FULTON MEDICAL CENTER
1. Target Overview & Investment Thesis
FULTON MEDICAL CENTER is a 18-bed under-performing / distressed in CALLAWAY, MO with $10.0M in net patient revenue and a -59.4% operating margin. The hospital serves a payer mix of 40.3% Medicare, 31.7% Medicaid, and 28.0% commercial.
Thesis: Turnaround. Our ML models identify $745K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -59.4% to -52.0% (+742bps).
| Net Revenue HCRIS | $10.0M |
| Current EBITDA COMPUTED | $-6.0M |
| Operating Margin COMPUTED | -59.4% |
| Occupancy HCRIS | 4.0% |
| Revenue / Bed COMPUTED | $558K |
| Net-to-Gross HCRIS | 41.5% |
| Distress Probability ML | 67.4% |
2. Market Context & Competitive Position
MO has 138 Medicare-certified hospitals with a median operating margin of -6.2%. The target's margin of -59.4% places it below the state median. Among 42 size-comparable peers (9-36 beds), the median margin is -9.3%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (9-36), prioritizing same-state peers. 42 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| FULTON MEDICAL CENTER (Target) | MO | 18 | $10.0M | -59.4% |
| CASS REGIONAL MEDICAL CENTER | MO | 25 | $89.9M | 5.4% |
| MISSOURI BAPTIST SULLIVAN HOSP | MO | 25 | $73.4M | 2.7% |
| MOSAIC MEDICAL CENTER - MARYVI | MO | 29 | $73.3M | -40.5% |
| HEDRICK MEDICAL CENTER | MO | 25 | $63.8M | 5.4% |
| COX-MONETT HOSPITAL | MO | 25 | $63.8M | 8.2% |
| STE. GENEVIEVE CO. MEMORIAL HO | MO | 25 | $61.0M | -6.8% |
| PERRY COUNTY MEMORIAL HOSPITAL | MO | 25 | $60.8M | -9.3% |
| MERCY HOSPITAL CARTHAGE | MO | 25 | $58.4M | 7.9% |
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: $745K (742bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $211K | +210bp | 18mo |
| Denial Rate Reduction | 12.0% | 6.5% | $201K | +201bp | 12mo |
| Cost to Collect | 4.5% | 2.5% | $201K | +200bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $122K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +10bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-6.0M |
| + RCM Uplift | +$745K |
| Pro Forma EBITDA | $-5.2M |
| Current Margin | -59.4% |
| Pro Forma Margin | -52.0% |
| WC Released (1x) | $385K |
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 | $-9.2M | $-31.9M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-9.2M | $-38.0M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-8.3M | $-38.6M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-8.3M | $-44.5M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-10.1M | $-32.6M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-10.1M | $-39.2M | 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 |
| Medium | Elevated Medicaid exposure (31.7%) | Medicaid reimburses below cost in most states. Mitigant: denial reduction lever has highest impact on Medicaid claims |
| Medium | Low occupancy | At 4.0%, fixed costs are spread over fewer patient days. Mitigant: volume growth is an additional upside lever not modeled in base case |
| High | Elevated distress probability | Model estimates 67.4% 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
- 42 hospitals with 9-36 beds
- Same-state prioritization (n=43)
- Comp margins: P25=-17.3% / P50=-9.3% / P75=-0.3%
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.