ST ELIZABETH DEARBORN
1. Target Overview & Investment Thesis
ST ELIZABETH DEARBORN is a 50-bed suburban community hospital in DEARBORN, IN with $78.4M in net patient revenue and a -11.2% operating margin. The hospital serves a payer mix of 38.9% Medicare, 1.9% Medicaid, and 59.2% commercial.
Thesis: Turnaround. Our ML models identify $5.8M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -11.2% to -3.9% (+736bps).
| Net Revenue HCRIS | $78.4M |
| Current EBITDA COMPUTED | $-8.8M |
| Operating Margin COMPUTED | -11.2% |
| Occupancy HCRIS | 69.9% |
| Revenue / Bed COMPUTED | $1.6M |
| Net-to-Gross HCRIS | 33.1% |
| Distress Probability ML | 43.1% |
2. Market Context & Competitive Position
IN has 171 Medicare-certified hospitals with a median operating margin of -1.1%. The target's margin of -11.2% places it below the state median. Among 91 size-comparable peers (25-100 beds), the median margin is -1.5%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (25-100), prioritizing same-state peers. 91 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ST ELIZABETH DEARBORN (Target) | IN | 50 | $78.4M | -11.2% |
| MEMORIAL HOSP & HEALTH CARE CT | IN | 96 | $259.1M | 28.7% |
| GOOD SAMARITAN HOSPITAL | IN | 99 | $233.1M | -12.9% |
| INDIANA ORTHOPAEDIC HOSPITAL L | IN | 38 | $196.8M | 31.2% |
| LAPORTE HOSPITAL | IN | 74 | $192.4M | 19.3% |
| SCHNECK MEDICAL CENTER | IN | 60 | $184.2M | -0.8% |
| ORTHOPAEDIC HOSPT.AT PARKVIEW | IN | 37 | $175.7M | 36.8% |
| LUTHERAN MUSCULOSKELETAL CENTE | IN | 39 | $168.9M | 25.0% |
| WITHAM MEMORIAL HOSPITAL | IN | 50 | $158.5M | -11.6% |
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: $5.8M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $1.6M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $1.6M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $1.6M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $953K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $50K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-8.8M |
| + RCM Uplift | +$5.8M |
| Pro Forma EBITDA | $-3.0M |
| Current Margin | -11.2% |
| Pro Forma Margin | -3.9% |
| WC Released (1x) | $3.0M |
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 | $-13.6M | $-431K | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-13.6M | $-4.9M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-12.2M | $9.8M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-12.2M | $7.0M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-14.9M | $-24.9M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-14.9M | $-32.2M | 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
- 91 hospitals with 25-100 beds
- Same-state prioritization (n=92)
- Comp margins: P25=-11.7% / P50=-1.5% / P75=13.1%
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.