SAINT LUKES NORTH HOSPITAL
1. Target Overview & Investment Thesis
SAINT LUKES NORTH HOSPITAL is a 108-bed suburban community hospital in PLATTE, MO with $183.6M in net patient revenue and a -6.4% operating margin. The hospital serves a payer mix of 26.8% Medicare, 13.3% Medicaid, and 60.0% commercial.
Thesis: Undervalued. Our ML models identify $13.5M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -6.4% to 1.0% (+736bps).
| Net Revenue HCRIS | $183.6M |
| Current EBITDA COMPUTED | $-11.7M |
| Operating Margin COMPUTED | -6.4% |
| Occupancy HCRIS | 64.3% |
| Revenue / Bed COMPUTED | $1.7M |
| Net-to-Gross HCRIS | 19.9% |
| Distress Probability ML | 45.2% |
2. Market Context & Competitive Position
MO has 138 Medicare-certified hospitals with a median operating margin of -6.2%. The target's margin of -6.4% places it below the state median. Among 39 size-comparable peers (54-216 beds), the median margin is 0.4%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (54-216), prioritizing same-state peers. 39 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| SAINT LUKES NORTH HOSPITAL (Target) | MO | 108 | $183.6M | -6.4% |
| ST. LUKES EAST - LEES SUMMIT | MO | 216 | $318.1M | -5.8% |
| LIBERTY HOSPITAL | MO | 199 | $303.2M | -3.1% |
| PHELPS COUNTY REGIONAL MEDICAL | MO | 196 | $270.3M | 33.1% |
| LAKE REGIONAL HEALTH SYSTEM | MO | 105 | $226.8M | -2.7% |
| HANNIBAL REGIONAL HOSPITAL | MO | 86 | $226.2M | -6.8% |
| SSM HEALTH ST CLARE HOSPITAL | MO | 180 | $225.5M | 2.8% |
| CAPITAL REGION MEDICAL CENTER | MO | 100 | $224.0M | -17.7% |
| BARNES JEWISH WEST COUNTY HOSP | MO | 68 | $221.1M | 4.9% |
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: $13.5M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $3.9M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $3.7M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $3.6M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $2.2M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $118K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-11.7M |
| + RCM Uplift | +$13.5M |
| Pro Forma EBITDA | $1.8M |
| Current Margin | -6.4% |
| Pro Forma Margin | 1.0% |
| WC Released (1x) | $7.0M |
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 | $-18.0M | $58.0M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-18.0M | $57.9M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-16.2M | $96.7M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-16.2M | $100.7M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-19.8M | $-3.8M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-19.8M | $-10.6M | 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 |
| Low | Low net-to-gross ratio | Large contractual allowances suggest pricing discipline issues. Mitigant: payer renegotiation is an additional upside lever |
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
- 39 hospitals with 54-216 beds
- Same-state prioritization (n=40)
- Comp margins: P25=-9.2% / P50=0.4% / P75=12.7%
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.