KIRBY HOSPITAL
1. Target Overview & Investment Thesis
KIRBY HOSPITAL is a 16-bed suburban community hospital in PIATT, IL with $60.9M in net patient revenue and a 2.0% operating margin. The hospital serves a payer mix of 40.8% Medicare, 0.1% Medicaid, and 59.2% commercial.
Thesis: Turnaround. Our ML models identify $4.5M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 2.0% to 9.3% (+736bps).
| Net Revenue HCRIS | $60.9M |
| Current EBITDA COMPUTED | $1.2M |
| Operating Margin COMPUTED | 2.0% |
| Occupancy HCRIS | 30.9% |
| Revenue / Bed COMPUTED | $3.8M |
| Net-to-Gross HCRIS | 44.3% |
| Distress Probability ML | 49.6% |
2. Market Context & Competitive Position
IL has 208 Medicare-certified hospitals with a median operating margin of -5.3%. The target's margin of 2.0% places it above the state median. Among 57 size-comparable peers (8-32 beds), the median margin is -0.9%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (8-32), prioritizing same-state peers. 57 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| KIRBY HOSPITAL (Target) | IL | 16 | $60.9M | 2.0% |
| GIBSON AREA HOSPITAL AND HEALT | IL | 25 | $125.0M | -6.7% |
| PARIS COMMUNITY HOSPITAL | IL | 25 | $100.7M | -4.2% |
| SAINT JOSEPH MEMORIAL HOSPITAL | IL | 25 | $86.0M | 33.9% |
| WABASH GENERAL HOSPITAL | IL | 25 | $71.8M | 4.5% |
| HOOPESTON COMMUNITY MEMORIAL H | IL | 22 | $71.5M | -5.2% |
| CRAWFORD MEMORIAL HOSPITAL | IL | 25 | $67.7M | 2.9% |
| ST. FRANCIS HOSPITAL | IL | 25 | $61.6M | 17.4% |
| LINCOLN MEMORIAL HOSPITAL | IL | 25 | $61.5M | 14.8% |
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: $4.5M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $1.3M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $1.2M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $1.2M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $741K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $39K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $1.2M |
| + RCM Uplift | +$4.5M |
| Pro Forma EBITDA | $5.7M |
| Current Margin | 2.0% |
| Pro Forma Margin | 9.3% |
| WC Released (1x) | $2.3M |
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 | $1.9M | $52.8M | 28.44x | 95.3% |
| Base (11x exit) | 10.0x | 11.0x | $1.9M | $58.6M | 31.61x | 99.5% |
| Bull Case | 9.0x | 11.0x | $1.7M | $74.0M | 44.34x | 113.5% |
| Bull (12x exit) | 9.0x | 12.0x | $1.7M | $81.2M | 48.67x | 117.5% |
| Bear Case | 11.0x | 10.0x | $2.0M | $29.8M | 14.58x | 70.9% |
| Bear (11x exit) | 11.0x | 11.0x | $2.0M | $33.4M | 16.37x | 74.9% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Low occupancy | At 30.9%, fixed costs are spread over fewer patient days. Mitigant: volume growth is an additional upside lever not modeled in base case |
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
- 57 hospitals with 8-32 beds
- Same-state prioritization (n=58)
- Comp margins: P25=-6.3% / P50=-0.9% / P75=9.5%
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.