MARION GENERAL HOSPITAL
1. Target Overview & Investment Thesis
MARION GENERAL HOSPITAL is a 106-bed under-performing / distressed in GRANT, IN with $183.5M in net patient revenue and a -14.6% operating margin. The hospital serves a payer mix of 29.2% Medicare, 4.3% Medicaid, and 66.5% commercial.
Thesis: Undervalued. Our ML models identify $13.5M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -14.6% to -7.3% (+736bps).
| Net Revenue HCRIS | $183.5M |
| Current EBITDA COMPUTED | $-26.9M |
| Operating Margin COMPUTED | -14.6% |
| Occupancy HCRIS | 39.0% |
| Revenue / Bed COMPUTED | $1.7M |
| Net-to-Gross HCRIS | 32.7% |
| Distress Probability ML | 50.3% |
2. Market Context & Competitive Position
IN has 171 Medicare-certified hospitals with a median operating margin of -1.1%. The target's margin of -14.6% places it below the state median. Among 58 size-comparable peers (53-212 beds), the median margin is 6.2%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (53-212), prioritizing same-state peers. 58 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| MARION GENERAL HOSPITAL (Target) | IN | 106 | $183.5M | -14.6% |
| IU HEALTH BLOOMINGTON HOSPITAL | IN | 210 | $529.4M | 6.2% |
| REID HOSPITAL & HEALTH CARE SE | IN | 183 | $487.2M | 26.1% |
| IU HEALTH ARNETT HOSPITAL | IN | 194 | $426.2M | 16.1% |
| HENDRICKS REGIONAL HEALTH | IN | 130 | $423.4M | -3.6% |
| IU HEALTH NORTH HOSPITAL | IN | 153 | $413.3M | 24.2% |
| FRANCISCAN HEALTH LAFAYETTE | IN | 177 | $377.7M | 2.7% |
| PORTER REGIONAL HOSPITAL | IN | 199 | $370.6M | 22.1% |
| ELKHART GENERAL HOSPITAL | IN | 201 | $323.0M | -1.0% |
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: $13.5M (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% | $3.7M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $3.6M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $2.2M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $117K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-26.9M |
| + RCM Uplift | +$13.5M |
| Pro Forma EBITDA | $-13.4M |
| Current Margin | -14.6% |
| Pro Forma Margin | -7.3% |
| WC Released (1x) | $7.0M |
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 | $-41.3M | $-42.2M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-41.3M | $-59.9M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-37.2M | $-28.7M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-37.2M | $-42.3M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-45.5M | $-96.3M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-45.5M | $-120.7M | 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 |
| High | Elevated distress probability | Model estimates 50.3% 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
- 58 hospitals with 53-212 beds
- Same-state prioritization (n=59)
- Comp margins: P25=-8.6% / P50=6.2% / P75=18.2%
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.