FAMILY HEALTH WEST HOSPITAL
1. Target Overview & Investment Thesis
FAMILY HEALTH WEST HOSPITAL is a 25-bed suburban community hospital in MESA, CO with $62.6M in net patient revenue and a 6.4% operating margin. The hospital serves a payer mix of 49.8% Medicare, 0.4% Medicaid, and 49.8% commercial.
Thesis: Turnaround. Our ML models identify $4.6M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 6.4% to 13.7% (+736bps).
| Net Revenue HCRIS | $62.6M |
| Current EBITDA COMPUTED | $4.0M |
| Operating Margin COMPUTED | 6.4% |
| Occupancy HCRIS | 65.4% |
| Revenue / Bed COMPUTED | $2.5M |
| Net-to-Gross HCRIS | 45.2% |
| Distress Probability ML | 44.1% |
2. Market Context & Competitive Position
CO has 108 Medicare-certified hospitals with a median operating margin of -3.6%. The target's margin of 6.4% places it above the state median. Among 50 size-comparable peers (12-50 beds), the median margin is -5.6%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (12-50), prioritizing same-state peers. 50 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| FAMILY HEALTH WEST HOSPITAL (Target) | CO | 25 | $62.6M | 6.4% |
| VALLEY VIEW HOSPITAL | CO | 31 | $285.3M | -3.1% |
| COMMUNITY HOSPITAL | CO | 44 | $216.5M | -5.5% |
| NATIONAL JEWISH HEALTH | CO | 13 | $150.4M | -50.0% |
| MONTROSE MEMORIAL HOSPITAL | CO | 47 | $147.2M | -0.7% |
| ASPEN VALLEY HOSPITAL DISTRICT | CO | 25 | $130.1M | 0.4% |
| CENTURA ST. MARY CORWIN HOSPIT | CO | 42 | $121.8M | -12.0% |
| CENTURA ST. ANTHONY SUMMIT HOS | CO | 34 | $121.5M | 28.8% |
| HEART OF THE ROCKIES REG MED C | CO | 25 | $117.5M | 5.4% |
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: $4.6M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $1.3M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $1.3M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $1.2M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $761K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $40K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $4.0M |
| + RCM Uplift | +$4.6M |
| Pro Forma EBITDA | $8.6M |
| Current Margin | 6.4% |
| Pro Forma Margin | 13.7% |
| WC Released (1x) | $2.4M |
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 | $6.1M | $72.4M | 11.79x | 63.8% |
| Base (11x exit) | 10.0x | 11.0x | $6.1M | $81.6M | 13.29x | 67.8% |
| Bull Case | 9.0x | 11.0x | $5.5M | $98.8M | 17.88x | 78.0% |
| Bull (12x exit) | 9.0x | 12.0x | $5.5M | $109.4M | 19.81x | 81.7% |
| Bear Case | 11.0x | 10.0x | $6.8M | $47.4M | 7.01x | 47.6% |
| Bear (11x exit) | 11.0x | 11.0x | $6.8M | $54.3M | 8.04x | 51.7% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Standard execution risk | RCM improvement requires management buy-in and 12-18 month implementation timeline |
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
- 50 hospitals with 12-50 beds
- Same-state prioritization (n=51)
- Comp margins: P25=-11.5% / P50=-5.6% / P75=2.3%
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.