BAPTIST MEM HOSPITAL UNION COUNTY
1. Target Overview & Investment Thesis
BAPTIST MEM HOSPITAL UNION COUNTY is a 83-bed suburban community hospital in UNION, MS with $117.9M in net patient revenue and a 3.7% operating margin. The hospital serves a payer mix of 38.2% Medicare, 23.3% Medicaid, and 38.5% commercial.
Thesis: Turnaround. Our ML models identify $8.7M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 3.7% to 11.0% (+736bps).
| Net Revenue HCRIS | $117.9M |
| Current EBITDA COMPUTED | $4.3M |
| Operating Margin COMPUTED | 3.7% |
| Occupancy HCRIS | 38.2% |
| Revenue / Bed COMPUTED | $1.4M |
| Net-to-Gross HCRIS | 21.8% |
| Distress Probability ML | 54.8% |
2. Market Context & Competitive Position
MS has 110 Medicare-certified hospitals with a median operating margin of -12.5%. The target's margin of 3.7% places it above the state median. Among 35 size-comparable peers (42-166 beds), the median margin is -4.5%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (42-166), prioritizing same-state peers. 35 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| BAPTIST MEM HOSPITAL UNION COU (Target) | MS | 83 | $117.9M | 3.7% |
| BAPTIST MEM HOSPITAL GOLDEN TR | MS | 154 | $221.1M | 6.9% |
| MAGNOLIA HOSPITAL | MS | 158 | $161.6M | -4.7% |
| MERIT HEALTH WESLEY | MS | 121 | $140.9M | 1.3% |
| RIVER OAKS HOSPITAL | MS | 158 | $124.1M | 7.0% |
| SOUTHWEST MS REGIONAL MED CENT | MS | 97 | $123.1M | -16.0% |
| DELTA HEALTH-THE MEDICAL CENTE | MS | 101 | $112.1M | -26.9% |
| MERIT HEALTH RIVER REGION | MS | 155 | $106.8M | 1.5% |
| SINGING RIVER GULFPORT | MS | 100 | $92.5M | -12.7% |
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: $8.7M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $2.5M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $2.4M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $2.3M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.4M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $75K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $4.3M |
| + RCM Uplift | +$8.7M |
| Pro Forma EBITDA | $13.0M |
| Current Margin | 3.7% |
| Pro Forma Margin | 11.0% |
| WC Released (1x) | $4.5M |
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 | $6.6M | $115.3M | 17.37x | 77.0% |
| Base (11x exit) | 10.0x | 11.0x | $6.6M | $129.0M | 19.43x | 81.0% |
| Bull Case | 9.0x | 11.0x | $6.0M | $159.8M | 26.74x | 93.0% |
| Bull (12x exit) | 9.0x | 12.0x | $6.0M | $176.1M | 29.47x | 96.7% |
| Bear Case | 11.0x | 10.0x | $7.3M | $69.7M | 9.55x | 57.0% |
| Bear (11x exit) | 11.0x | 11.0x | $7.3M | $79.1M | 10.83x | 61.0% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Elevated Medicaid exposure (23.3%) | Medicaid reimburses below cost in most states. Mitigant: denial reduction lever has highest impact on Medicaid claims |
| High | Elevated distress probability | Model estimates 54.8% 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
- 35 hospitals with 42-166 beds
- Same-state prioritization (n=36)
- Comp margins: P25=-16.5% / P50=-4.5% / P75=5.0%
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.