RIVEREDGE HOSPITAL
1. Target Overview & Investment Thesis
RIVEREDGE HOSPITAL is a 210-bed suburban community hospital in COOK, IL with $48.8M in net patient revenue and a 24.4% operating margin. The hospital serves a payer mix of 7.7% Medicare, 2.6% Medicaid, and 89.7% commercial.
Thesis: Platform Growth. Our ML models identify $3.6M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 24.4% to 31.7% (+736bps).
| Net Revenue HCRIS | $48.8M |
| Current EBITDA COMPUTED | $11.9M |
| Operating Margin COMPUTED | 24.4% |
| Occupancy HCRIS | 51.9% |
| Revenue / Bed COMPUTED | $232K |
| Net-to-Gross HCRIS | 67.3% |
| Distress Probability ML | 52.4% |
2. Market Context & Competitive Position
IL has 208 Medicare-certified hospitals with a median operating margin of -5.3%. The target's margin of 24.4% places it above the state median. Among 90 size-comparable peers (105-420 beds), the median margin is -8.9%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (105-420), prioritizing same-state peers. 90 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| RIVEREDGE HOSPITAL (Target) | IL | 210 | $48.8M | 24.4% |
| CENTRAL DUPAGE HOSPITAL | IL | 347 | $1.30B | 16.4% |
| ANN & ROBERT H. LURIE CHILDREN | IL | 364 | $1.17B | -12.8% |
| BOARD OF TRUSTEES OF THE UNIVE | IL | 395 | $1.14B | -12.3% |
| SWEDISHAMERICAN HOSPITAL | IL | 324 | $752.0M | -2.8% |
| SPRINGFIELD MEMORIAL HOSPITAL | IL | 389 | $732.9M | -14.5% |
| ADVOCATE NORTHSIDE HEALTH SYST | IL | 233 | $713.2M | 18.5% |
| NORTHERN ILLINOIS MEDICAL CENT | IL | 259 | $640.9M | -12.5% |
| BLESSING HOSPITAL | IL | 309 | $522.4M | -13.2% |
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: $3.6M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $1.0M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $976K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $966K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $594K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $31K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $11.9M |
| + RCM Uplift | +$3.6M |
| Pro Forma EBITDA | $15.5M |
| Current Margin | 24.4% |
| Pro Forma Margin | 31.7% |
| WC Released (1x) | $1.9M |
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 | $18.3M | $114.4M | 6.25x | 44.3% |
| Base (11x exit) | 10.0x | 11.0x | $18.3M | $131.7M | 7.20x | 48.4% |
| Bull Case | 9.0x | 11.0x | $16.5M | $149.5M | 9.08x | 55.5% |
| Bull (12x exit) | 9.0x | 12.0x | $16.5M | $168.0M | 10.20x | 59.1% |
| Bear Case | 11.0x | 10.0x | $20.1M | $90.5M | 4.49x | 35.1% |
| Bear (11x exit) | 11.0x | 11.0x | $20.1M | $106.0M | 5.27x | 39.4% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| High | Elevated distress probability | Model estimates 52.4% 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
- 90 hospitals with 105-420 beds
- Same-state prioritization (n=91)
- Comp margins: P25=-21.0% / P50=-8.9% / P75=0.8%
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.