ELLSWORTH COUNTY MEDICAL CENTER
1. Target Overview & Investment Thesis
ELLSWORTH COUNTY MEDICAL CENTER is a 19-bed community hospital in ELLSWORTH, KS with $17.4M in net patient revenue and a -31.3% operating margin. The hospital serves a payer mix of 73.2% Medicare, 0.0% Medicaid, and 26.8% commercial.
Thesis: Turnaround. Our ML models identify $1.3M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -31.3% to -23.9% (+736bps).
| Net Revenue HCRIS | $17.4M |
| Current EBITDA COMPUTED | $-5.4M |
| Operating Margin COMPUTED | -31.3% |
| Occupancy HCRIS | 16.1% |
| Revenue / Bed COMPUTED | $915K |
| Net-to-Gross HCRIS | 69.9% |
| 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 -31.3% places it below the state median. Among 106 size-comparable peers (10-38 beds), the median margin is -20.6%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (10-38), prioritizing same-state peers. 106 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ELLSWORTH COUNTY MEDICAL CENTE (Target) | KS | 19 | $17.4M | -31.3% |
| KANSAS CITY ORTHOPAEDIC INSTIT | KS | 17 | $86.3M | 21.1% |
| NEWMAN REGIONAL HEALTH | KS | 23 | $73.9M | -15.6% |
| KANSAS SPINE & SPECIALTY HOSPI | KS | 35 | $69.6M | 19.1% |
| KANSAS SURGERY & RECOVERY CENT | KS | 30 | $62.8M | 20.0% |
| VIA CHRISTI HOSP. WICHITA ST. | KS | 38 | $55.1M | 16.7% |
| UKHS GREAT BEND CAMPUS | KS | 29 | $53.8M | -22.8% |
| NEOSHO MEMORIAL REGIONAL MED C | KS | 21 | $53.8M | -13.0% |
| ADVENTHEALTH OTTAWA | KS | 36 | $53.4M | -5.2% |
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: $1.3M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $365K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $348K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $344K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $212K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $11K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-5.4M |
| + RCM Uplift | +$1.3M |
| Pro Forma EBITDA | $-4.2M |
| Current Margin | -31.3% |
| Pro Forma Margin | -23.9% |
| WC Released (1x) | $667K |
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 | $-8.4M | $-23.1M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-8.4M | $-28.1M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-7.5M | $-26.6M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-7.5M | $-31.2M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-9.2M | $-26.7M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-9.2M | $-32.4M | 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 73.2% of days; rate updates may lag inflation. Mitigant: CDI/CMI lever directly increases Medicare reimbursement |
| Medium | Low occupancy | At 16.1%, 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
- 106 hospitals with 10-38 beds
- Same-state prioritization (n=107)
- Comp margins: P25=-30.6% / P50=-20.6% / P75=-11.7%
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.