SSM HEALTH ST CLARE HOSPITAL
1. Target Overview & Investment Thesis
SSM HEALTH ST CLARE HOSPITAL is a 180-bed suburban community hospital in ST. LOUIS, MO with $225.5M in net patient revenue and a 2.8% operating margin. The hospital serves a payer mix of 24.3% Medicare, 6.9% Medicaid, and 68.8% commercial.
Thesis: Undervalued. Our ML models identify $16.6M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 2.8% to 10.1% (+736bps).
| Net Revenue HCRIS | $225.5M |
| Current EBITDA COMPUTED | $6.2M |
| Operating Margin COMPUTED | 2.8% |
| Occupancy HCRIS | 66.5% |
| Revenue / Bed COMPUTED | $1.3M |
| Net-to-Gross HCRIS | 28.7% |
| Distress Probability ML | 44.9% |
2. Market Context & Competitive Position
MO has 138 Medicare-certified hospitals with a median operating margin of -6.2%. The target's margin of 2.8% places it above the state median. Among 41 size-comparable peers (90-360 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 (90-360), prioritizing same-state peers. 41 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| SSM HEALTH ST CLARE HOSPITAL (Target) | MO | 180 | $225.5M | 2.8% |
| 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% |
| SAINT FRANCIS MEDICAL CENTER | MO | 282 | $556.6M | -1.3% |
| UNIVERSITY HEALTH TRUMAN MED C | MO | 258 | $540.8M | -13.5% |
| AMEND #2 RESEARCH MEDICAL CENT | MO | 337 | $487.0M | -5.2% |
| AMEND 1 CENTERPOINT MEDICAL CE | MO | 265 | $378.8M | 19.2% |
| BOONE HOSPITAL CENTER | MO | 278 | $346.5M | -22.5% |
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: $16.6M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $4.7M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $4.5M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $4.5M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $2.7M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $144K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $6.2M |
| + RCM Uplift | +$16.6M |
| Pro Forma EBITDA | $22.8M |
| Current Margin | 2.8% |
| Pro Forma Margin | 10.1% |
| WC Released (1x) | $8.6M |
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 | $9.6M | $207.0M | 21.61x | 84.9% |
| Base (11x exit) | 10.0x | 11.0x | $9.6M | $230.9M | 24.09x | 89.0% |
| Bull Case | 9.0x | 11.0x | $8.6M | $288.7M | 33.48x | 101.8% |
| Bull (12x exit) | 9.0x | 12.0x | $8.6M | $317.5M | 36.82x | 105.7% |
| Bear Case | 11.0x | 10.0x | $10.5M | $121.0M | 11.48x | 62.9% |
| Bear (11x exit) | 11.0x | 11.0x | $10.5M | $136.5M | 12.95x | 66.9% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Standard execution risk | RCM improvement requires management buy-in and 12-18 month implementation timeline |
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
- 41 hospitals with 90-360 beds
- Same-state prioritization (n=42)
- Comp margins: P25=-15.2% / P50=-3.2% / P75=6.9%
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.