ST MARTIN HOSPITAL
1. Target Overview & Investment Thesis
ST MARTIN HOSPITAL is a 25-bed suburban community hospital in ST. MARTIN PARISH, LA with $36.3M in net patient revenue and a 6.5% operating margin. The hospital serves a payer mix of 53.7% Medicare, 0.2% Medicaid, and 46.1% commercial.
Thesis: Turnaround. Our ML models identify $2.7M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 6.5% to 13.9% (+736bps).
| Net Revenue HCRIS | $36.3M |
| Current EBITDA COMPUTED | $2.4M |
| Operating Margin COMPUTED | 6.5% |
| Occupancy HCRIS | 63.2% |
| Revenue / Bed COMPUTED | $1.5M |
| Net-to-Gross HCRIS | 36.4% |
| Distress Probability ML | 45.3% |
2. Market Context & Competitive Position
LA has 212 Medicare-certified hospitals with a median operating margin of -3.5%. The target's margin of 6.5% places it above the state median. Among 130 size-comparable peers (12-50 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 (12-50), prioritizing same-state peers. 130 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ST MARTIN HOSPITAL (Target) | LA | 25 | $36.3M | 6.5% |
| SPECIALISTS HOSPITAL OF SHREVE | LA | 15 | $79.1M | 21.3% |
| OCHSNER BAYOU LLC | LA | 25 | $76.5M | -0.9% |
| OUR LADY OF THE ANGELS HOSPITA | LA | 36 | $76.2M | -4.9% |
| CENTRAL LOUISIANA SURGICAL HOS | LA | 24 | $69.1M | 7.7% |
| ABBEVILLE GENERAL HOSPITAL | LA | 44 | $68.5M | 3.4% |
| ST. CHARLES PARISH HOSPITAL | LA | 27 | $64.0M | -5.1% |
| AVALA | LA | 21 | $64.0M | 7.4% |
| BYRD REGIONAL HOSPITAL | LA | 39 | $61.1M | 2.5% |
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: $2.7M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $762K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $726K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $718K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $442K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $23K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $2.4M |
| + RCM Uplift | +$2.7M |
| Pro Forma EBITDA | $5.0M |
| Current Margin | 6.5% |
| Pro Forma Margin | 13.9% |
| WC Released (1x) | $1.4M |
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 | $3.6M | $42.2M | 11.66x | 63.4% |
| Base (11x exit) | 10.0x | 11.0x | $3.6M | $47.6M | 13.15x | 67.4% |
| Bull Case | 9.0x | 11.0x | $3.3M | $57.6M | 17.67x | 77.6% |
| Bull (12x exit) | 9.0x | 12.0x | $3.3M | $63.8M | 19.58x | 81.3% |
| Bear Case | 11.0x | 10.0x | $4.0M | $27.7M | 6.95x | 47.4% |
| Bear (11x exit) | 11.0x | 11.0x | $4.0M | $31.8M | 7.97x | 51.5% |
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
- 130 hospitals with 12-50 beds
- Same-state prioritization (n=131)
- Comp margins: P25=-15.8% / P50=-3.3% / P75=5.4%
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.