CASS REGIONAL MEDICAL CENTER
1. Target Overview & Investment Thesis
CASS REGIONAL MEDICAL CENTER is a 25-bed suburban community hospital in CASS, MO with $89.9M in net patient revenue and a 5.4% operating margin. The hospital serves a payer mix of 28.2% Medicare, 6.8% Medicaid, and 65.0% commercial.
Thesis: Turnaround. Our ML models identify $6.6M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 5.4% to 12.7% (+736bps).
| Net Revenue HCRIS | $89.9M |
| Current EBITDA COMPUTED | $4.8M |
| Operating Margin COMPUTED | 5.4% |
| Occupancy HCRIS | 41.3% |
| Revenue / Bed COMPUTED | $3.6M |
| Net-to-Gross HCRIS | 29.2% |
| Distress Probability ML | 47.0% |
2. Market Context & Competitive Position
MO has 138 Medicare-certified hospitals with a median operating margin of -6.2%. The target's margin of 5.4% places it above the state median. Among 61 size-comparable peers (12-50 beds), the median margin is -9.8%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (12-50), prioritizing same-state peers. 61 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| CASS REGIONAL MEDICAL CENTER (Target) | MO | 25 | $89.9M | 5.4% |
| GOLDEN VALLEY MEMORIAL HOSPITA | MO | 42 | $139.8M | -4.9% |
| WESTERN MISSOURI MEDICAL CENTE | MO | 45 | $108.5M | -9.2% |
| MERCY HOSPITAL LEBANON | MO | 43 | $94.1M | 15.5% |
| MISSOURI BAPTIST SULLIVAN HOSP | MO | 25 | $73.4M | 2.7% |
| MOSAIC MEDICAL CENTER - MARYVI | MO | 29 | $73.3M | -40.5% |
| NORTHEAST REGIONAL MEDICAL CEN | MO | 40 | $70.6M | 43.6% |
| FULTON STATE HOSPITAL | MO | 49 | $68.9M | -50.0% |
| CAMERON REGIONAL MEDICAL CENTE | MO | 42 | $65.0M | -12.0% |
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: $6.6M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $1.9M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $1.8M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $1.8M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.1M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $58K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $4.8M |
| + RCM Uplift | +$6.6M |
| Pro Forma EBITDA | $11.4M |
| Current Margin | 5.4% |
| Pro Forma Margin | 12.7% |
| WC Released (1x) | $3.4M |
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 | $7.4M | $98.0M | 13.20x | 67.5% |
| Base (11x exit) | 10.0x | 11.0x | $7.4M | $110.2M | 14.84x | 71.5% |
| Bull Case | 9.0x | 11.0x | $6.7M | $134.4M | 20.12x | 82.3% |
| Bull (12x exit) | 9.0x | 12.0x | $6.7M | $148.6M | 22.25x | 86.0% |
| Bear Case | 11.0x | 10.0x | $8.2M | $62.5M | 7.65x | 50.2% |
| Bear (11x exit) | 11.0x | 11.0x | $8.2M | $71.4M | 8.74x | 54.3% |
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
- 61 hospitals with 12-50 beds
- Same-state prioritization (n=62)
- Comp margins: P25=-17.8% / P50=-9.8% / P75=-1.6%
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.