FREMONT HEALTH
1. Target Overview & Investment Thesis
FREMONT HEALTH is a 50-bed suburban community hospital in DODGE, NE with $130.0M in net patient revenue and a 7.1% operating margin. The hospital serves a payer mix of 41.5% Medicare, 4.4% Medicaid, and 54.1% commercial.
Thesis: Turnaround. Our ML models identify $9.6M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 7.1% to 14.4% (+736bps).
| Net Revenue HCRIS | $130.0M |
| Current EBITDA COMPUTED | $9.2M |
| Operating Margin COMPUTED | 7.1% |
| Occupancy HCRIS | 46.7% |
| Revenue / Bed COMPUTED | $2.6M |
| Net-to-Gross HCRIS | 37.0% |
| Distress Probability ML | 48.1% |
2. Market Context & Competitive Position
NE has 98 Medicare-certified hospitals with a median operating margin of -6.3%. The target's margin of 7.1% places it above the state median. Among 29 size-comparable peers (25-100 beds), the median margin is -2.1%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (25-100), prioritizing same-state peers. 29 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| FREMONT HEALTH (Target) | NE | 50 | $130.0M | 7.1% |
| GREAT PLAINS HEALTH | NE | 96 | $268.8M | 3.9% |
| MARY LANNING MEMORIAL HOSPITAL | NE | 97 | $200.0M | -8.9% |
| MADONNA REHABILITATION LTC HOS | NE | 77 | $177.1M | -8.8% |
| MADONNA REHAB OMAHA LTC HOSPIT | NE | 67 | $177.1M | -8.8% |
| MADONNA REHABILITATION HOSPITA | NE | 67 | $177.1M | -8.8% |
| BOYS TOWN NATIONAL RESEARCH HO | NE | 52 | $173.1M | -29.1% |
| MADONNA REHABILITATION HOSPITA | NE | 62 | $170.3M | -2.1% |
| KEARNEY REGIONAL MEDICAL CENTE | NE | 93 | $145.9M | -9.7% |
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: $9.6M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $2.7M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $2.6M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $2.6M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.6M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $83K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $9.2M |
| + RCM Uplift | +$9.6M |
| Pro Forma EBITDA | $18.7M |
| Current Margin | 7.1% |
| Pro Forma Margin | 14.4% |
| WC Released (1x) | $5.0M |
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 | $14.1M | $156.1M | 11.07x | 61.8% |
| Base (11x exit) | 10.0x | 11.0x | $14.1M | $176.3M | 12.51x | 65.7% |
| Bull Case | 9.0x | 11.0x | $12.7M | $212.5M | 16.74x | 75.7% |
| Bull (12x exit) | 9.0x | 12.0x | $12.7M | $235.5M | 18.56x | 79.4% |
| Bear Case | 11.0x | 10.0x | $15.5M | $103.7M | 6.69x | 46.2% |
| Bear (11x exit) | 11.0x | 11.0x | $15.5M | $119.1M | 7.68x | 50.3% |
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
- 29 hospitals with 25-100 beds
- Same-state prioritization (n=30)
- Comp margins: P25=-8.9% / P50=-2.1% / P75=0.9%
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.