FIRST HOSPITAL HOPKINSVILLE
1. Target Overview & Investment Thesis
FIRST HOSPITAL HOPKINSVILLE is a 97-bed suburban community hospital in CHRISTIAN, KY with $21.1M in net patient revenue and a 24.6% operating margin. The hospital serves a payer mix of 3.6% Medicare, 0.4% Medicaid, and 96.0% commercial.
Thesis: Turnaround. Our ML models identify $1.6M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 24.6% to 32.0% (+736bps).
| Net Revenue HCRIS | $21.1M |
| Current EBITDA COMPUTED | $5.2M |
| Operating Margin COMPUTED | 24.6% |
| Occupancy HCRIS | 51.2% |
| Revenue / Bed COMPUTED | $218K |
| Net-to-Gross HCRIS | 61.3% |
| Distress Probability ML | 50.8% |
2. Market Context & Competitive Position
KY has 114 Medicare-certified hospitals with a median operating margin of -0.6%. The target's margin of 24.6% places it above the state median. Among 46 size-comparable peers (48-194 beds), the median margin is 0.3%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (48-194), prioritizing same-state peers. 46 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| FIRST HOSPITAL HOPKINSVILLE (Target) | KY | 97 | $21.1M | 24.6% |
| BAPTIST HEALTH PADUCAH | KY | 190 | $391.7M | -0.5% |
| MERCY HEALTH LOURDES HOSPITAL | KY | 178 | $288.1M | 7.7% |
| 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% |
| ST. CLAIRE MEDICAL CENTER | KY | 100 | $204.5M | -8.5% |
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: $1.6M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $444K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $423K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $419K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $257K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $14K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $5.2M |
| + RCM Uplift | +$1.6M |
| Pro Forma EBITDA | $6.8M |
| Current Margin | 24.6% |
| Pro Forma Margin | 32.0% |
| WC Released (1x) | $811K |
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 | $8.0M | $49.9M | 6.23x | 44.2% |
| Base (11x exit) | 10.0x | 11.0x | $8.0M | $57.5M | 7.18x | 48.3% |
| Bull Case | 9.0x | 11.0x | $7.2M | $65.2M | 9.05x | 55.4% |
| Bull (12x exit) | 9.0x | 12.0x | $7.2M | $73.2M | 10.17x | 59.0% |
| Bear Case | 11.0x | 10.0x | $8.8M | $39.5M | 4.49x | 35.0% |
| Bear (11x exit) | 11.0x | 11.0x | $8.8M | $46.3M | 5.26x | 39.4% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| High | Elevated distress probability | Model estimates 50.8% probability of financial distress. Mitigant: distressed entry pricing (7-9x) compensates for risk |
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
- 46 hospitals with 48-194 beds
- Same-state prioritization (n=47)
- Comp margins: P25=-10.3% / P50=0.3% / P75=9.9%
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.