ASCENSION ST. VINCENT MERCY
1. Target Overview & Investment Thesis
ASCENSION ST. VINCENT MERCY is a 18-bed suburban community hospital in MADISON, IN with $25.4M in net patient revenue and a 5.3% operating margin. The hospital serves a payer mix of 24.0% Medicare, 1.7% Medicaid, and 74.2% commercial.
Thesis: Turnaround. Our ML models identify $1.9M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 5.3% to 12.7% (+736bps).
| Net Revenue HCRIS | $25.4M |
| Current EBITDA COMPUTED | $1.3M |
| Operating Margin COMPUTED | 5.3% |
| Occupancy HCRIS | 16.6% |
| Revenue / Bed COMPUTED | $1.4M |
| Net-to-Gross HCRIS | 30.8% |
| Distress Probability ML | 54.6% |
2. Market Context & Competitive Position
IN has 171 Medicare-certified hospitals with a median operating margin of -1.1%. The target's margin of 5.3% places it above the state median. Among 61 size-comparable peers (9-36 beds), the median margin is -5.8%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (9-36), prioritizing same-state peers. 61 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ASCENSION ST. VINCENT MERCY (Target) | IN | 18 | $25.4M | 5.3% |
| MARGARET MARY COMMUNITY HOSPIT | IN | 25 | $124.5M | -3.6% |
| FRANCISCAN HEALTH HAMMOND | IN | 10 | $117.7M | -4.3% |
| CAMERON MEMORIAL COMMUNITY HOS | IN | 25 | $95.1M | 7.4% |
| THE OTIS R. BOWEN CENTER | IN | 20 | $92.4M | -11.2% |
| WHITLEY MEMORIAL HOSPITAL | IN | 30 | $87.8M | 1.1% |
| ADAMS MEMORIAL HOSPITAL | IN | 25 | $76.5M | 0.1% |
| DECATUR CO. MEMORIAL HOSPITAL | IN | 25 | $75.7M | -19.8% |
| COMMUNITY HOSPITAL OF NOBLE CT | IN | 31 | $71.4M | 1.7% |
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: $1.9M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $533K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $507K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $502K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $309K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $16K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $1.3M |
| + RCM Uplift | +$1.9M |
| Pro Forma EBITDA | $3.2M |
| Current Margin | 5.3% |
| Pro Forma Margin | 12.7% |
| WC Released (1x) | $973K |
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 | $2.1M | $27.6M | 13.29x | 67.8% |
| Base (11x exit) | 10.0x | 11.0x | $2.1M | $31.0M | 14.95x | 71.8% |
| Bull Case | 9.0x | 11.0x | $1.9M | $37.8M | 20.27x | 82.5% |
| Bull (12x exit) | 9.0x | 12.0x | $1.9M | $41.8M | 22.41x | 86.2% |
| Bear Case | 11.0x | 10.0x | $2.3M | $17.6M | 7.70x | 50.4% |
| Bear (11x exit) | 11.0x | 11.0x | $2.3M | $20.0M | 8.79x | 54.5% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Low occupancy | At 16.6%, 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 54.6% 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 9-36 beds
- Same-state prioritization (n=62)
- Comp margins: P25=-19.8% / P50=-5.8% / P75=3.0%
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.