ST ELIZABETH - GRANT COUNTY
1. Target Overview & Investment Thesis
ST ELIZABETH - GRANT COUNTY is a 15-bed community hospital in GRANT, KY with $33.7M in net patient revenue and a 8.1% operating margin. The hospital serves a payer mix of 36.8% Medicare, 0.0% Medicaid, and 63.2% commercial.
Thesis: Turnaround. Our ML models identify $2.5M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 8.1% to 15.4% (+736bps).
| Net Revenue HCRIS | $33.7M |
| Current EBITDA COMPUTED | $2.7M |
| Operating Margin COMPUTED | 8.1% |
| Occupancy HCRIS | 8.5% |
| Revenue / Bed COMPUTED | $2.2M |
| Net-to-Gross HCRIS | 39.4% |
| Distress Probability ML | nan% |
2. Market Context & Competitive Position
KY has 114 Medicare-certified hospitals with a median operating margin of -0.6%. The target's margin of 8.1% places it above the state median. Among 32 size-comparable peers (8-30 beds), the median margin is -3.3%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (8-30), prioritizing same-state peers. 32 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ST ELIZABETH - GRANT COUNTY (Target) | KY | 15 | $33.7M | 8.1% |
| ROCKCASTLE HOSPT. & RESPIR CAR | KY | 30 | $79.1M | 2.2% |
| OHIO COUNTY HOSPITAL | KY | 25 | $56.6M | -6.8% |
| SAINT JOSEPH BEREA | KY | 25 | $40.0M | 3.9% |
| JAMES B HAGGIN MEMORIAL HOSPIT | KY | 25 | $38.9M | 12.2% |
| BARBOURVILLE ARH HOSPITAL | KY | 25 | $38.8M | 9.3% |
| CASEY COUNTY HOSPITAL | KY | 24 | $37.7M | 26.8% |
| JANE TODD CRAWFORD HOSPITAL | KY | 25 | $36.1M | 20.0% |
| THE MEDICAL CENTER AT SCOTTSVI | KY | 25 | $34.8M | 5.3% |
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: $2.5M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $708K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $675K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $668K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $411K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $22K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $2.7M |
| + RCM Uplift | +$2.5M |
| Pro Forma EBITDA | $5.2M |
| Current Margin | 8.1% |
| Pro Forma Margin | 15.4% |
| WC Released (1x) | $1.3M |
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 | $4.2M | $42.8M | 10.20x | 59.1% |
| Base (11x exit) | 10.0x | 11.0x | $4.2M | $48.5M | 11.55x | 63.1% |
| Bull Case | 9.0x | 11.0x | $3.8M | $58.0M | 15.36x | 72.7% |
| Bull (12x exit) | 9.0x | 12.0x | $3.8M | $64.4M | 17.05x | 76.3% |
| Bear Case | 11.0x | 10.0x | $4.6M | $29.1M | 6.29x | 44.5% |
| Bear (11x exit) | 11.0x | 11.0x | $4.6M | $33.5M | 7.25x | 48.6% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Low occupancy | At 8.5%, 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
- 32 hospitals with 8-30 beds
- Same-state prioritization (n=33)
- Comp margins: P25=-10.7% / P50=-3.3% / P75=6.9%
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.