PRESENCE SAINT FRANCIS HOSPITAL
1. Target Overview & Investment Thesis
PRESENCE SAINT FRANCIS HOSPITAL is a 146-bed suburban community hospital in COOK, IL with $188.0M in net patient revenue and a -12.6% operating margin. The hospital serves a payer mix of 33.0% Medicare, 8.5% Medicaid, and 58.6% commercial.
Thesis: Undervalued. Our ML models identify $13.8M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -12.6% to -5.2% (+736bps).
| Net Revenue HCRIS | $188.0M |
| Current EBITDA COMPUTED | $-23.6M |
| Operating Margin COMPUTED | -12.6% |
| Occupancy HCRIS | 58.3% |
| Revenue / Bed COMPUTED | $1.3M |
| Net-to-Gross HCRIS | 17.8% |
| Distress Probability ML | 46.2% |
2. Market Context & Competitive Position
IL has 208 Medicare-certified hospitals with a median operating margin of -5.3%. The target's margin of -12.6% places it below the state median. Among 94 size-comparable peers (73-292 beds), the median margin is -7.5%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (73-292), prioritizing same-state peers. 94 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| PRESENCE SAINT FRANCIS HOSPITA (Target) | IL | 146 | $188.0M | -12.6% |
| MIDWESTERN REGIONAL MEDICAL CE | IL | 73 | $1.38B | 80.5% |
| ADVOCATE NORTHSIDE HEALTH SYST | IL | 233 | $713.2M | 18.5% |
| NORTHERN ILLINOIS MEDICAL CENT | IL | 259 | $640.9M | -12.5% |
| NORTHWESTERN LAKE FOREST HOSPI | IL | 124 | $494.3M | -13.8% |
| ALEXIAN BROTHERS MEDICAL CENTE | IL | 282 | $474.5M | -4.7% |
| SARAH BUSH LINCOLN HEALTH CENT | IL | 100 | $448.6M | -18.1% |
| DELNOR-COMMUNITY HOSPITAL | IL | 149 | $441.4M | 6.4% |
| SAINT ANTHONY MEDICAL CENTER | IL | 241 | $407.4M | 3.1% |
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: $13.8M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $3.9M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $3.8M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $3.7M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $2.3M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $120K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-23.6M |
| + RCM Uplift | +$13.8M |
| Pro Forma EBITDA | $-9.8M |
| Current Margin | -12.6% |
| Pro Forma Margin | -5.2% |
| WC Released (1x) | $7.2M |
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 | $-36.3M | $-17.4M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-36.3M | $-30.9M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-32.7M | $2.9M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-32.7M | $-6.5M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-40.0M | $-74.8M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-40.0M | $-95.2M | 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
- 94 hospitals with 73-292 beds
- Same-state prioritization (n=95)
- Comp margins: P25=-19.8% / P50=-7.5% / P75=4.0%
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.