HAMILTON CENTER INC.
1. Target Overview & Investment Thesis
HAMILTON CENTER INC. is a 16-bed under-performing / distressed in VIGO, IN with $30.8M in net patient revenue and a -83.5% operating margin. The hospital serves a payer mix of 10.1% Medicare, 9.2% Medicaid, and 80.6% commercial.
Thesis: Turnaround. Our ML models identify $2.3M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -83.5% to -76.2% (+736bps).
| Net Revenue HCRIS | $30.8M |
| Current EBITDA COMPUTED | $-25.7M |
| Operating Margin COMPUTED | -83.5% |
| Occupancy HCRIS | 85.9% |
| Revenue / Bed COMPUTED | $1.9M |
| Net-to-Gross HCRIS | 59.5% |
| Distress Probability ML | 42.3% |
2. Market Context & Competitive Position
IN has 171 Medicare-certified hospitals with a median operating margin of -1.1%. The target's margin of -83.5% places it below the state median. Among 57 size-comparable peers (8-32 beds), the median margin is -5.8%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (8-32), prioritizing same-state peers. 57 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| HAMILTON CENTER INC. (Target) | IN | 16 | $30.8M | -83.5% |
| 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: $2.3M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $647K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $616K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $610K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $375K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $20K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-25.7M |
| + RCM Uplift | +$2.3M |
| Pro Forma EBITDA | $-23.5M |
| Current Margin | -83.5% |
| Pro Forma Margin | -76.2% |
| WC Released (1x) | $1.2M |
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 | $-39.6M | $-147.1M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-39.6M | $-174.7M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-35.6M | $-180.1M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-35.6M | $-206.9M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-43.6M | $-145.6M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-43.6M | $-174.3M | 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
- 57 hospitals with 8-32 beds
- Same-state prioritization (n=59)
- Comp margins: P25=-19.1% / 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.