KOSCIUSKO COMMUNITY HOSPITAL
1. Target Overview & Investment Thesis
KOSCIUSKO COMMUNITY HOSPITAL is a 72-bed suburban community hospital in KOSCIUSKO, IN with $148.0M in net patient revenue and a 29.9% operating margin. The hospital serves a payer mix of 25.7% Medicare, 6.7% Medicaid, and 67.6% commercial.
Thesis: Turnaround. Our ML models identify $10.9M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 29.9% to 37.3% (+736bps).
| Net Revenue HCRIS | $148.0M |
| Current EBITDA COMPUTED | $44.3M |
| Operating Margin COMPUTED | 29.9% |
| Occupancy HCRIS | 42.1% |
| Revenue / Bed COMPUTED | $2.1M |
| Net-to-Gross HCRIS | 16.8% |
| Distress Probability ML | 47.7% |
2. Market Context & Competitive Position
IN has 171 Medicare-certified hospitals with a median operating margin of -1.1%. The target's margin of 29.9% places it above the state median. Among 75 size-comparable peers (36-144 beds), the median margin is 1.3%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (36-144), prioritizing same-state peers. 75 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| KOSCIUSKO COMMUNITY HOSPITAL (Target) | IN | 72 | $148.0M | 29.9% |
| HENDRICKS REGIONAL HEALTH | IN | 130 | $423.4M | -3.6% |
| FRANCISCAN HEALTH MICHIGAN CIT | IN | 119 | $276.7M | 6.1% |
| ASCENSION ST. VINCENT CARMEL | IN | 124 | $268.5M | 38.3% |
| MEMORIAL HOSP & HEALTH CARE CT | IN | 96 | $259.1M | 28.7% |
| GOSHEN HOSPITAL | IN | 103 | $248.4M | -22.8% |
| RIVERVIEW HOSPITAL | IN | 121 | $233.1M | -19.0% |
| GOOD SAMARITAN HOSPITAL | IN | 99 | $233.1M | -12.9% |
| COMMUNITY HOSPITAL ANDERSON | IN | 128 | $214.6M | 1.3% |
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: $10.9M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $3.1M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $3.0M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $2.9M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.8M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $95K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $44.3M |
| + RCM Uplift | +$10.9M |
| Pro Forma EBITDA | $55.2M |
| Current Margin | 29.9% |
| Pro Forma Margin | 37.3% |
| WC Released (1x) | $5.7M |
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 | $68.1M | $401.0M | 5.89x | 42.5% |
| Base (11x exit) | 10.0x | 11.0x | $68.1M | $463.2M | 6.80x | 46.7% |
| Bull Case | 9.0x | 11.0x | $61.3M | $521.2M | 8.50x | 53.4% |
| Bull (12x exit) | 9.0x | 12.0x | $61.3M | $586.7M | 9.57x | 57.1% |
| Bear Case | 11.0x | 10.0x | $74.9M | $324.4M | 4.33x | 34.1% |
| Bear (11x exit) | 11.0x | 11.0x | $74.9M | $381.2M | 5.09x | 38.5% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Low | Low net-to-gross ratio | Large contractual allowances suggest pricing discipline issues. Mitigant: payer renegotiation is an additional upside lever |
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
- 75 hospitals with 36-144 beds
- Same-state prioritization (n=76)
- Comp margins: P25=-11.2% / P50=1.3% / P75=15.1%
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.