WEST GABLES REHABILITATION HOSPITAL
1. Target Overview & Investment Thesis
WEST GABLES REHABILITATION HOSPITAL is a 85-bed suburban community hospital in MIAMI-DADE, FL with $43.6M in net patient revenue and a 1.8% operating margin. The hospital serves a payer mix of 48.5% Medicare, 2.5% Medicaid, and 49.0% commercial.
Thesis: Turnaround. Our ML models identify $3.2M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 1.8% to 9.1% (+736bps).
| Net Revenue HCRIS | $43.6M |
| Current EBITDA COMPUTED | $773K |
| Operating Margin COMPUTED | 1.8% |
| Occupancy HCRIS | 90.1% |
| Revenue / Bed COMPUTED | $513K |
| Net-to-Gross HCRIS | 29.8% |
| Distress Probability ML | 40.4% |
2. Market Context & Competitive Position
FL has 261 Medicare-certified hospitals with a median operating margin of 3.2%. The target's margin of 1.8% places it below the state median. Among 119 size-comparable peers (42-170 beds), the median margin is 2.8%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (42-170), prioritizing same-state peers. 119 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| WEST GABLES REHABILITATION HOS (Target) | FL | 85 | $43.6M | 1.8% |
| WEST KENDALL BAPTIST HOSPITAL | FL | 127 | $361.6M | 18.5% |
| ADVENTHEALTH WESLEY CHAPEL | FL | 169 | $360.1M | 17.0% |
| ORLANDO HEALTH SOUTH LAKE HOSP | FL | 167 | $331.8M | 7.2% |
| ADVENTHEALTH PALM COAST | FL | 99 | $285.7M | 8.1% |
| HOMESTEAD HOSPITAL | FL | 159 | $270.4M | -11.1% |
| NEMOURS CHILDRENS HOSPITAL | FL | 130 | $268.7M | -10.2% |
| DOCTORS HOSPITAL | FL | 130 | $250.0M | 0.9% |
| ADVENTHEALTH ZEPHYRHILLS | FL | 149 | $207.1M | -0.8% |
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: $3.2M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $916K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $872K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $864K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $531K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $28K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $773K |
| + RCM Uplift | +$3.2M |
| Pro Forma EBITDA | $4.0M |
| Current Margin | 1.8% |
| Pro Forma Margin | 9.1% |
| WC Released (1x) | $1.7M |
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 | $1.2M | $37.2M | 31.27x | 99.1% |
| Base (11x exit) | 10.0x | 11.0x | $1.2M | $41.3M | 34.73x | 103.3% |
| Bull Case | 9.0x | 11.0x | $1.1M | $52.3M | 48.84x | 117.7% |
| Bull (12x exit) | 9.0x | 12.0x | $1.1M | $57.4M | 53.58x | 121.7% |
| Bear Case | 11.0x | 10.0x | $1.3M | $20.8M | 15.87x | 73.8% |
| Bear (11x exit) | 11.0x | 11.0x | $1.3M | $23.3M | 17.78x | 77.8% |
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
- 119 hospitals with 42-170 beds
- Same-state prioritization (n=120)
- Comp margins: P25=-9.0% / P50=2.8% / P75=12.5%
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.