PAUL OLIVER MEMORIAL HOSPITAL
1. Target Overview & Investment Thesis
PAUL OLIVER MEMORIAL HOSPITAL is a 8-bed community hospital in BENZIE, MI with $23.4M in net patient revenue and a -5.2% operating margin. The hospital serves a payer mix of 50.9% Medicare, 0.0% Medicaid, and 49.1% commercial.
Thesis: Turnaround. Our ML models identify $1.7M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -5.2% to 2.2% (+736bps).
| Net Revenue HCRIS | $23.4M |
| Current EBITDA COMPUTED | $-1.2M |
| Operating Margin COMPUTED | -5.2% |
| Occupancy HCRIS | 1.8% |
| Revenue / Bed COMPUTED | $2.9M |
| Net-to-Gross HCRIS | 45.0% |
| Distress Probability ML | nan% |
2. Market Context & Competitive Position
MI has 163 Medicare-certified hospitals with a median operating margin of -5.2%. The target's margin of -5.2% places it below the state median. Among 9 size-comparable peers (4-16 beds), the median margin is -8.4%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (4-16), prioritizing same-state peers. 9 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| PAUL OLIVER MEMORIAL HOSPITAL (Target) | MI | 8 | $23.4M | -5.2% |
| BRONSON LAKEVIEW HOSPITAL | MI | 16 | $67.9M | 14.6% |
| MACKINAC STRAITS HEALTH SYSTEM | MI | 15 | $62.2M | 1.1% |
| SCHOOLCRAFT MEMORIAL HOSPITAL | MI | 12 | $44.7M | -11.1% |
| INSIGHT SURGICAL HOSPITAL | MI | 13 | $28.3M | -8.5% |
| KELSEY MEMORIAL HOSPITAL | MI | 12 | $16.4M | 5.6% |
| HARBOR BEACH COMMUNITY HOSPITA | MI | 15 | $15.7M | -16.3% |
| MUNISING MEMORIAL HOSPITAL | MI | 11 | $11.2M | -17.7% |
| DECKERVILLE COMMUNITY HOSPITAL | MI | 15 | $8.5M | -8.4% |
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: $1.7M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $491K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $468K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $463K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $285K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $15K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-1.2M |
| + RCM Uplift | +$1.7M |
| Pro Forma EBITDA | $509K |
| Current Margin | -5.2% |
| Pro Forma Margin | 2.2% |
| WC Released (1x) | $898K |
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 | $-1.9M | $9.2M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-1.9M | $9.5M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-1.7M | $14.6M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-1.7M | $15.4M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-2.1M | $1.2M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-2.1M | $670K | 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 1.8%, fixed costs are spread over fewer patient days. Mitigant: volume growth is an additional upside lever not modeled in base case |
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
- 9 hospitals with 4-16 beds
- Same-state prioritization (n=13)
- Comp margins: P25=-11.1% / P50=-8.4% / P75=5.6%
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.