MURRAY CALLOWAY COUNTY HOSPITAL
1. Target Overview & Investment Thesis
MURRAY CALLOWAY COUNTY HOSPITAL is a 99-bed suburban community hospital in CALLOWAY, KY with $154.2M in net patient revenue and a 0.1% operating margin. The hospital serves a payer mix of 36.6% Medicare, 0.4% Medicaid, and 63.0% commercial.
Thesis: Turnaround. Our ML models identify $11.3M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 0.1% to 7.5% (+736bps).
| Net Revenue HCRIS | $154.2M |
| Current EBITDA COMPUTED | $183K |
| Operating Margin COMPUTED | 0.1% |
| Occupancy HCRIS | 43.9% |
| Revenue / Bed COMPUTED | $1.6M |
| Net-to-Gross HCRIS | 29.8% |
| Distress Probability ML | 48.5% |
2. Market Context & Competitive Position
KY has 114 Medicare-certified hospitals with a median operating margin of -0.6%. The target's margin of 0.1% places it above the state median. Among 44 size-comparable peers (50-198 beds), the median margin is 1.0%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (50-198), prioritizing same-state peers. 44 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| MURRAY CALLOWAY COUNTY HOSPITA (Target) | KY | 99 | $154.2M | 0.1% |
| BAPTIST HEALTH PADUCAH | KY | 190 | $391.7M | -0.5% |
| MERCY HEALTH LOURDES HOSPITAL | KY | 178 | $288.1M | 7.7% |
| BAPTIST HEALTH CORBIN | KY | 197 | $285.4M | 1.4% |
| LAKE CUMBERLAND REGIONAL HOSP | KY | 179 | $278.7M | 5.6% |
| BAPTIST HEALTH MADISONVILLE | KY | 154 | $220.0M | -5.7% |
| ST. ELIZABETH FLORENCE | KY | 134 | $212.6M | 8.8% |
| SAINT JOSEPH EAST | KY | 138 | $209.5M | 2.6% |
| EPHRAIM MCDOWELL REG MED CTR | KY | 157 | $207.7M | -13.8% |
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: $11.3M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $3.2M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $3.1M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $3.1M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.9M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $99K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $183K |
| + RCM Uplift | +$11.3M |
| Pro Forma EBITDA | $11.5M |
| Current Margin | 0.1% |
| Pro Forma Margin | 7.5% |
| WC Released (1x) | $5.9M |
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 | $282K | $114.7M | 406.44x | 232.5% |
| Base (11x exit) | 10.0x | 11.0x | $282K | $126.2M | 447.41x | 238.9% |
| Bull Case | 9.0x | 11.0x | $254K | $163.8M | 644.94x | 264.7% |
| Bull (12x exit) | 9.0x | 12.0x | $254K | $178.7M | 703.86x | 271.1% |
| Bear Case | 11.0x | 10.0x | $310K | $57.9M | 186.40x | 184.5% |
| Bear (11x exit) | 11.0x | 11.0x | $310K | $63.7M | 205.36x | 190.1% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Standard execution risk | RCM improvement requires management buy-in and 12-18 month implementation timeline |
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
- 44 hospitals with 50-198 beds
- Same-state prioritization (n=45)
- Comp margins: P25=-9.8% / P50=1.0% / P75=11.5%
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.