SSH - ATLANTIC CITY
1. Target Overview & Investment Thesis
SSH - ATLANTIC CITY is a 30-bed community hospital in ATLANTIC, NJ with $21.0M in net patient revenue and a 11.4% operating margin. The hospital serves a payer mix of 74.7% Medicare, 0.0% Medicaid, and 25.3% commercial.
Thesis: Turnaround. Our ML models identify $1.5M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 11.4% to 18.7% (+736bps).
| Net Revenue HCRIS | $21.0M |
| Current EBITDA COMPUTED | $2.4M |
| Operating Margin COMPUTED | 11.4% |
| Occupancy HCRIS | 67.4% |
| Revenue / Bed COMPUTED | $702K |
| Net-to-Gross HCRIS | 13.4% |
| Distress Probability ML | nan% |
2. Market Context & Competitive Position
NJ has 95 Medicare-certified hospitals with a median operating margin of -3.9%. The target's margin of 11.4% places it above the state median. Among 10 size-comparable peers (15-60 beds), the median margin is -5.9%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (15-60), prioritizing same-state peers. 10 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| SSH - ATLANTIC CITY (Target) | NJ | 30 | $21.0M | 11.4% |
| RAMAPO RIDGE PSYCHIATRIC | NJ | 58 | $78.4M | -34.4% |
| ENCOMPASS HEALTH REHABILITATIO | NJ | 60 | $28.9M | 18.0% |
| ASPEN HILLS HEALTHCARE CENTER | NJ | 30 | $26.2M | -12.7% |
| ENCOMPASS HEALTH REHABILITATIO | NJ | 41 | $25.7M | 21.2% |
| ST. LAWRENCE REHABILITATION CE | NJ | 60 | $24.9M | -27.1% |
| ATLANTIC REHABILITATION INSTIT | NJ | 38 | $23.2M | 22.9% |
| ACHS CENTRAL JERSEY | NJ | 50 | $20.6M | -5.9% |
| CORNERSTONE BEHAVIORAL HEALTH | NJ | 44 | $18.2M | -3.8% |
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: $1.5M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $442K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $421K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $417K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $256K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $13K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $2.4M |
| + RCM Uplift | +$1.5M |
| Pro Forma EBITDA | $3.9M |
| Current Margin | 11.4% |
| Pro Forma Margin | 18.7% |
| WC Released (1x) | $807K |
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 | $3.7M | $31.3M | 8.50x | 53.4% |
| Base (11x exit) | 10.0x | 11.0x | $3.7M | $35.6M | 9.67x | 57.4% |
| Bull Case | 9.0x | 11.0x | $3.3M | $41.9M | 12.65x | 66.1% |
| Bull (12x exit) | 9.0x | 12.0x | $3.3M | $46.7M | 14.10x | 69.8% |
| Bear Case | 11.0x | 10.0x | $4.0M | $22.3M | 5.52x | 40.7% |
| Bear (11x exit) | 11.0x | 11.0x | $4.0M | $25.9M | 6.39x | 44.9% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Heavy Medicare dependence | Medicare comprises 74.7% of days; rate updates may lag inflation. Mitigant: CDI/CMI lever directly increases Medicare reimbursement |
| Low | Low net-to-gross ratio | Large contractual allowances suggest pricing discipline issues. Mitigant: payer renegotiation is an additional upside lever |
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
- 10 hospitals with 15-60 beds
- Same-state prioritization (n=11)
- Comp margins: P25=-25.7% / P50=-5.9% / P75=18.0%
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 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.