ROOSEVELT WARM SPRINGS LTAC HOSPITAL
1. Target Overview & Investment Thesis
ROOSEVELT WARM SPRINGS LTAC HOSPITAL is a 28-bed under-performing / distressed in MERIWETHER, GA with $5.1M in net patient revenue and a -100.0% operating margin. The hospital serves a payer mix of 25.5% Medicare, 20.3% Medicaid, and 54.2% commercial.
Thesis: Turnaround. Our ML models identify $388K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -100.0% to -311.6% (+759bps).
| Net Revenue HCRIS | $5.1M |
| Current EBITDA COMPUTED | $-16.3M |
| Operating Margin COMPUTED | -100.0% |
| Occupancy HCRIS | 34.0% |
| Revenue / Bed COMPUTED | $182K |
| Net-to-Gross HCRIS | 37.9% |
| Distress Probability ML | 57.9% |
2. Market Context & Competitive Position
GA has 165 Medicare-certified hospitals with a median operating margin of -2.8%. The target's margin of -100.0% places it below the state median. Among 72 size-comparable peers (14-56 beds), the median margin is -3.7%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (14-56), prioritizing same-state peers. 72 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ROOSEVELT WARM SPRINGS LTAC HO (Target) | GA | 28 | $5.1M | -100.0% |
| KENNESTONE HOSPITAL AT WINDY H | GA | 55 | $160.5M | 0.7% |
| PIEDMONT MOUNTAINSIDE HOSPITAL | GA | 52 | $131.2M | 10.5% |
| UNION GENERAL HOSPITAL | GA | 39 | $108.6M | 2.4% |
| TATTNALL HOSPITAL COMPANY LLC | GA | 25 | $101.7M | 41.9% |
| PHOEBE SUMTER MEDICAL CENTER | GA | 54 | $101.0M | -1.6% |
| 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% |
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: $388K (759bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $107K | +210bp | 18mo |
| Denial Rate Reduction | 12.0% | 6.5% | $107K | +209bp | 12mo |
| Cost to Collect | 4.5% | 2.5% | $102K | +200bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $62K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +19bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-16.3M |
| + RCM Uplift | +$388K |
| Pro Forma EBITDA | $-15.9M |
| Current Margin | -100.0% |
| Pro Forma Margin | -311.6% |
| WC Released (1x) | $196K |
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 | $-25.1M | $-103.6M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-25.1M | $-122.1M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-22.6M | $-129.0M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-22.6M | $-147.4M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-27.6M | $-97.4M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-27.6M | $-116.1M | 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 |
| Medium | Low occupancy | At 34.0%, fixed costs are spread over fewer patient days. Mitigant: volume growth is an additional upside lever not modeled in base case |
| High | Elevated distress probability | Model estimates 57.9% 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
- 72 hospitals with 14-56 beds
- Same-state prioritization (n=73)
- Comp margins: P25=-19.5% / P50=-3.7% / P75=5.4%
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.