MID COAST HOSPITAL
1. Target Overview & Investment Thesis
MID COAST HOSPITAL is a 93-bed suburban community hospital in CUMBERLAND, ME with $213.6M in net patient revenue and a -14.0% operating margin. The hospital serves a payer mix of 25.4% Medicare, 8.1% Medicaid, and 66.5% commercial.
Thesis: Turnaround. Our ML models identify $15.7M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -14.0% to -6.7% (+736bps).
| Net Revenue HCRIS | $213.6M |
| Current EBITDA COMPUTED | $-30.0M |
| Operating Margin COMPUTED | -14.0% |
| Occupancy HCRIS | 75.3% |
| Revenue / Bed COMPUTED | $2.3M |
| Net-to-Gross HCRIS | 39.9% |
| Distress Probability ML | 42.7% |
2. Market Context & Competitive Position
ME has 38 Medicare-certified hospitals with a median operating margin of -8.3%. The target's margin of -14.0% places it below the state median. Among 13 size-comparable peers (46-186 beds), the median margin is -11.3%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (46-186), prioritizing same-state peers. 13 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| MID COAST HOSPITAL (Target) | ME | 93 | $213.6M | -14.0% |
| MAINEGENERAL MEDICAL CENTER | ME | 186 | $559.8M | -17.8% |
| SOUTHERN MAINE HEALTH CARE | ME | 140 | $352.3M | -9.9% |
| MERCY HOSPITAL | ME | 77 | $240.0M | -11.6% |
| YORK HOSPITAL | ME | 54 | $197.1M | -3.6% |
| ST. MARYS REGIONAL MEDICAL CEN | ME | 140 | $196.3M | -32.8% |
| ST JOSEPH HOSPITAL | ME | 99 | $176.8M | -9.2% |
| PENOBSCOT BAY MEDICAL CENTER | ME | 81 | $171.6M | -21.7% |
| SPRING HARBOR HOSPITAL | ME | 96 | $77.6M | -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: $15.7M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $4.5M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $4.3M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $4.2M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $2.6M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $137K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-30.0M |
| + RCM Uplift | +$15.7M |
| Pro Forma EBITDA | $-14.2M |
| Current Margin | -14.0% |
| Pro Forma Margin | -6.7% |
| WC Released (1x) | $8.2M |
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 | $-46.1M | $-40.4M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-46.1M | $-59.4M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-41.5M | $-22.5M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-41.5M | $-36.8M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-50.7M | $-104.1M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-50.7M | $-131.0M | 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
- 13 hospitals with 46-186 beds
- Same-state prioritization (n=14)
- Comp margins: P25=-19.7% / P50=-11.3% / P75=-6.4%
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.