LOUISIANA BEHAVIORAL HEALTH AMEND #1
1. Target Overview & Investment Thesis
LOUISIANA BEHAVIORAL HEALTH AMEND #1 is a 89-bed community hospital in CADDO PARISH, LA with $18.5M in net patient revenue and a -3.4% operating margin. The hospital serves a payer mix of 11.7% Medicare, 0.0% Medicaid, and 88.3% commercial.
Thesis: Turnaround. Our ML models identify $1.4M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -3.4% to 3.9% (+736bps).
| Net Revenue HCRIS | $18.5M |
| Current EBITDA COMPUTED | $-635K |
| Operating Margin COMPUTED | -3.4% |
| Occupancy HCRIS | 72.6% |
| Revenue / Bed COMPUTED | $208K |
| Net-to-Gross HCRIS | 50.0% |
| Distress Probability ML | nan% |
2. Market Context & Competitive Position
LA has 212 Medicare-certified hospitals with a median operating margin of -3.5%. The target's margin of -3.4% places it above the state median. Among 48 size-comparable peers (44-178 beds), the median margin is -4.9%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (44-178), prioritizing same-state peers. 48 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| LOUISIANA BEHAVIORAL HEALTH AM (Target) | LA | 89 | $18.5M | -3.4% |
| OCHSNER MEDICAL CENTER - BATON | LA | 171 | $371.4M | -11.5% |
| THIBODAUX REGIONAL HEALTH SYST | LA | 164 | $244.9M | -1.7% |
| TERREBONNE GENERAL HEALTH SYST | LA | 139 | $230.6M | -8.3% |
| OCHSNER MEDICAL CENTER - KENNE | LA | 115 | $193.8M | -2.9% |
| ST. PATRICK HOSPITAL | LA | 100 | $189.4M | -7.4% |
| OPELOUSAS GENERAL HOSPITAL | LA | 151 | $168.5M | -12.7% |
| UNIVERSITY HOSPITAL & CLINICS | LA | 52 | $158.9M | -33.4% |
| OCHSNER MEDICAL CENTER -NORTHS | LA | 150 | $107.3M | -5.7% |
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: $1.4M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $388K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $370K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $366K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $225K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $12K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-635K |
| + RCM Uplift | +$1.4M |
| Pro Forma EBITDA | $726K |
| Current Margin | -3.4% |
| Pro Forma Margin | 3.9% |
| WC Released (1x) | $710K |
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 | $-978K | $9.4M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-978K | $10.0M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-880K | $14.2M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-880K | $15.3M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-1.1M | $2.9M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-1.1M | $2.9M | 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
- 48 hospitals with 44-178 beds
- Same-state prioritization (n=49)
- Comp margins: P25=-27.4% / P50=-4.9% / P75=4.3%
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.