SSH - QUAD CITIES INC.
1. Target Overview & Investment Thesis
SSH - QUAD CITIES INC. is a 50-bed community hospital in SCOTT, IA with $14.1M in net patient revenue and a -14.4% operating margin. The hospital serves a payer mix of 66.6% Medicare, 0.0% Medicaid, and 33.4% commercial.
Thesis: Turnaround. Our ML models identify $1.0M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -14.4% to -7.0% (+737bps).
| Net Revenue HCRIS | $14.1M |
| Current EBITDA COMPUTED | $-2.0M |
| Operating Margin COMPUTED | -14.4% |
| Occupancy HCRIS | 38.9% |
| Revenue / Bed COMPUTED | $283K |
| Net-to-Gross HCRIS | 19.4% |
| Distress Probability ML | nan% |
2. Market Context & Competitive Position
IA has 124 Medicare-certified hospitals with a median operating margin of -8.2%. The target's margin of -14.4% places it below the state median. Among 76 size-comparable peers (25-100 beds), the median margin is -7.2%. 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. 76 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| SSH - QUAD CITIES INC. (Target) | IA | 50 | $14.1M | -14.4% |
| TRINITY REGIONAL MEDICAL CENTE | IA | 44 | $140.4M | -6.8% |
| THE FINLEY HOSPITAL | IA | 66 | $121.7M | 0.1% |
| PELLA REGIONAL HEALTH CENTER | IA | 25 | $108.8M | -16.6% |
| SPENCER MUNICIPAL HOSPITAL | IA | 49 | $108.7M | -10.3% |
| TRINITY BETTENDORF | IA | 81 | $90.6M | -3.7% |
| GREATER REGIONAL MEDICAL CENTE | IA | 25 | $89.4M | -4.4% |
| ST. ANTHONY REGIONAL HOSPITAL | IA | 49 | $84.0M | -21.0% |
| WINNESHIEK MEDICAL CENTER | IA | 25 | $77.6M | -0.1% |
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: $1.0M (737bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $297K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $283K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $280K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $172K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +7bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-2.0M |
| + RCM Uplift | +$1.0M |
| Pro Forma EBITDA | $-990K |
| Current Margin | -14.4% |
| Pro Forma Margin | -7.0% |
| WC Released (1x) | $542K |
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 | $-3.1M | $-3.0M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-3.1M | $-4.3M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-2.8M | $-1.9M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-2.8M | $-2.9M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-3.4M | $-7.2M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-3.4M | $-9.0M | 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 |
| Medium | Heavy Medicare dependence | Medicare comprises 66.6% of days; rate updates may lag inflation. Mitigant: CDI/CMI lever directly increases Medicare reimbursement |
| 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
- 76 hospitals with 25-100 beds
- Same-state prioritization (n=77)
- Comp margins: P25=-13.6% / P50=-7.2% / 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.