BEAUMONT HEALTH - GROSSE POINTE
1. Target Overview & Investment Thesis
BEAUMONT HEALTH - GROSSE POINTE is a 248-bed suburban community hospital in nan, MI with $265.7M in net patient revenue and a 1.2% operating margin. The hospital serves a payer mix of 27.1% Medicare, 2.1% Medicaid, and 70.8% commercial.
Thesis: Undervalued. Our ML models identify $19.6M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 1.2% to 8.6% (+736bps).
| Net Revenue HCRIS | $265.7M |
| Current EBITDA COMPUTED | $3.2M |
| Operating Margin COMPUTED | 1.2% |
| Occupancy HCRIS | 47.0% |
| Revenue / Bed COMPUTED | $1.1M |
| Net-to-Gross HCRIS | 20.1% |
| Distress Probability ML | 47.9% |
2. Market Context & Competitive Position
MI has 163 Medicare-certified hospitals with a median operating margin of -5.2%. The target's margin of 1.2% places it above the state median. Among 52 size-comparable peers (124-496 beds), the median margin is -7.2%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (124-496), prioritizing same-state peers. 52 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| BEAUMONT HEALTH - GROSSE POINT (Target) | MI | 248 | $265.7M | 1.2% |
| BRONSON METHODIST HOSPITAL | MI | 439 | $1.06B | -1.4% |
| TRINITY HEALTH ANN ARBOR | MI | 475 | $1.00B | -1.0% |
| EDWARD W. SPARROW HOSPITAL | MI | 425 | $936.1M | -24.5% |
| WILLIAM BEAUMONT HOSPITAL - TR | MI | 484 | $747.4M | 2.3% |
| MUNSON MEDICAL CENTER | MI | 401 | $710.9M | -7.0% |
| W.A. FOOTE MEMORIAL HOSPITAL | MI | 331 | $681.8M | -9.0% |
| COVENANT MEDICAL CENTER | MI | 464 | $680.9M | -10.5% |
| TRINITY HEALTH MUSKEGON | MI | 262 | $621.2M | -15.5% |
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: $19.6M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $5.6M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $5.3M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $5.3M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $3.2M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $170K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $3.2M |
| + RCM Uplift | +$19.6M |
| Pro Forma EBITDA | $22.8M |
| Current Margin | 1.2% |
| Pro Forma Margin | 8.6% |
| WC Released (1x) | $10.2M |
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 | $5.0M | $216.8M | 43.72x | 112.9% |
| Base (11x exit) | 10.0x | 11.0x | $5.0M | $240.1M | 48.42x | 117.3% |
| Bull Case | 9.0x | 11.0x | $4.5M | $306.2M | 68.62x | 133.0% |
| Bull (12x exit) | 9.0x | 12.0x | $4.5M | $335.4M | 75.15x | 137.2% |
| Bear Case | 11.0x | 10.0x | $5.5M | $117.4M | 21.53x | 84.8% |
| Bear (11x exit) | 11.0x | 11.0x | $5.5M | $130.9M | 24.00x | 88.8% |
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
- 52 hospitals with 124-496 beds
- Same-state prioritization (n=53)
- Comp margins: P25=-14.1% / P50=-7.2% / P75=-0.7%
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.