ROCKVILLE GENERAL HOSPITAL INC.
1. Target Overview & Investment Thesis
ROCKVILLE GENERAL HOSPITAL INC. is a 102-bed under-performing / distressed in TOLLAND, CT with $31.0M in net patient revenue and a -35.6% operating margin. The hospital serves a payer mix of 22.3% Medicare, 14.5% Medicaid, and 63.3% commercial.
Thesis: Undervalued. Our ML models identify $2.3M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -35.6% to -28.3% (+736bps).
| Net Revenue HCRIS | $31.0M |
| Current EBITDA COMPUTED | $-11.0M |
| Operating Margin COMPUTED | -35.6% |
| Occupancy HCRIS | 2.0% |
| Revenue / Bed COMPUTED | $304K |
| Net-to-Gross HCRIS | 24.7% |
| Distress Probability ML | 62.1% |
2. Market Context & Competitive Position
CT has 39 Medicare-certified hospitals with a median operating margin of -6.8%. The target's margin of -35.6% places it below the state median. Among 17 size-comparable peers (51-204 beds), the median margin is -6.8%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (51-204), prioritizing same-state peers. 17 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ROCKVILLE GENERAL HOSPITAL IN (Target) | CT | 102 | $31.0M | -35.6% |
| JOHN DEMPSEY HOSPITAL | CT | 141 | $590.3M | -24.8% |
| GREENWICH HOSPITAL | CT | 186 | $498.0M | -5.9% |
| MIDDLESEX HOSPITAL | CT | 186 | $449.7M | -1.3% |
| CONNECTICUT CHILDRENS MEDICAL | CT | 187 | $416.8M | -6.7% |
| THE WILLIAM W. BACKUS HOSPITAL | CT | 172 | $411.7M | -4.3% |
| MIDSTATE MEDICAL CENTER | CT | 143 | $346.8M | -2.3% |
| ST. MARYS HOSPITAL | CT | 163 | $311.2M | -2.5% |
| THE GRIFFIN HOSPITAL | CT | 101 | $217.2M | -13.8% |
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: $2.3M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $650K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $619K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $613K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $377K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $20K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-11.0M |
| + RCM Uplift | +$2.3M |
| Pro Forma EBITDA | $-8.8M |
| Current Margin | -35.6% |
| Pro Forma Margin | -28.3% |
| WC Released (1x) | $1.2M |
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 | $-17.0M | $-50.0M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-17.0M | $-60.5M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-15.3M | $-58.5M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-15.3M | $-68.4M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-18.7M | $-55.9M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-18.7M | $-67.6M | 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 | Low occupancy | At 2.0%, fixed costs are spread over fewer patient days. Mitigant: volume growth is an additional upside lever not modeled in base case |
| High | Elevated distress probability | Model estimates 62.1% 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
- 17 hospitals with 51-204 beds
- Same-state prioritization (n=18)
- Comp margins: P25=-12.7% / P50=-6.8% / P75=-5.5%
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.