ST. FRANCES CABRINI HOSPITAL
1. Target Overview & Investment Thesis
ST. FRANCES CABRINI HOSPITAL is a 268-bed suburban community hospital in nan, LA with $363.0M in net patient revenue and a 2.3% operating margin. The hospital serves a payer mix of 29.3% Medicare, 1.1% Medicaid, and 69.6% commercial.
Thesis: Undervalued. Our ML models identify $26.7M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 2.3% to 9.7% (+736bps).
| Net Revenue HCRIS | $363.0M |
| Current EBITDA COMPUTED | $8.4M |
| Operating Margin COMPUTED | 2.3% |
| Occupancy HCRIS | 65.4% |
| Revenue / Bed COMPUTED | $1.4M |
| Net-to-Gross HCRIS | 18.8% |
| Distress Probability ML | 43.0% |
2. Market Context & Competitive Position
LA has 212 Medicare-certified hospitals with a median operating margin of -3.5%. The target's margin of 2.3% places it above the state median. Among 30 size-comparable peers (134-536 beds), the median margin is -8.3%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (134-536), prioritizing same-state peers. 30 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ST. FRANCES CABRINI HOSPITAL (Target) | LA | 268 | $363.0M | 2.3% |
| UNIVERSITY MEDICAL CTR. AT NEW | LA | 310 | $671.3M | -22.4% |
| CHILDRENS HOSPITAL | LA | 189 | $523.4M | 6.7% |
| OUR LADY OF LOURDES RMC | LA | 363 | $509.6M | 8.9% |
| TULANE UNIVERSITY HOSPITAL & C | LA | 431 | $490.2M | -14.1% |
| LAFAYETTE GENERAL MEDICAL CENT | LA | 390 | $480.2M | -16.4% |
| BATON ROUGE GENERAL | LA | 251 | $445.5M | -6.7% |
| ST. TAMMANY PARISH HOSPITAL | LA | 213 | $434.6M | 4.5% |
| OCHSNER LSU HEALTH SHREVEPORT | LA | 273 | $395.6M | -50.0% |
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: $26.7M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $7.6M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $7.3M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $7.2M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $4.4M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $232K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $8.4M |
| + RCM Uplift | +$26.7M |
| Pro Forma EBITDA | $35.1M |
| Current Margin | 2.3% |
| Pro Forma Margin | 9.7% |
| WC Released (1x) | $13.9M |
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 | $12.9M | $322.4M | 25.06x | 90.5% |
| Base (11x exit) | 10.0x | 11.0x | $12.9M | $358.8M | 27.89x | 94.6% |
| Bull Case | 9.0x | 11.0x | $11.6M | $451.1M | 38.97x | 108.0% |
| Bull (12x exit) | 9.0x | 12.0x | $11.6M | $495.6M | 42.81x | 112.0% |
| Bear Case | 11.0x | 10.0x | $14.1M | $184.6M | 13.05x | 67.2% |
| Bear (11x exit) | 11.0x | 11.0x | $14.1M | $207.6M | 14.68x | 71.1% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Low | Low net-to-gross ratio | Large contractual allowances suggest pricing discipline issues. Mitigant: payer renegotiation is an additional upside lever |
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
- 30 hospitals with 134-536 beds
- Same-state prioritization (n=31)
- Comp margins: P25=-14.1% / P50=-8.3% / P75=-1.7%
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.