DOUGLAS HOSPITAL
1. Target Overview & Investment Thesis
DOUGLAS HOSPITAL is a 112-bed suburban community hospital in DOUGLAS, GA with $217.2M in net patient revenue and a -0.8% operating margin. The hospital serves a payer mix of 21.2% Medicare, 8.9% Medicaid, and 69.9% commercial.
Thesis: Undervalued. Our ML models identify $16.0M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -0.8% to 6.5% (+736bps).
| Net Revenue HCRIS | $217.2M |
| Current EBITDA COMPUTED | $-1.8M |
| Operating Margin COMPUTED | -0.8% |
| Occupancy HCRIS | 78.8% |
| Revenue / Bed COMPUTED | $1.9M |
| Net-to-Gross HCRIS | 16.4% |
| Distress Probability ML | 40.0% |
2. Market Context & Competitive Position
GA has 165 Medicare-certified hospitals with a median operating margin of -2.8%. The target's margin of -0.8% places it above the state median. Among 59 size-comparable peers (56-224 beds), the median margin is -3.3%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (56-224), prioritizing same-state peers. 59 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| DOUGLAS HOSPITAL (Target) | GA | 112 | $217.2M | -0.8% |
| NORTHSIDE HOSPITAL-CHEROKEE I | GA | 212 | $623.5M | -0.1% |
| TIFT REGIONAL MEDICAL CENTER | GA | 181 | $372.8M | -10.9% |
| PIEDMONT NEWNAN HOSPITAL INC. | GA | 177 | $366.0M | 19.2% |
| SOUTH GEORGIA MEDICAL CENTER | GA | 224 | $359.9M | -16.2% |
| HAMILTON MEDICAL CENTER | GA | 221 | $349.6M | 5.3% |
| NORTH FULTON REGIONAL HOSPITAL | GA | 178 | $320.1M | 6.6% |
| TANNER MEDICAL CENTER | GA | 196 | $307.5M | -42.3% |
| ST. JOSEPHS HOSPITAL INC. | GA | 188 | $300.6M | -15.6% |
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: $16.0M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $4.6M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $4.3M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $4.3M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $2.6M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $139K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-1.8M |
| + RCM Uplift | +$16.0M |
| Pro Forma EBITDA | $14.2M |
| Current Margin | -0.8% |
| Pro Forma Margin | 6.5% |
| WC Released (1x) | $8.3M |
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 | $-2.8M | $148.0M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-2.8M | $161.9M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-2.5M | $213.8M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-2.5M | $232.5M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-3.0M | $69.0M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-3.0M | $74.9M | 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 |
| Low | Low net-to-gross ratio | Large contractual allowances suggest pricing discipline issues. Mitigant: payer renegotiation is an additional upside lever |
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
- 59 hospitals with 56-224 beds
- Same-state prioritization (n=60)
- Comp margins: P25=-12.0% / P50=-3.3% / P75=6.8%
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 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.