NORTH HAWAII COMMUNITY HOSPITAL
1. Target Overview & Investment Thesis
NORTH HAWAII COMMUNITY HOSPITAL is a 33-bed safety-net/medicaid heavy in HAWAII, HI with $93.8M in net patient revenue and a -1.1% operating margin. The hospital serves a payer mix of 20.9% Medicare, 25.9% Medicaid, and 53.2% commercial.
Thesis: Turnaround. Our ML models identify $6.9M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -1.1% to 6.2% (+736bps).
| Net Revenue HCRIS | $93.8M |
| Current EBITDA COMPUTED | $-1.1M |
| Operating Margin COMPUTED | -1.1% |
| Occupancy HCRIS | 59.9% |
| Revenue / Bed COMPUTED | $2.8M |
| Net-to-Gross HCRIS | 29.0% |
| Distress Probability ML | 48.2% |
2. Market Context & Competitive Position
HI has 26 Medicare-certified hospitals with a median operating margin of -14.7%. The target's margin of -1.1% places it above the state median. Among 2599 size-comparable peers (16-66 beds), the median margin is -5.4%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (16-66), prioritizing same-state peers. 2599 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| NORTH HAWAII COMMUNITY HOSPITA (Target) | HI | 33 | $93.8M | -1.1% |
| DANA-FARBER CANCER INSTITUTE | MA | 30 | $1.88B | -35.1% |
| FRED HUTCHINSON CANCER CENTER | WA | 20 | $1.17B | -50.0% |
| MERCY WALWORTH HOSPITAL | WI | 25 | $616.4M | 4.4% |
| USC NORRIS CANCER HOSPITAL | CA | 60 | $468.7M | 19.1% |
| MOUNTAIN VIEW HOSPITAL | ID | 43 | $382.5M | 8.7% |
| WISE HEALTH SYSTEM - PARKWAY | TX | 36 | $361.0M | -15.5% |
| CORYELL MEMORIAL HOSPITAL | TX | 25 | $305.9M | -1.5% |
| TANNER MEDICAL CENTER-VILLA RI | GA | 58 | $289.8M | 33.3% |
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: $6.9M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $2.0M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $1.9M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $1.9M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.1M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $60K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-1.1M |
| + RCM Uplift | +$6.9M |
| Pro Forma EBITDA | $5.9M |
| Current Margin | -1.1% |
| Pro Forma Margin | 6.2% |
| WC Released (1x) | $3.6M |
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 | $-1.6M | $62.1M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-1.6M | $67.8M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-1.5M | $90.1M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-1.5M | $97.8M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-1.8M | $28.1M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-1.8M | $30.3M | 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 | Elevated Medicaid exposure (25.9%) | Medicaid reimburses below cost in most states. Mitigant: denial reduction lever has highest impact on Medicaid claims |
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
- 2599 hospitals with 16-66 beds
- Same-state prioritization (n=6)
- Comp margins: P25=-17.8% / P50=-5.4% / P75=5.2%
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.