ELKHART GENERAL HOSPITAL
1. Target Overview & Investment Thesis
ELKHART GENERAL HOSPITAL is a 201-bed suburban community hospital in ELKHART, IN with $323.0M in net patient revenue and a -1.0% operating margin. The hospital serves a payer mix of 27.5% Medicare, 4.2% Medicaid, and 68.3% commercial.
Thesis: Undervalued. Our ML models identify $23.8M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -1.0% to 6.4% (+736bps).
| Net Revenue HCRIS | $323.0M |
| Current EBITDA COMPUTED | $-3.1M |
| Operating Margin COMPUTED | -1.0% |
| Occupancy HCRIS | 67.1% |
| Revenue / Bed COMPUTED | $1.6M |
| Net-to-Gross HCRIS | 28.6% |
| Distress Probability ML | 43.8% |
2. Market Context & Competitive Position
IN has 171 Medicare-certified hospitals with a median operating margin of -1.1%. The target's margin of -1.0% places it above the state median. Among 43 size-comparable peers (100-402 beds), the median margin is 3.8%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (100-402), prioritizing same-state peers. 43 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ELKHART GENERAL HOSPITAL (Target) | IN | 201 | $323.0M | -1.0% |
| COMMUNITY HEALTH NETWORK INC. | IN | 387 | $1.24B | 16.4% |
| FRANCISCAN HEALTH INDIANAPOLIS | IN | 401 | $891.4M | -0.3% |
| ASCENSION ST. VINCENT EVANSVIL | IN | 346 | $671.8M | 11.4% |
| UNION HOSPITAL INC. | IN | 258 | $581.9M | 3.8% |
| LUTHERAN HOSPITAL OF INDIANA | IN | 335 | $580.1M | 3.8% |
| COMMUNITY HOSPITAL OF INDIANA | IN | 340 | $565.2M | 12.0% |
| ESKENAZI HEALTH | IN | 314 | $562.3M | -50.0% |
| IU HEALTH BLOOMINGTON HOSPITAL | IN | 210 | $529.4M | 6.2% |
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: $23.8M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $6.8M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $6.5M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $6.4M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $3.9M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $207K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-3.1M |
| + RCM Uplift | +$23.8M |
| Pro Forma EBITDA | $20.7M |
| Current Margin | -1.0% |
| Pro Forma Margin | 6.4% |
| WC Released (1x) | $12.4M |
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 | $-4.8M | $217.3M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-4.8M | $237.5M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-4.3M | $314.4M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-4.3M | $341.7M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-5.3M | $100.0M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-5.3M | $108.2M | 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 |
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
- 43 hospitals with 100-402 beds
- Same-state prioritization (n=44)
- Comp margins: P25=-12.9% / P50=3.8% / P75=12.3%
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.