REHABILITATION HOSPITAL OF MONTANA
1. Target Overview & Investment Thesis
REHABILITATION HOSPITAL OF MONTANA is a 34-bed suburban community hospital in YELLOWSTONE, MT with $15.1M in net patient revenue and a 21.9% operating margin. The hospital serves a payer mix of 61.8% Medicare, 4.2% Medicaid, and 34.0% commercial.
Thesis: Turnaround. Our ML models identify $1.1M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 21.9% to 29.3% (+736bps).
| Net Revenue HCRIS | $15.1M |
| Current EBITDA COMPUTED | $3.3M |
| Operating Margin COMPUTED | 21.9% |
| Occupancy HCRIS | 62.2% |
| Revenue / Bed COMPUTED | $444K |
| Net-to-Gross HCRIS | 57.0% |
| Distress Probability ML | 50.7% |
2. Market Context & Competitive Position
MT has 66 Medicare-certified hospitals with a median operating margin of -9.6%. The target's margin of 21.9% places it above the state median. Among 45 size-comparable peers (17-68 beds), the median margin is -9.5%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (17-68), prioritizing same-state peers. 45 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| REHABILITATION HOSPITAL OF MON (Target) | MT | 34 | $15.1M | 21.9% |
| GREAT FALLS CLINIC MEDICAL CEN | MT | 20 | $132.1M | 21.0% |
| MARCUS DALY MEMORIAL HOSPITAL | MT | 25 | $107.6M | -1.3% |
| LOGAN HEALTH WHITEFISH | MT | 25 | $101.8M | 13.8% |
| SIDNEY HEALTH CENTER | MT | 25 | $95.2M | -6.3% |
| NORTHERN MONTANA HOSPITAL | MT | 49 | $93.3M | -4.7% |
| COMMUNITY HOSPITAL OF ANACONDA | MT | 25 | $89.0M | 1.3% |
| LIVINGSTON HEALTHCARE | MT | 25 | $72.6M | -7.1% |
| HOLY ROSARY HEALTHCARE | MT | 25 | $67.3M | 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: $1.1M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $317K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $302K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $299K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $184K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $3.3M |
| + RCM Uplift | +$1.1M |
| Pro Forma EBITDA | $4.4M |
| Current Margin | 21.9% |
| Pro Forma Margin | 29.3% |
| WC Released (1x) | $580K |
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 | $5.1M | $33.0M | 6.47x | 45.3% |
| Base (11x exit) | 10.0x | 11.0x | $5.1M | $37.9M | 7.44x | 49.4% |
| Bull Case | 9.0x | 11.0x | $4.6M | $43.2M | 9.43x | 56.6% |
| Bull (12x exit) | 9.0x | 12.0x | $4.6M | $48.5M | 10.58x | 60.3% |
| Bear Case | 11.0x | 10.0x | $5.6M | $25.7M | 4.60x | 35.7% |
| Bear (11x exit) | 11.0x | 11.0x | $5.6M | $30.1M | 5.38x | 40.0% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Heavy Medicare dependence | Medicare comprises 61.8% of days; rate updates may lag inflation. Mitigant: CDI/CMI lever directly increases Medicare reimbursement |
| High | Elevated distress probability | Model estimates 50.7% 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
- 45 hospitals with 17-68 beds
- Same-state prioritization (n=46)
- Comp margins: P25=-21.6% / P50=-9.5% / P75=-1.4%
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.