KINDRED HOSPITAL OCALA
1. Target Overview & Investment Thesis
KINDRED HOSPITAL OCALA is a 31-bed community hospital in MARION, FL with $8.5M in net patient revenue and a 18.2% operating margin. The hospital serves a payer mix of 35.1% Medicare, 0.0% Medicaid, and 64.9% commercial.
Thesis: Turnaround. Our ML models identify $634K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 18.2% to 25.7% (+745bps).
| Net Revenue HCRIS | $8.5M |
| Current EBITDA COMPUTED | $1.6M |
| Operating Margin COMPUTED | 18.2% |
| Occupancy HCRIS | 43.0% |
| Revenue / Bed COMPUTED | $274K |
| Net-to-Gross HCRIS | 25.3% |
| 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 18.2% places it above the state median. Among 54 size-comparable peers (16-62 beds), the median margin is -2.2%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (16-62), prioritizing same-state peers. 54 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| KINDRED HOSPITAL OCALA (Target) | FL | 31 | $8.5M | 18.2% |
| BAPTIST MEDICAL CTR-NASSAU | FL | 54 | $85.1M | 2.1% |
| MARINERS HOSPITAL | FL | 16 | $74.3M | 17.0% |
| MEDICAL CENTER OF DELTONA | FL | 43 | $45.4M | -30.2% |
| LEHIGH REGIONAL | FL | 53 | $41.3M | 6.6% |
| 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% |
| ST CATHERINES REHAB HOSPITAL | FL | 60 | $38.4M | -12.4% |
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: $634K (745bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $179K | +210bp | 18mo |
| Denial Rate Reduction | 12.0% | 6.5% | $172K | +202bp | 12mo |
| Cost to Collect | 4.5% | 2.5% | $170K | +200bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $104K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +11bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $1.6M |
| + RCM Uplift | +$634K |
| Pro Forma EBITDA | $2.2M |
| Current Margin | 18.2% |
| Pro Forma Margin | 25.7% |
| WC Released (1x) | $326K |
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 | $2.4M | $16.6M | 6.95x | 47.3% |
| Base (11x exit) | 10.0x | 11.0x | $2.4M | $19.0M | 7.97x | 51.4% |
| Bull Case | 9.0x | 11.0x | $2.1M | $21.9M | 10.19x | 59.1% |
| Bull (12x exit) | 9.0x | 12.0x | $2.1M | $24.5M | 11.41x | 62.7% |
| Bear Case | 11.0x | 10.0x | $2.6M | $12.6M | 4.81x | 36.9% |
| Bear (11x exit) | 11.0x | 11.0x | $2.6M | $14.7M | 5.62x | 41.2% |
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
- 54 hospitals with 16-62 beds
- Same-state prioritization (n=55)
- Comp margins: P25=-27.6% / P50=-2.2% / P75=6.5%
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.