BON SECOURS HOSPITAL
1. Target Overview & Investment Thesis
BON SECOURS HOSPITAL is a 69-bed community hospital in BALTIMORE CITY, MD with $18.8M in net patient revenue and a -38.5% operating margin. The hospital serves a payer mix of 0.0% Medicare, 0.0% Medicaid, and 100.0% commercial.
Thesis: Turnaround. Our ML models identify $1.4M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -38.5% to -31.1% (+736bps).
| Net Revenue HCRIS | $18.8M |
| Current EBITDA COMPUTED | $-7.2M |
| Operating Margin COMPUTED | -38.5% |
| Occupancy HCRIS | nan% |
| Revenue / Bed COMPUTED | $273K |
| Net-to-Gross HCRIS | 52.1% |
| Distress Probability ML | nan% |
2. Market Context & Competitive Position
MD has 59 Medicare-certified hospitals with a median operating margin of -8.3%. The target's margin of -38.5% places it below the state median. Among 18 size-comparable peers (34-138 beds), the median margin is -1.8%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (34-138), prioritizing same-state peers. 18 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| BON SECOURS HOSPITAL (Target) | MD | 69 | $18.8M | -38.5% |
| KENNEDY KRIEGER | MD | 50 | $203.5M | -50.0% |
| ST. MARYS HOSPITAL | MD | 105 | $198.5M | -1.5% |
| UNION HOSPITAL OF CECIL COUNTY | MD | 124 | $184.1M | -4.6% |
| MEDSTAR MONTGOMERY MEDICAL CEN | MD | 96 | $173.7M | -14.1% |
| CIVISTA MEDICAL CENTER | MD | 98 | $154.9M | 2.9% |
| CALVERT MEMORIAL HOSPITAL | MD | 78 | $150.0M | -7.2% |
| ATLANTIC GENERAL HOSPITAL | MD | 62 | $148.6M | -12.0% |
| HOLY CROSS GERMANTOWN HOSPITAL | MD | 78 | $127.2M | -29.6% |
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% | $395K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $376K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $372K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $229K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $12K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-7.2M |
| + RCM Uplift | +$1.4M |
| Pro Forma EBITDA | $-5.8M |
| Current Margin | -38.5% |
| Pro Forma Margin | -31.1% |
| WC Released (1x) | $721K |
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 | $-11.1M | $-33.9M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-11.1M | $-40.9M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-10.0M | $-39.9M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-10.0M | $-46.5M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-12.2M | $-37.2M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-12.2M | $-44.9M | 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
- 18 hospitals with 34-138 beds
- Same-state prioritization (n=19)
- Comp margins: P25=-10.8% / P50=-1.8% / P75=2.3%
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.