OCEANS BEHAVIORAL HOSPITAL BILOXI
1. Target Overview & Investment Thesis
OCEANS BEHAVIORAL HOSPITAL BILOXI is a 45-bed safety-net/medicaid heavy in nan, MS with $13.6M in net patient revenue and a 18.8% operating margin. The hospital serves a payer mix of 21.5% Medicare, 31.1% Medicaid, and 47.4% commercial.
Thesis: Turnaround. Our ML models identify $1.0M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 18.8% to 26.1% (+737bps).
| Net Revenue HCRIS | $13.6M |
| Current EBITDA COMPUTED | $2.6M |
| Operating Margin COMPUTED | 18.8% |
| Occupancy HCRIS | 74.3% |
| Revenue / Bed COMPUTED | $303K |
| Net-to-Gross HCRIS | 55.7% |
| Distress Probability ML | 53.0% |
2. Market Context & Competitive Position
MS has 110 Medicare-certified hospitals with a median operating margin of -12.5%. The target's margin of 18.8% places it above the state median. Among 62 size-comparable peers (22-90 beds), the median margin is -13.9%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (22-90), prioritizing same-state peers. 62 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| OCEANS BEHAVIORAL HOSPITAL BIL (Target) | MS | 45 | $13.6M | 18.8% |
| BAPTIST MEM HOSPITAL UNION COU | MS | 83 | $117.9M | 3.7% |
| METHODIST H/C OLIVE BRANCH HOS | MS | 65 | $75.4M | -25.6% |
| NORTH SUNFLOWER COUNTY HOSPITA | MS | 25 | $70.1M | -7.2% |
| MISSISSIPPI METHODIST REHAB CE | MS | 31 | $68.1M | -0.5% |
| UMMC-GRENADA | MS | 49 | $63.7M | 7.1% |
| OKTIBBEHA COUNTY HOSPITAL | MS | 88 | $63.2M | -16.5% |
| NESHOBA COUNTY GENERAL HOSPITA | MS | 38 | $47.6M | -19.7% |
| ALLIANCE HEALTH CENTER | MS | 79 | $46.1M | 32.5% |
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: $1.0M (737bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $287K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $273K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $271K | +199bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $166K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +7bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $2.6M |
| + RCM Uplift | +$1.0M |
| Pro Forma EBITDA | $3.6M |
| Current Margin | 18.8% |
| Pro Forma Margin | 26.1% |
| WC Released (1x) | $523K |
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 | $3.9M | $27.0M | 6.84x | 46.9% |
| Base (11x exit) | 10.0x | 11.0x | $3.9M | $30.9M | 7.85x | 51.0% |
| Bull Case | 9.0x | 11.0x | $3.5M | $35.5M | 10.02x | 58.6% |
| Bull (12x exit) | 9.0x | 12.0x | $3.5M | $39.8M | 11.23x | 62.2% |
| Bear Case | 11.0x | 10.0x | $4.3M | $20.6M | 4.76x | 36.6% |
| Bear (11x exit) | 11.0x | 11.0x | $4.3M | $24.1M | 5.56x | 41.0% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Elevated Medicaid exposure (31.1%) | Medicaid reimburses below cost in most states. Mitigant: denial reduction lever has highest impact on Medicaid claims |
| High | Elevated distress probability | Model estimates 53.0% 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
- 62 hospitals with 22-90 beds
- Same-state prioritization (n=63)
- Comp margins: P25=-22.4% / P50=-13.9% / P75=-0.5%
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.