MEMORIAL HOSP & HEALTH CARE CTR
1. Target Overview & Investment Thesis
MEMORIAL HOSP & HEALTH CARE CTR is a 96-bed suburban community hospital in DUBOIS, IN with $259.1M in net patient revenue and a 28.7% operating margin. The hospital serves a payer mix of 38.2% Medicare, 2.0% Medicaid, and 59.8% commercial.
Thesis: Turnaround. Our ML models identify $19.1M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 28.7% to 36.0% (+736bps).
| Net Revenue HCRIS | $259.1M |
| Current EBITDA COMPUTED | $74.3M |
| Operating Margin COMPUTED | 28.7% |
| Occupancy HCRIS | 31.8% |
| Revenue / Bed COMPUTED | $2.7M |
| Net-to-Gross HCRIS | 31.8% |
| Distress Probability ML | 50.2% |
2. Market Context & Competitive Position
IN has 171 Medicare-certified hospitals with a median operating margin of -1.1%. The target's margin of 28.7% places it above the state median. Among 61 size-comparable peers (48-192 beds), the median margin is 3.5%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (48-192), prioritizing same-state peers. 61 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| MEMORIAL HOSP & HEALTH CARE CT (Target) | IN | 96 | $259.1M | 28.7% |
| REID HOSPITAL & HEALTH CARE SE | IN | 183 | $487.2M | 26.1% |
| 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% |
| ST. MARY MEDICAL CENTER INC. | IN | 180 | $319.2M | 9.5% |
| COMMUNITY HOSPITAL SOUTH | IN | 169 | $315.7M | 14.4% |
| FRANCISCAN HEALTH CROWN POINT | IN | 192 | $300.5M | 8.9% |
| IU HEALTH WEST HOSPITAL | IN | 174 | $288.7M | 9.0% |
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: $19.1M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $5.4M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $5.2M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $5.1M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $3.2M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $166K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $74.3M |
| + RCM Uplift | +$19.1M |
| Pro Forma EBITDA | $93.4M |
| Current Margin | 28.7% |
| Pro Forma Margin | 36.0% |
| WC Released (1x) | $9.9M |
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 | $114.3M | $680.7M | 5.96x | 42.9% |
| Base (11x exit) | 10.0x | 11.0x | $114.3M | $785.9M | 6.88x | 47.0% |
| Bull Case | 9.0x | 11.0x | $102.9M | $886.0M | 8.61x | 53.8% |
| Bull (12x exit) | 9.0x | 12.0x | $102.9M | $996.9M | 9.69x | 57.5% |
| Bear Case | 11.0x | 10.0x | $125.7M | $548.3M | 4.36x | 34.2% |
| Bear (11x exit) | 11.0x | 11.0x | $125.7M | $643.9M | 5.12x | 38.6% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Low occupancy | At 31.8%, fixed costs are spread over fewer patient days. Mitigant: volume growth is an additional upside lever not modeled in base case |
| High | Elevated distress probability | Model estimates 50.2% 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
- 61 hospitals with 48-192 beds
- Same-state prioritization (n=62)
- Comp margins: P25=-11.3% / P50=3.5% / P75=14.4%
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.