TEN BROECK HOSPITAL - KMI
1. Target Overview & Investment Thesis
TEN BROECK HOSPITAL - KMI is a 64-bed suburban community hospital in JEFFERSON, KY with $26.5M in net patient revenue and a 29.1% operating margin. The hospital serves a payer mix of 3.7% Medicare, 0.1% Medicaid, and 96.1% commercial.
Thesis: Turnaround. Our ML models identify $2.0M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 29.1% to 36.5% (+736bps).
| Net Revenue HCRIS | $26.5M |
| Current EBITDA COMPUTED | $7.7M |
| Operating Margin COMPUTED | 29.1% |
| Occupancy HCRIS | 81.2% |
| Revenue / Bed COMPUTED | $414K |
| Net-to-Gross HCRIS | 55.4% |
| Distress Probability ML | 42.8% |
2. Market Context & Competitive Position
KY has 114 Medicare-certified hospitals with a median operating margin of -0.6%. The target's margin of 29.1% places it above the state median. Among 53 size-comparable peers (32-128 beds), the median margin is -0.6%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (32-128), prioritizing same-state peers. 53 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| TEN BROECK HOSPITAL - KMI (Target) | KY | 64 | $26.5M | 29.1% |
| BAPTIST HEALTH LAGRANGE | KY | 42 | $236.9M | 2.7% |
| ST. CLAIRE MEDICAL CENTER | KY | 100 | $204.5M | -8.5% |
| HAZARD ARH | KY | 109 | $200.8M | -32.3% |
| T.J. SAMSON COMMUNITY HOSPITAL | KY | 112 | $189.4M | -10.5% |
| SAINT JOSEPH LONDON | KY | 118 | $173.7M | -8.1% |
| JENNIE STUART MEDICAL CENTER | KY | 122 | $165.3M | -6.1% |
| CLARK REGIONAL MEDICAL CENTER | KY | 54 | $156.4M | 16.5% |
| MURRAY CALLOWAY COUNTY HOSPITA | KY | 99 | $154.2M | 0.1% |
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: $2.0M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $557K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $530K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $525K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $323K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $17K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $7.7M |
| + RCM Uplift | +$2.0M |
| Pro Forma EBITDA | $9.7M |
| Current Margin | 29.1% |
| Pro Forma Margin | 36.5% |
| WC Released (1x) | $1.0M |
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 | $11.9M | $70.4M | 5.93x | 42.8% |
| Base (11x exit) | 10.0x | 11.0x | $11.9M | $81.3M | 6.85x | 46.9% |
| Bull Case | 9.0x | 11.0x | $10.7M | $91.6M | 8.57x | 53.7% |
| Bull (12x exit) | 9.0x | 12.0x | $10.7M | $103.1M | 9.65x | 57.4% |
| Bear Case | 11.0x | 10.0x | $13.1M | $56.8M | 4.35x | 34.2% |
| Bear (11x exit) | 11.0x | 11.0x | $13.1M | $66.7M | 5.11x | 38.6% |
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
- 53 hospitals with 32-128 beds
- Same-state prioritization (n=54)
- Comp margins: P25=-10.5% / P50=-0.6% / P75=10.4%
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.