PHELPS COUNTY REGIONAL MEDICAL CNTR
1. Target Overview & Investment Thesis
PHELPS COUNTY REGIONAL MEDICAL CNTR is a 196-bed suburban community hospital in PHELPS, MO with $270.3M in net patient revenue and a 33.1% operating margin. The hospital serves a payer mix of 33.6% Medicare, 14.8% Medicaid, and 51.6% commercial.
Thesis: Turnaround. Our ML models identify $19.9M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 33.1% to 40.4% (+736bps).
| Net Revenue HCRIS | $270.3M |
| Current EBITDA COMPUTED | $89.4M |
| Operating Margin COMPUTED | 33.1% |
| Occupancy HCRIS | 38.8% |
| Revenue / Bed COMPUTED | $1.4M |
| Net-to-Gross HCRIS | 22.4% |
| Distress Probability ML | 52.8% |
2. Market Context & Competitive Position
MO has 138 Medicare-certified hospitals with a median operating margin of -6.2%. The target's margin of 33.1% places it above the state median. Among 43 size-comparable peers (98-392 beds), the median margin is -3.2%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (98-392), prioritizing same-state peers. 43 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| PHELPS COUNTY REGIONAL MEDICAL (Target) | MO | 196 | $270.3M | 33.1% |
| CHILDRENS MERCY HOSPITAL | MO | 328 | $1.44B | 30.5% |
| SSM SAINT LOUIS UNIVERSITY HOS | MO | 317 | $772.2M | -6.4% |
| HEARTLAND REGIONAL MEDICAL CEN | MO | 352 | $676.9M | -6.2% |
| NORTH KANSAS CITY HOSPITAL | MO | 383 | $601.5M | 7.7% |
| FREEMAN OAK HILL HEALTH SYSTEM | MO | 363 | $587.5M | 3.0% |
| ST. LUKES HOSPITAL | MO | 390 | $573.7M | 2.8% |
| SAINT FRANCIS MEDICAL CENTER | MO | 282 | $556.6M | -1.3% |
| UNIVERSITY HEALTH TRUMAN MED C | MO | 258 | $540.8M | -13.5% |
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: $19.9M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $5.7M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $5.4M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $5.4M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $3.3M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $173K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $89.4M |
| + RCM Uplift | +$19.9M |
| Pro Forma EBITDA | $109.3M |
| Current Margin | 33.1% |
| Pro Forma Margin | 40.4% |
| WC Released (1x) | $10.4M |
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 | $137.5M | $788.6M | 5.73x | 41.8% |
| Base (11x exit) | 10.0x | 11.0x | $137.5M | $912.2M | 6.63x | 46.0% |
| Bull Case | 9.0x | 11.0x | $123.8M | $1.02B | 8.26x | 52.5% |
| Bull (12x exit) | 9.0x | 12.0x | $123.8M | $1.15B | 9.31x | 56.2% |
| Bear Case | 11.0x | 10.0x | $151.3M | $644.5M | 4.26x | 33.6% |
| Bear (11x exit) | 11.0x | 11.0x | $151.3M | $758.1M | 5.01x | 38.0% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| High | Elevated distress probability | Model estimates 52.8% 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
- 43 hospitals with 98-392 beds
- Same-state prioritization (n=44)
- Comp margins: P25=-16.5% / P50=-3.2% / P75=2.9%
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.