WARM SPRINGS MEDICAL CENTER
1. Target Overview & Investment Thesis
WARM SPRINGS MEDICAL CENTER is a 25-bed suburban community hospital in MERIWETHER, GA with $17.0M in net patient revenue and a 2.4% operating margin. The hospital serves a payer mix of 30.1% Medicare, 0.2% Medicaid, and 69.7% commercial.
Thesis: Turnaround. Our ML models identify $1.2M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 2.4% to 9.8% (+736bps).
| Net Revenue HCRIS | $17.0M |
| Current EBITDA COMPUTED | $408K |
| Operating Margin COMPUTED | 2.4% |
| Occupancy HCRIS | 52.7% |
| Revenue / Bed COMPUTED | $679K |
| Net-to-Gross HCRIS | 85.1% |
| Distress Probability ML | 53.3% |
2. Market Context & Competitive Position
GA has 165 Medicare-certified hospitals with a median operating margin of -2.8%. The target's margin of 2.4% places it above the state median. Among 62 size-comparable peers (12-50 beds), the median margin is -5.0%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (12-50), prioritizing same-state peers. 62 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| WARM SPRINGS MEDICAL CENTER (Target) | GA | 25 | $17.0M | 2.4% |
| UNION GENERAL HOSPITAL | GA | 39 | $108.6M | 2.4% |
| TATTNALL HOSPITAL COMPANY LLC | GA | 25 | $101.7M | 41.9% |
| MILLER COUNTY HOSPITAL | GA | 25 | $81.6M | -1.1% |
| BURKE MEDICAL CENTER | GA | 40 | $55.7M | 34.7% |
| SGHS - CAMDEN CAMPUS | GA | 40 | $54.9M | -10.3% |
| EFFINGHAM HOSPITAL | GA | 25 | $53.8M | -39.8% |
| STEPHENS COUNTY HOSPITAL | GA | 40 | $49.4M | 6.0% |
| LIBERTY REGIONAL MEDICAL CENTE | GA | 25 | $46.0M | -14.4% |
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: $1.2M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $356K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $339K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $336K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $207K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $11K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $408K |
| + RCM Uplift | +$1.2M |
| Pro Forma EBITDA | $1.7M |
| Current Margin | 2.4% |
| Pro Forma Margin | 9.8% |
| WC Released (1x) | $651K |
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 | $628K | $15.2M | 24.18x | 89.1% |
| Base (11x exit) | 10.0x | 11.0x | $628K | $16.9M | 26.93x | 93.2% |
| Bull Case | 9.0x | 11.0x | $565K | $21.2M | 37.57x | 106.5% |
| Bull (12x exit) | 9.0x | 12.0x | $565K | $23.3M | 41.28x | 110.5% |
| Bear Case | 11.0x | 10.0x | $691K | $8.7M | 12.65x | 66.1% |
| Bear (11x exit) | 11.0x | 11.0x | $691K | $9.8M | 14.23x | 70.1% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| High | Elevated distress probability | Model estimates 53.3% probability of financial distress. Mitigant: distressed entry pricing (7-9x) compensates for risk |
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
- 62 hospitals with 12-50 beds
- Same-state prioritization (n=63)
- Comp margins: P25=-20.1% / P50=-5.0% / P75=5.7%
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.