WINDHAM COMMUNITY MEMORIAL HOSPITAL
1. Target Overview & Investment Thesis
WINDHAM COMMUNITY MEMORIAL HOSPITAL is a 46-bed suburban community hospital in WINDHAM, CT with $123.7M in net patient revenue and a 5.6% operating margin. The hospital serves a payer mix of 27.8% Medicare, 15.5% Medicaid, and 56.7% commercial.
Thesis: Turnaround. Our ML models identify $9.1M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 5.6% to 12.9% (+736bps).
| Net Revenue HCRIS | $123.7M |
| Current EBITDA COMPUTED | $6.9M |
| Operating Margin COMPUTED | 5.6% |
| Occupancy HCRIS | 61.5% |
| Revenue / Bed COMPUTED | $2.7M |
| Net-to-Gross HCRIS | 35.1% |
| Distress Probability ML | 46.5% |
2. Market Context & Competitive Position
CT has 39 Medicare-certified hospitals with a median operating margin of -6.8%. The target's margin of 5.6% places it above the state median. Among 8 size-comparable peers (23-92 beds), the median margin is -18.5%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (23-92), prioritizing same-state peers. 8 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| WINDHAM COMMUNITY MEMORIAL HOS (Target) | CT | 46 | $123.7M | 5.6% |
| CHARLOTTE HUNGERFORD HOSPITAL | CT | 91 | $163.6M | -8.9% |
| JOHNSON MEMORIAL HOSPITAL INC | CT | 44 | $65.6M | -20.4% |
| SHARON HOSPITAL | CT | 66 | $47.0M | -50.0% |
| SILVER HILL HOSPITAL | CT | 35 | $45.2M | -16.6% |
| NATCHAUG HOSPITAL | CT | 59 | $42.2M | -32.2% |
| MOUNT SINAI REHABILITATION HOS | CT | 60 | $24.0M | -9.0% |
| CONNECTICUT MENTAL HEALTH CENT | CT | 32 | $nan | nan% |
| SOUTHWEST CT MENTAL HEALTH SYS | CT | 62 | $nan | nan% |
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: $9.1M (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% | $2.5M | +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% | $79K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $6.9M |
| + RCM Uplift | +$9.1M |
| Pro Forma EBITDA | $16.0M |
| Current Margin | 5.6% |
| Pro Forma Margin | 12.9% |
| 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 | $10.6M | $136.5M | 12.87x | 66.7% |
| Base (11x exit) | 10.0x | 11.0x | $10.6M | $153.6M | 14.48x | 70.7% |
| Bull Case | 9.0x | 11.0x | $9.5M | $187.1M | 19.60x | 81.3% |
| Bull (12x exit) | 9.0x | 12.0x | $9.5M | $207.0M | 21.68x | 85.0% |
| Bear Case | 11.0x | 10.0x | $11.7M | $87.6M | 7.50x | 49.6% |
| Bear (11x exit) | 11.0x | 11.0x | $11.7M | $100.1M | 8.58x | 53.7% |
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
- 8 hospitals with 23-92 beds
- Same-state prioritization (n=9)
- Comp margins: P25=-29.3% / P50=-18.5% / P75=-10.9%
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.