MEADOW WOOD HOSPITAL
1. Target Overview & Investment Thesis
MEADOW WOOD HOSPITAL is a 120-bed community hospital in NEW CASTLE, DE with $30.5M in net patient revenue and a 9.6% operating margin. The hospital serves a payer mix of 14.1% Medicare, 0.0% Medicaid, and 85.9% commercial.
Thesis: Turnaround. Our ML models identify $2.2M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 9.6% to 17.0% (+736bps).
| Net Revenue HCRIS | $30.5M |
| Current EBITDA COMPUTED | $2.9M |
| Operating Margin COMPUTED | 9.6% |
| Occupancy HCRIS | 84.5% |
| Revenue / Bed COMPUTED | $254K |
| Net-to-Gross HCRIS | 35.1% |
| Distress Probability ML | nan% |
2. Market Context & Competitive Position
DE has 14 Medicare-certified hospitals with a median operating margin of 0.7%. The target's margin of 9.6% places it above the state median. Among 8 size-comparable peers (60-240 beds), the median margin is -1.1%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (60-240), prioritizing same-state peers. 8 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| MEADOW WOOD HOSPITAL (Target) | DE | 120 | $30.5M | 9.6% |
| ALFRED I DUPONT HOSP FOR CHILD | DE | 206 | $694.0M | 17.3% |
| BEEBE MEDICAL CENTER | DE | 210 | $549.7M | -0.9% |
| BAYHEALTH HOSPITAL SUSSEX CAM | DE | 117 | $298.6M | -1.4% |
| NANTICOKE MEMORIAL HOSPITAL | DE | 92 | $153.2M | -7.4% |
| ST. FRANCIS HOSPITAL WILMINGT | DE | 146 | $129.0M | -2.5% |
| ROCKFORD | DE | 148 | $32.4M | 2.3% |
| DOVER BEHAVIORAL HEALTH SYSTEM | DE | 104 | $27.8M | 7.7% |
| SUN BEHAVIORAL DELAWARE LLC | DE | 90 | $21.1M | -8.2% |
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: $2.2M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $640K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $609K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $603K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $371K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $19K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $2.9M |
| + RCM Uplift | +$2.2M |
| Pro Forma EBITDA | $5.2M |
| Current Margin | 9.6% |
| Pro Forma Margin | 17.0% |
| 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 | $4.5M | $41.8M | 9.26x | 56.1% |
| Base (11x exit) | 10.0x | 11.0x | $4.5M | $47.4M | 10.51x | 60.1% |
| Bull Case | 9.0x | 11.0x | $4.1M | $56.3M | 13.86x | 69.2% |
| Bull (12x exit) | 9.0x | 12.0x | $4.1M | $62.6M | 15.42x | 72.8% |
| Bear Case | 11.0x | 10.0x | $5.0M | $29.1M | 5.86x | 42.4% |
| Bear (11x exit) | 11.0x | 11.0x | $5.0M | $33.6M | 6.77x | 46.6% |
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 60-240 beds
- Same-state prioritization (n=9)
- Comp margins: P25=-3.8% / P50=-1.1% / P75=3.6%
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.