BARNES JEWISH WEST COUNTY HOSPITAL
1. Target Overview & Investment Thesis
BARNES JEWISH WEST COUNTY HOSPITAL is a 68-bed suburban community hospital in ST. LOUIS, MO with $221.1M in net patient revenue and a 4.9% operating margin. The hospital serves a payer mix of 29.1% Medicare, 7.1% Medicaid, and 63.8% commercial.
Thesis: Turnaround. Our ML models identify $16.3M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 4.9% to 12.3% (+736bps).
| Net Revenue HCRIS | $221.1M |
| Current EBITDA COMPUTED | $10.9M |
| Operating Margin COMPUTED | 4.9% |
| Occupancy HCRIS | 44.6% |
| Revenue / Bed COMPUTED | $3.3M |
| Net-to-Gross HCRIS | 27.1% |
| Distress Probability ML | 46.7% |
2. Market Context & Competitive Position
MO has 138 Medicare-certified hospitals with a median operating margin of -6.2%. The target's margin of 4.9% places it above the state median. Among 50 size-comparable peers (34-136 beds), the median margin is -6.6%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (34-136), prioritizing same-state peers. 50 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| BARNES JEWISH WEST COUNTY HOSP (Target) | MO | 68 | $221.1M | 4.9% |
| LAKE REGIONAL HEALTH SYSTEM | MO | 105 | $226.8M | -2.7% |
| HANNIBAL REGIONAL HOSPITAL | MO | 86 | $226.2M | -6.8% |
| CAPITAL REGION MEDICAL CENTER | MO | 100 | $224.0M | -17.7% |
| SAINT LUKES NORTH HOSPITAL | MO | 108 | $183.6M | -6.4% |
| CITIZENS MEMORIAL HOSPITAL DIS | MO | 52 | $178.3M | -19.3% |
| BARNES JEWISH ST. PETERS HOSPI | MO | 110 | $177.0M | 2.7% |
| UNIVERSITY HEALTH LAKEWOOD MED | MO | 117 | $158.8M | -34.6% |
| BOTHWELL REGIONAL HEALTH CENTE | MO | 108 | $156.0M | -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: $16.3M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $4.6M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $4.4M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $4.4M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $2.7M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $142K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $10.9M |
| + RCM Uplift | +$16.3M |
| Pro Forma EBITDA | $27.2M |
| Current Margin | 4.9% |
| Pro Forma Margin | 12.3% |
| WC Released (1x) | $8.5M |
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 | $16.8M | $235.0M | 13.96x | 69.4% |
| Base (11x exit) | 10.0x | 11.0x | $16.8M | $263.9M | 15.68x | 73.4% |
| Bull Case | 9.0x | 11.0x | $15.2M | $323.1M | 21.33x | 84.4% |
| Bull (12x exit) | 9.0x | 12.0x | $15.2M | $356.9M | 23.56x | 88.1% |
| Bear Case | 11.0x | 10.0x | $18.5M | $148.1M | 8.00x | 51.6% |
| Bear (11x exit) | 11.0x | 11.0x | $18.5M | $168.9M | 9.12x | 55.6% |
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
- 50 hospitals with 34-136 beds
- Same-state prioritization (n=51)
- Comp margins: P25=-16.3% / P50=-6.6% / P75=11.0%
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.