MANHATTAN SURGICAL HOSPITAL
1. Target Overview & Investment Thesis
MANHATTAN SURGICAL HOSPITAL is a 13-bed community hospital in RILEY, KS with $42.0M in net patient revenue and a 13.1% operating margin. The hospital serves a payer mix of 29.2% Medicare, 0.0% Medicaid, and 70.8% commercial.
Thesis: Turnaround. Our ML models identify $3.1M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 13.1% to 20.5% (+736bps).
| Net Revenue HCRIS | $42.0M |
| Current EBITDA COMPUTED | $5.5M |
| Operating Margin COMPUTED | 13.1% |
| Occupancy HCRIS | 13.5% |
| Revenue / Bed COMPUTED | $3.2M |
| Net-to-Gross HCRIS | 26.5% |
| Distress Probability ML | nan% |
2. Market Context & Competitive Position
KS has 152 Medicare-certified hospitals with a median operating margin of -17.7%. The target's margin of 13.1% places it above the state median. Among 96 size-comparable peers (6-26 beds), the median margin is -20.8%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (6-26), prioritizing same-state peers. 96 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| MANHATTAN SURGICAL HOSPITAL (Target) | KS | 13 | $42.0M | 13.1% |
| KANSAS CITY ORTHOPAEDIC INSTIT | KS | 17 | $86.3M | 21.1% |
| NEWMAN REGIONAL HEALTH | KS | 23 | $73.9M | -15.6% |
| NEOSHO MEMORIAL REGIONAL MED C | KS | 21 | $53.8M | -13.0% |
| ATCHISON HOSPITAL ASSOCIATION | KS | 25 | $50.3M | -11.7% |
| CITIZENS MEDICAL CENTER | KS | 23 | $49.5M | -13.9% |
| WILLIAM NEWTON MEMORIAL HOSPIT | KS | 23 | $42.2M | -20.3% |
| MERCY SPECIALTY HOSPITAL - SOU | KS | 26 | $39.2M | -0.5% |
| CLARA BARTON HOSPITAL ASSOCIAT | KS | 18 | $35.1M | -8.2% |
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: $3.1M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $883K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $841K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $832K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $512K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $27K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $5.5M |
| + RCM Uplift | +$3.1M |
| Pro Forma EBITDA | $8.6M |
| Current Margin | 13.1% |
| Pro Forma Margin | 20.5% |
| WC Released (1x) | $1.6M |
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 | $8.5M | $67.2M | 7.94x | 51.3% |
| Base (11x exit) | 10.0x | 11.0x | $8.5M | $76.7M | 9.06x | 55.4% |
| Bull Case | 9.0x | 11.0x | $7.6M | $89.7M | 11.77x | 63.7% |
| Bull (12x exit) | 9.0x | 12.0x | $7.6M | $100.1M | 13.13x | 67.4% |
| Bear Case | 11.0x | 10.0x | $9.3M | $49.0M | 5.26x | 39.4% |
| Bear (11x exit) | 11.0x | 11.0x | $9.3M | $57.0M | 6.11x | 43.6% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Low occupancy | At 13.5%, fixed costs are spread over fewer patient days. Mitigant: volume growth is an additional upside lever not modeled in base case |
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
- 96 hospitals with 6-26 beds
- Same-state prioritization (n=100)
- Comp margins: P25=-31.3% / P50=-20.8% / P75=-13.3%
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.