PROGRESS WEST HOSPITAL
1. Target Overview & Investment Thesis
PROGRESS WEST HOSPITAL is a 69-bed suburban community hospital in ST CHARLES, MO with $112.0M in net patient revenue and a 11.7% operating margin. The hospital serves a payer mix of 21.9% Medicare, 5.1% Medicaid, and 73.1% commercial.
Thesis: Turnaround. Our ML models identify $8.2M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 11.7% to 19.1% (+736bps).
| Net Revenue HCRIS | $112.0M |
| Current EBITDA COMPUTED | $13.2M |
| Operating Margin COMPUTED | 11.7% |
| Occupancy HCRIS | 75.0% |
| Revenue / Bed COMPUTED | $1.6M |
| Net-to-Gross HCRIS | 29.9% |
| Distress Probability ML | 41.7% |
2. Market Context & Competitive Position
MO has 138 Medicare-certified hospitals with a median operating margin of -6.2%. The target's margin of 11.7% places it above the state median. Among 50 size-comparable peers (34-138 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 (34-138), prioritizing same-state peers. 50 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| PROGRESS WEST HOSPITAL (Target) | MO | 69 | $112.0M | 11.7% |
| 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% |
| BARNES JEWISH WEST COUNTY HOSP | MO | 68 | $221.1M | 4.9% |
| 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% |
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: $8.2M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $2.4M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $2.2M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $2.2M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.4M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $72K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $13.2M |
| + RCM Uplift | +$8.2M |
| Pro Forma EBITDA | $21.4M |
| Current Margin | 11.7% |
| Pro Forma Margin | 19.1% |
| WC Released (1x) | $4.3M |
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 | $20.2M | $169.2M | 8.36x | 52.9% |
| Base (11x exit) | 10.0x | 11.0x | $20.2M | $192.7M | 9.52x | 56.9% |
| Bull Case | 9.0x | 11.0x | $18.2M | $226.5M | 12.43x | 65.5% |
| Bull (12x exit) | 9.0x | 12.0x | $18.2M | $252.4M | 13.86x | 69.2% |
| Bear Case | 11.0x | 10.0x | $22.3M | $121.4M | 5.45x | 40.4% |
| Bear (11x exit) | 11.0x | 11.0x | $22.3M | $140.8M | 6.32x | 44.6% |
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 34-138 beds
- Same-state prioritization (n=51)
- Comp margins: P25=-16.3% / P50=-6.6% / P75=8.8%
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.