 11.6% |
| BOULDER COMMUNITY HOSPITAL | CO | 139 | $418.3M | -1.6% |
| CENTURA PARKER ADVENTIST HOSPI | CO | 162 | $351.5M | 12.9% |
| NORTH COLORADO MEDICAL CENTER | CO | 202 | $321.9M | -13.1% |
| CENTURA PORTER ADVENTIST HOSPI | CO | 180 | $319.8M | -10.5% |
| GOOD SAMARITAN MEDICAL CTR | CO | 183 | $314.3M | -1.0% |
| CENTURA LITTLETON ADVENTIST HO | CO | 201 | $314.2M | 1.3% |
| CENTURA MERCY HOSPITAL | CO | 73 | $270.4M | 10.0% |
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: $13.3M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $3.8M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $3.6M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $3.6M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $2.2M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $116K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $15.3M |
| + RCM Uplift | +$13.3M |
| Pro Forma EBITDA | $28.7M |
| Current Margin | 8.4% |
| Pro Forma Margin | 15.8% |
| WC Released (1x) | $7.0M |
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 | $23.6M | $234.4M | 9.95x | 58.3% |
| Base (11x exit) | 10.0x | 11.0x | $23.6M | $265.5M | 11.27x | 62.3% |
| Bull Case | 9.0x | 11.0x | $21.2M | $317.2M | 14.96x | 71.8% |
| Bull (12x exit) | 9.0x | 12.0x | $21.2M | $352.3M | 16.62x | 75.4% |
| Bear Case | 11.0x | 10.0x | $25.9M | $160.1M | 6.18x | 43.9% |
| Bear (11x exit) | 11.0x | 11.0x | $25.9M | $184.5M | 7.12x | 48.1% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Elevated Medicaid exposure (27.1%) | Medicaid reimburses below cost in most states. Mitigant: denial reduction lever has highest impact on Medicaid claims |
| High | Elevated distress probability | Model estimates 53.6% 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
- 34 hospitals with 54-216 beds
- Same-state prioritization (n=35)
- Comp margins: P25=-10.5% / P50=-1.8% / P75=2.0%
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.