MADISON MEMORIAL HOSPITAL
1. Target Overview & Investment Thesis
MADISON MEMORIAL HOSPITAL is a 25-bed community hospital in nan, FL with $11.5M in net patient revenue and a -21.1% operating margin. The hospital serves a payer mix of 66.9% Medicare, 0.0% Medicaid, and 33.1% commercial.
Thesis: Turnaround. Our ML models identify $851K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -21.1% to -13.7% (+740bps).
| Net Revenue HCRIS | $11.5M |
| Current EBITDA COMPUTED | $-2.4M |
| Operating Margin COMPUTED | -21.1% |
| Occupancy HCRIS | 37.0% |
| Revenue / Bed COMPUTED | $460K |
| Net-to-Gross HCRIS | 49.3% |
| Distress Probability ML | nan% |
2. Market Context & Competitive Position
FL has 261 Medicare-certified hospitals with a median operating margin of 3.2%. The target's margin of -21.1% places it below the state median. Among 41 size-comparable peers (12-50 beds), the median margin is -0.7%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (12-50), prioritizing same-state peers. 41 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| MADISON MEMORIAL HOSPITAL (Target) | FL | 25 | $11.5M | -21.1% |
| MARINERS HOSPITAL | FL | 16 | $74.3M | 17.0% |
| MEDICAL CENTER OF DELTONA | FL | 43 | $45.4M | -30.2% |
| HENDRY REGIONAL MEDICAL CENTER | FL | 25 | $41.1M | -20.8% |
| ED FRASER MEMORIAL HOSPITAL | FL | 21 | $40.7M | 17.8% |
| DESOTO MEMORIAL HOSPITAL | FL | 49 | $38.5M | -18.7% |
| MIAMI JEWISH HEALTH SYSTEMS I | FL | 32 | $36.6M | -50.0% |
| ADVENTHEALTH WAUCHULA | FL | 25 | $35.5M | 10.0% |
| NORTHWEST FLORIDA COMMUNITY HO | FL | 25 | $35.2M | -2.4% |
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: $851K (740bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $242K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $230K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $230K | +200bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $140K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +8bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-2.4M |
| + RCM Uplift | +$851K |
| Pro Forma EBITDA | $-1.6M |
| Current Margin | -21.1% |
| Pro Forma Margin | -13.7% |
| WC Released (1x) | $441K |
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 | $-3.7M | $-7.5M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-3.7M | $-9.5M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-3.4M | $-7.9M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-3.4M | $-9.6M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-4.1M | $-10.5M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-4.1M | $-12.9M | 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 | Heavy Medicare dependence | Medicare comprises 66.9% of days; rate updates may lag inflation. Mitigant: CDI/CMI lever directly increases Medicare reimbursement |
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
- 41 hospitals with 12-50 beds
- Same-state prioritization (n=42)
- Comp margins: P25=-25.1% / P50=-0.7% / P75=9.4%
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.