MYMICHIGAN MEDICAL CTR - WEST BRAN
1. Target Overview & Investment Thesis
MYMICHIGAN MEDICAL CTR - WEST BRAN is a 88-bed under-performing / distressed in nan, MI with $65.0M in net patient revenue and a -11.3% operating margin. The hospital serves a payer mix of 32.0% Medicare, 4.2% Medicaid, and 63.8% commercial.
Thesis: Turnaround. Our ML models identify $4.8M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -11.3% to -3.9% (+736bps).
| Net Revenue HCRIS | $65.0M |
| Current EBITDA COMPUTED | $-7.4M |
| Operating Margin COMPUTED | -11.3% |
| Occupancy HCRIS | 17.2% |
| Revenue / Bed COMPUTED | $739K |
| Net-to-Gross HCRIS | 38.7% |
| Distress Probability ML | 57.5% |
2. Market Context & Competitive Position
MI has 163 Medicare-certified hospitals with a median operating margin of -5.2%. The target's margin of -11.3% places it below the state median. Among 51 size-comparable peers (44-176 beds), the median margin is -4.7%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (44-176), prioritizing same-state peers. 51 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| MYMICHIGAN MEDICAL CTR - WEST (Target) | MI | 88 | $65.0M | -11.3% |
| MARQUETTE GENERAL HOSPITAL | MI | 163 | $350.8M | -11.5% |
| KARMANOS CANCER HOSPITAL | MI | 106 | $284.8M | -27.8% |
| ST. MARYS OF MICHIGAN | MI | 166 | $264.2M | -32.0% |
| BRONSON BATTLE CREEK | MI | 144 | $251.8M | -27.7% |
| ASCENSION PROVIDENCE ROCHESTER | MI | 153 | $249.9M | -4.6% |
| MYMICHIGAN MEDICAL CENTER ALPE | MI | 128 | $237.2M | 6.0% |
| MEMORIAL HEALTHCARE | MI | 113 | $226.4M | -13.4% |
| MCLAREN PORT HURON | MI | 163 | $225.7M | -0.2% |
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: $4.8M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $1.4M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $1.3M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $1.3M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $791K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $42K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-7.4M |
| + RCM Uplift | +$4.8M |
| Pro Forma EBITDA | $-2.6M |
| Current Margin | -11.3% |
| Pro Forma Margin | -3.9% |
| WC Released (1x) | $2.5M |
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 | $-11.3M | $-639K | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-11.3M | $-4.4M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-10.2M | $7.7M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-10.2M | $5.4M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-12.4M | $-20.9M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-12.4M | $-27.0M | 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 |
| Medium | Low occupancy | At 17.2%, fixed costs are spread over fewer patient days. Mitigant: volume growth is an additional upside lever not modeled in base case |
| High | Elevated distress probability | Model estimates 57.5% probability of financial distress. Mitigant: distressed entry pricing (7-9x) compensates for risk |
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
- 51 hospitals with 44-176 beds
- Same-state prioritization (n=52)
- Comp margins: P25=-14.6% / P50=-4.7% / P75=1.5%
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.