OUR LADY OF THE LAKE RMC
1. Target Overview & Investment Thesis
OUR LADY OF THE LAKE RMC is a 647-bed large academic medical center in nan, LA with $1.31B in net patient revenue and a -2.8% operating margin. The hospital serves a payer mix of 14.9% Medicare, 3.3% Medicaid, and 81.8% commercial.
Thesis: Undervalued. Our ML models identify $96.2M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -2.8% to 4.5% (+736bps).
| Net Revenue HCRIS | $1.31B |
| Current EBITDA COMPUTED | $-37.0M |
| Operating Margin COMPUTED | -2.8% |
| Occupancy HCRIS | 67.7% |
| Revenue / Bed COMPUTED | $2.0M |
| Net-to-Gross HCRIS | 33.9% |
| Distress Probability ML | 44.4% |
2. Market Context & Competitive Position
LA has 212 Medicare-certified hospitals with a median operating margin of -3.5%. The target's margin of -2.8% places it above the state median. Among 8 size-comparable peers (324-1294 beds), the median margin is -13.9%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (324-1294), prioritizing same-state peers. 8 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| OUR LADY OF THE LAKE RMC (Target) | LA | 647 | $1.31B | -2.8% |
| OCHSNER CLINIC FOUNDATION | LA | 1024 | $2.02B | -13.8% |
| WILLIS-KNIGHTON HEALTH SYSTEMS | LA | 686 | $1.02B | 6.9% |
| 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% |
| ST. FRANCIS MEDICAL CENTER | LA | 328 | $311.0M | -1.1% |
| RAPIDES REGIONAL MEDICAL CENTE | LA | 375 | $230.4M | -17.7% |
| EAST LA STATE MENTAL HEALTH SY | LA | 334 | $121K | -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: $96.2M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $27.5M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $26.1M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $25.9M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $15.9M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $837K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-37.0M |
| + RCM Uplift | +$96.2M |
| Pro Forma EBITDA | $59.2M |
| Current Margin | -2.8% |
| Pro Forma Margin | 4.5% |
| WC Released (1x) | $50.1M |
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 | $-57.0M | $718.0M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-57.0M | $771.3M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-51.3M | $1.07B | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-51.3M | $1.15B | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-62.7M | $255.4M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-62.7M | $260.6M | 0.00x | -100.0% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| High | Negative operating margin | RCM uplift bridge shows clear path to profitability; working capital release provides near-term cash cushion |
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
- 8 hospitals with 324-1294 beds
- Same-state prioritization (n=9)
- Comp margins: P25=-16.8% / P50=-13.9% / P75=0.9%
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.