SSH - ES MIDTOWN ATLANTA
1. Target Overview & Investment Thesis
SSH - ES MIDTOWN ATLANTA is a 72-bed suburban community hospital in FULTON, GA with $38.7M in net patient revenue and a -11.6% operating margin. The hospital serves a payer mix of 27.6% Medicare, 10.9% Medicaid, and 61.4% commercial.
Thesis: Turnaround. Our ML models identify $2.8M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -11.6% to -4.3% (+736bps).
| Net Revenue HCRIS | $38.7M |
| Current EBITDA COMPUTED | $-4.5M |
| Operating Margin COMPUTED | -11.6% |
| Occupancy HCRIS | 67.3% |
| Revenue / Bed COMPUTED | $538K |
| Net-to-Gross HCRIS | 10.9% |
| Distress Probability ML | 44.6% |
2. Market Context & Competitive Position
GA has 165 Medicare-certified hospitals with a median operating margin of -2.8%. The target's margin of -11.6% places it below the state median. Among 70 size-comparable peers (36-144 beds), the median margin is -0.8%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (36-144), prioritizing same-state peers. 70 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| SSH - ES MIDTOWN ATLANTA (Target) | GA | 72 | $38.7M | -11.6% |
| TANNER MEDICAL CENTER-VILLA RI | GA | 58 | $289.8M | 33.3% |
| PAULDING MEDICAL CENTER | GA | 112 | $288.5M | 9.0% |
| SHEPHERD CENTER | GA | 130 | $254.9M | -20.8% |
| PIEDMONT ROCKDALE HOSPITAL | GA | 141 | $217.4M | -4.1% |
| DOUGLAS HOSPITAL | GA | 112 | $217.2M | -0.8% |
| NORTHSIDE HOSPITAL - DULUTH | GA | 87 | $193.2M | -3.1% |
| ADVENTHEALTH GORDON | GA | 69 | $188.5M | -3.4% |
| EAST GEORGIA REGIONAL MEDICAL | GA | 142 | $184.0M | 20.0% |
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: $2.8M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $813K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $774K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $766K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $471K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $25K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-4.5M |
| + RCM Uplift | +$2.8M |
| Pro Forma EBITDA | $-1.7M |
| Current Margin | -11.6% |
| Pro Forma Margin | -4.3% |
| WC Released (1x) | $1.5M |
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 | $-6.9M | $-1.2M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-6.9M | $-3.6M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-6.2M | $3.5M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-6.2M | $2.0M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-7.6M | $-13.2M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-7.6M | $-17.0M | 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
- 70 hospitals with 36-144 beds
- Same-state prioritization (n=71)
- Comp margins: P25=-13.6% / P50=-0.8% / P75=8.8%
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.