SUNCOAST BEHAVIORAL HEALTH CENTER
1. Target Overview & Investment Thesis
SUNCOAST BEHAVIORAL HEALTH CENTER is a 40-bed community hospital in MANATEE, FL with $8.7M in net patient revenue and a -23.9% operating margin. The hospital serves a payer mix of 0.9% Medicare, 0.0% Medicaid, and 99.1% commercial.
Thesis: Turnaround. Our ML models identify $650K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -23.9% to -16.5% (+745bps).
| Net Revenue HCRIS | $8.7M |
| Current EBITDA COMPUTED | $-2.1M |
| Operating Margin COMPUTED | -23.9% |
| Occupancy HCRIS | 59.4% |
| Revenue / Bed COMPUTED | $218K |
| Net-to-Gross HCRIS | 38.6% |
| 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 -23.9% places it below the state median. Among 78 size-comparable peers (20-80 beds), the median margin is 2.0%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (20-80), prioritizing same-state peers. 78 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| SUNCOAST BEHAVIORAL HEALTH CEN (Target) | FL | 40 | $8.7M | -23.9% |
| ASCENSION SACRED HEART EMERALD | FL | 80 | $187.9M | 16.1% |
| GULF BREEZE HOSPITAL | FL | 65 | $121.8M | 12.8% |
| OVIEDO MEDICAL CENTER | FL | 64 | $110.9M | 7.4% |
| BARTOW REGIONAL MEDICAL CENTER | FL | 72 | $90.9M | 11.3% |
| BAPTIST MEDICAL CTR-NASSAU | FL | 54 | $85.1M | 2.1% |
| UCF LAKE NONA HOSPITAL | FL | 64 | $80.3M | 1.8% |
| JACKSON HOSPITAL MARIANNA | FL | 66 | $75.3M | -9.7% |
| TWIN CITIES HOSPITAL | FL | 65 | $73.6M | 39.7% |
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: $650K (745bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $183K | +210bp | 18mo |
| Denial Rate Reduction | 12.0% | 6.5% | $176K | +202bp | 12mo |
| Cost to Collect | 4.5% | 2.5% | $175K | +200bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $106K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +11bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-2.1M |
| + RCM Uplift | +$650K |
| Pro Forma EBITDA | $-1.4M |
| Current Margin | -23.9% |
| Pro Forma Margin | -16.5% |
| WC Released (1x) | $335K |
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 | $-3.2M | $-7.3M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-3.2M | $-9.1M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-2.9M | $-8.0M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-2.9M | $-9.5M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-3.5M | $-9.5M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-3.5M | $-11.6M | 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 |
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
- 78 hospitals with 20-80 beds
- Same-state prioritization (n=79)
- Comp margins: P25=-18.6% / P50=2.0% / P75=11.8%
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 27, 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.