MEMORIAL HOSPITAL OF SOUTH BEND INC
1. Target Overview & Investment Thesis
MEMORIAL HOSPITAL OF SOUTH BEND INC is a 429-bed suburban community hospital in ST. JOSEPH, IN with $631.5M in net patient revenue and a 9.7% operating margin. The hospital serves a payer mix of 20.8% Medicare, 5.5% Medicaid, and 73.8% commercial.
Thesis: Platform Growth. Our ML models identify $46.5M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 9.7% to 17.1% (+736bps).
| Net Revenue HCRIS | $631.5M |
| Current EBITDA COMPUTED | $61.4M |
| Operating Margin COMPUTED | 9.7% |
| Occupancy HCRIS | 68.8% |
| Revenue / Bed COMPUTED | $1.5M |
| Net-to-Gross HCRIS | 31.9% |
| Distress Probability ML | 44.7% |
2. Market Context & Competitive Position
IN has 171 Medicare-certified hospitals with a median operating margin of -1.1%. The target's margin of 9.7% places it above the state median. Among 16 size-comparable peers (214-858 beds), the median margin is 0.8%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (214-858), prioritizing same-state peers. 16 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| MEMORIAL HOSPITAL OF SOUTH BEN (Target) | IN | 429 | $631.5M | 9.7% |
| PARKVIEW HOSPITAL | IN | 761 | $1.66B | -6.6% |
| ASCENSION ST. VINCENT HOSPITAL | IN | 756 | $1.41B | 4.8% |
| COMMUNITY HEALTH NETWORK INC. | IN | 387 | $1.24B | 16.4% |
| DEACONESS HOSPITAL | IN | 545 | $1.14B | 0.7% |
| FRANCISCAN HEALTH INDIANAPOLIS | IN | 401 | $891.4M | -0.3% |
| ASCENSION ST. VINCENT EVANSVIL | IN | 346 | $671.8M | 11.4% |
| COMMUNITY HOSPITAL | IN | 405 | $615.1M | 6.0% |
| UNION HOSPITAL INC. | IN | 258 | $581.9M | 3.8% |
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: $46.5M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $13.3M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $12.6M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $12.5M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $7.7M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $404K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $61.4M |
| + RCM Uplift | +$46.5M |
| Pro Forma EBITDA | $107.9M |
| Current Margin | 9.7% |
| Pro Forma Margin | 17.1% |
| WC Released (1x) | $24.2M |
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 | $94.5M | $870.0M | 9.21x | 55.9% |
| Base (11x exit) | 10.0x | 11.0x | $94.5M | $987.7M | 10.45x | 59.9% |
| Bull Case | 9.0x | 11.0x | $85.1M | $1.17B | 13.78x | 69.0% |
| Bull (12x exit) | 9.0x | 12.0x | $85.1M | $1.30B | 15.32x | 72.6% |
| Bear Case | 11.0x | 10.0x | $104.0M | $606.9M | 5.84x | 42.3% |
| Bear (11x exit) | 11.0x | 11.0x | $104.0M | $701.4M | 6.75x | 46.5% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Standard execution risk | RCM improvement requires management buy-in and 12-18 month implementation timeline |
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
- 16 hospitals with 214-858 beds
- Same-state prioritization (n=17)
- Comp margins: P25=-6.8% / P50=0.8% / P75=5.1%
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.