DUNDY COUNTY HOSPITAL
1. Target Overview & Investment Thesis
DUNDY COUNTY HOSPITAL is a 12-bed rural/critical access in DUNDY, NE with $9.7M in net patient revenue and a -35.7% operating margin. The hospital serves a payer mix of 83.2% Medicare, 3.0% Medicaid, and 13.8% commercial.
Thesis: Turnaround. Our ML models identify $724K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -35.7% to -28.2% (+742bps).
| Net Revenue HCRIS | $9.7M |
| Current EBITDA COMPUTED | $-3.5M |
| Operating Margin COMPUTED | -35.7% |
| Occupancy HCRIS | 15.7% |
| Revenue / Bed COMPUTED | $812K |
| Net-to-Gross HCRIS | 72.3% |
| Distress Probability ML | 62.9% |
2. Market Context & Competitive Position
NE has 98 Medicare-certified hospitals with a median operating margin of -6.3%. The target's margin of -35.7% places it below the state median. Among 53 size-comparable peers (6-24 beds), the median margin is -7.1%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (6-24), prioritizing same-state peers. 53 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| DUNDY COUNTY HOSPITAL (Target) | NE | 12 | $9.7M | -35.7% |
| NEBRASKA ORTHOPAEDIC HOSPITAL | NE | 24 | $112.1M | 22.5% |
| LINCOLN SURGICAL HOSPITAL | NE | 20 | $80.9M | 18.8% |
| MIDWEST SURGICAL HOSPITAL | NE | 19 | $70.1M | 36.2% |
| SIDNEY REGIONAL MEDICAL CENTER | NE | 19 | $68.0M | 0.8% |
| MEMORIAL COMMUNITY HOSPITAL | NE | 21 | $44.8M | 1.2% |
| MEMORIAL HEALTH CARE SYSTEMS | NE | 24 | $42.0M | 4.4% |
| SAINT MARYS HOSPITAL | NE | 18 | $39.5M | 3.4% |
| SAUNDERS COUNTY HEALTH SERVICE | NE | 16 | $35.9M | -0.0% |
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: $724K (742bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $205K | +210bp | 18mo |
| Denial Rate Reduction | 12.0% | 6.5% | $196K | +201bp | 12mo |
| Cost to Collect | 4.5% | 2.5% | $195K | +200bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $119K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +10bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-3.5M |
| + RCM Uplift | +$724K |
| Pro Forma EBITDA | $-2.8M |
| Current Margin | -35.7% |
| Pro Forma Margin | -28.2% |
| WC Released (1x) | $374K |
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 | $-5.3M | $-15.7M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-5.3M | $-19.0M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-4.8M | $-18.3M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-4.8M | $-21.4M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-5.9M | $-17.6M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-5.9M | $-21.2M | 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 | Heavy Medicare dependence | Medicare comprises 83.2% of days; rate updates may lag inflation. Mitigant: CDI/CMI lever directly increases Medicare reimbursement |
| Medium | Low occupancy | At 15.7%, 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 62.9% 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
- 53 hospitals with 6-24 beds
- Same-state prioritization (n=54)
- Comp margins: P25=-13.3% / P50=-7.1% / P75=-0.0%
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 27, 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.