PEMBROKE HOSPITAL
1. Target Overview & Investment Thesis
PEMBROKE HOSPITAL is a 120-bed suburban community hospital in NORFOLK, MA with $33.6M in net patient revenue and a 14.9% operating margin. The hospital serves a payer mix of 14.7% Medicare, 1.0% Medicaid, and 84.3% commercial.
Thesis: Turnaround. Our ML models identify $2.5M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 14.9% to 22.3% (+736bps).
| Net Revenue HCRIS | $33.6M |
| Current EBITDA COMPUTED | $5.0M |
| Operating Margin COMPUTED | 14.9% |
| Occupancy HCRIS | 67.8% |
| Revenue / Bed COMPUTED | $280K |
| Net-to-Gross HCRIS | 66.8% |
| Distress Probability ML | 48.2% |
2. Market Context & Competitive Position
MA has 99 Medicare-certified hospitals with a median operating margin of -12.2%. The target's margin of 14.9% places it above the state median. Among 58 size-comparable peers (60-240 beds), the median margin is -11.4%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (60-240), prioritizing same-state peers. 58 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| PEMBROKE HOSPITAL (Target) | MA | 120 | $33.6M | 14.9% |
| NEWTON WELLESLEY HOSPITAL | MA | 216 | $624.3M | -4.7% |
| CAPE COD HOSPITAL | MA | 239 | $620.3M | -1.3% |
| BERKSHIRE MEDICAL CENTER | MA | 238 | $522.9M | -12.9% |
| SAINT VINCENT HOSPITAL | MA | 232 | $404.2M | 0.2% |
| CAMBRIDGE HEALTH ALLIANCE | MA | 225 | $383.9M | -50.0% |
| BETH ISRAEL DEACONESS - PLYMOU | MA | 150 | $349.1M | 2.6% |
| MOUNT AUBURN HOSPITAL | MA | 186 | $337.4M | -8.4% |
| STEWARD ST. ANNES HOSPITAL | MA | 175 | $322.3M | 12.8% |
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: $2.5M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $705K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $671K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $665K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $408K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $21K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $5.0M |
| + RCM Uplift | +$2.5M |
| Pro Forma EBITDA | $7.5M |
| Current Margin | 14.9% |
| Pro Forma Margin | 22.3% |
| WC Released (1x) | $1.3M |
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 | $7.7M | $57.7M | 7.50x | 49.6% |
| Base (11x exit) | 10.0x | 11.0x | $7.7M | $66.0M | 8.57x | 53.7% |
| Bull Case | 9.0x | 11.0x | $6.9M | $76.7M | 11.06x | 61.7% |
| Bull (12x exit) | 9.0x | 12.0x | $6.9M | $85.7M | 12.36x | 65.3% |
| Bear Case | 11.0x | 10.0x | $8.5M | $42.9M | 5.06x | 38.3% |
| Bear (11x exit) | 11.0x | 11.0x | $8.5M | $49.9M | 5.89x | 42.6% |
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
- 58 hospitals with 60-240 beds
- Same-state prioritization (n=59)
- Comp margins: P25=-18.4% / P50=-11.4% / P75=0.0%
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.