RUSH FOUNDATION HOSPITAL
1. Target Overview & Investment Thesis
RUSH FOUNDATION HOSPITAL is a 191-bed under-performing / distressed in LAUDERDALE, MS with $122.0M in net patient revenue and a -19.1% operating margin. The hospital serves a payer mix of 28.2% Medicare, 18.0% Medicaid, and 53.8% commercial.
Thesis: Undervalued. Our ML models identify $9.0M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -19.1% to -11.7% (+736bps).
| Net Revenue HCRIS | $122.0M |
| Current EBITDA COMPUTED | $-23.2M |
| Operating Margin COMPUTED | -19.1% |
| Occupancy HCRIS | 28.9% |
| Revenue / Bed COMPUTED | $639K |
| Net-to-Gross HCRIS | 28.2% |
| Distress Probability ML | 57.4% |
2. Market Context & Competitive Position
MS has 110 Medicare-certified hospitals with a median operating margin of -12.5%. The target's margin of -19.1% places it below the state median. Among 23 size-comparable peers (96-382 beds), the median margin is -4.9%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (96-382), prioritizing same-state peers. 23 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| RUSH FOUNDATION HOSPITAL (Target) | MS | 191 | $122.0M | -19.1% |
| MEMORIAL HOSPITAL AT GULFPORT | MS | 278 | $700.2M | -15.7% |
| SINGING RIVER HEALTH SYSTEM | MS | 294 | $415.9M | -12.8% |
| BAPTIST MEM HOSPITAL DESOTO | MS | 298 | $301.6M | -5.2% |
| BAPTIST MEM HOSPITAL NORTH MIS | MS | 195 | $229.4M | 0.7% |
| BAPTIST MEM HOSPITAL GOLDEN TR | MS | 154 | $221.1M | 6.9% |
| JEFF ANDERSON REGIONAL MEDICAL | MS | 270 | $213.3M | -25.9% |
| MAGNOLIA HOSPITAL | MS | 158 | $161.6M | -4.7% |
| SOUTH CENTRAL REGIONAL MEDICAL | MS | 268 | $146.9M | -1.3% |
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: $9.0M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $2.6M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $2.4M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $2.4M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.5M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $78K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-23.2M |
| + RCM Uplift | +$9.0M |
| Pro Forma EBITDA | $-14.3M |
| Current Margin | -19.1% |
| Pro Forma Margin | -11.7% |
| WC Released (1x) | $4.7M |
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 | $-35.8M | $-63.5M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-35.8M | $-81.5M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-32.2M | $-63.5M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-32.2M | $-78.8M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-39.3M | $-96.8M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-39.3M | $-119.3M | 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 28.9%, 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 57.4% 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
- 23 hospitals with 96-382 beds
- Same-state prioritization (n=24)
- Comp margins: P25=-15.0% / P50=-4.9% / 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.