HAVERHILL PAVILION
1. Target Overview & Investment Thesis
HAVERHILL PAVILION is a 71-bed suburban community hospital in ARCHER, MA with $22.1M in net patient revenue and a 2.1% operating margin. The hospital serves a payer mix of 18.7% Medicare, 0.9% Medicaid, and 80.4% commercial.
Thesis: Turnaround. Our ML models identify $1.6M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 2.1% to 9.4% (+736bps).
| Net Revenue HCRIS | $22.1M |
| Current EBITDA COMPUTED | $458K |
| Operating Margin COMPUTED | 2.1% |
| Occupancy HCRIS | 89.0% |
| Revenue / Bed COMPUTED | $312K |
| Net-to-Gross HCRIS | 71.0% |
| Distress Probability ML | 43.7% |
2. Market Context & Competitive Position
MA has 99 Medicare-certified hospitals with a median operating margin of -12.2%. The target's margin of 2.1% places it above the state median. Among 42 size-comparable peers (36-142 beds), the median margin is -12.2%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (36-142), prioritizing same-state peers. 42 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| HAVERHILL PAVILION (Target) | MA | 71 | $22.1M | 2.1% |
| EMERSON HOSPITAL | MA | 111 | $315.1M | -10.1% |
| MASSACHUSETTS EYE AND EAR INFI | MA | 41 | $263.9M | -36.1% |
| COOLEY DICKINSON HOSPITAL | MA | 118 | $233.6M | 2.3% |
| STURDY MEMORIAL HOSPITAL | MA | 125 | $221.7M | -12.2% |
| NEW ENGLAND BAPTIST HOSPITAL | MA | 75 | $221.2M | -4.6% |
| HEALTHALLIANCE-CLINTON | MA | 125 | $190.6M | -29.1% |
| FALMOUTH HOSPITAL | MA | 81 | $172.1M | -2.2% |
| MORTON HOSPITAL | MA | 125 | $156.5M | -6.0% |
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: $1.6M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $465K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $443K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $438K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $269K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $14K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $458K |
| + RCM Uplift | +$1.6M |
| Pro Forma EBITDA | $2.1M |
| Current Margin | 2.1% |
| Pro Forma Margin | 9.4% |
| WC Released (1x) | $849K |
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 | $705K | $19.3M | 27.40x | 93.9% |
| Base (11x exit) | 10.0x | 11.0x | $705K | $21.5M | 30.46x | 98.0% |
| Bull Case | 9.0x | 11.0x | $635K | $27.1M | 42.68x | 111.9% |
| Bull (12x exit) | 9.0x | 12.0x | $635K | $29.7M | 46.85x | 115.9% |
| Bear Case | 11.0x | 10.0x | $776K | $10.9M | 14.11x | 69.8% |
| Bear (11x exit) | 11.0x | 11.0x | $776K | $12.3M | 15.84x | 73.8% |
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
- 42 hospitals with 36-142 beds
- Same-state prioritization (n=43)
- Comp margins: P25=-20.2% / P50=-12.2% / P75=-0.8%
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.