SALINA REGIONAL HEALTH CENTER
1. Target Overview & Investment Thesis
SALINA REGIONAL HEALTH CENTER is a 177-bed under-performing / distressed in SALINE, KS with $226.7M in net patient revenue and a -39.5% operating margin. The hospital serves a payer mix of 48.1% Medicare, 0.5% Medicaid, and 51.5% commercial.
Thesis: Undervalued. Our ML models identify $16.7M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -39.5% to -32.1% (+736bps).
| Net Revenue HCRIS | $226.7M |
| Current EBITDA COMPUTED | $-89.5M |
| Operating Margin COMPUTED | -39.5% |
| Occupancy HCRIS | 45.6% |
| Revenue / Bed COMPUTED | $1.3M |
| Net-to-Gross HCRIS | 34.4% |
| Distress Probability ML | 49.8% |
2. Market Context & Competitive Position
KS has 152 Medicare-certified hospitals with a median operating margin of -17.7%. The target's margin of -39.5% places it below the state median. Among 14 size-comparable peers (88-354 beds), the median margin is -7.3%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (88-354), prioritizing same-state peers. 14 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| SALINA REGIONAL HEALTH CENTER (Target) | KS | 177 | $226.7M | -39.5% |
| ADVENTHEALTH SHAWNEE MISSION | KS | 317 | $555.8M | 0.1% |
| OVERLAND PARK REGIONAL MED CTR | KS | 271 | $452.2M | 35.9% |
| LAWRENCE MEMORIAL HOSPITAL | KS | 110 | $346.7M | -4.0% |
| AM 1 MENORAH MEDICAL CENTER | KS | 137 | $289.4M | 8.5% |
| ST.FRANCIS HEALTH CENTER | KS | 228 | $276.6M | -13.7% |
| OLATHE MEDICAL CENTER | KS | 237 | $272.8M | -6.5% |
| ST. LUKES SOUTH | KS | 91 | $218.2M | -13.1% |
| HAYS MEDICAL CENTER INC. | KS | 136 | $215.1M | -12.3% |
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: $16.7M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $4.8M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $4.5M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $4.5M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $2.8M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $145K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-89.5M |
| + RCM Uplift | +$16.7M |
| Pro Forma EBITDA | $-72.8M |
| Current Margin | -39.5% |
| Pro Forma Margin | -32.1% |
| WC Released (1x) | $8.7M |
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 | $-137.7M | $-423.7M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-137.7M | $-510.8M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-124.0M | $-500.5M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-124.0M | $-582.6M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-151.5M | $-462.4M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-151.5M | $-557.9M | 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
- 14 hospitals with 88-354 beds
- Same-state prioritization (n=15)
- Comp margins: P25=-13.6% / P50=-7.3% / P75=0.1%
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.