SAINT BARNABAS BEHAVIORAL HEALTH CEN
1. Target Overview & Investment Thesis
SAINT BARNABAS BEHAVIORAL HEALTH CEN is a 40-bed under-performing / distressed in OCEAN, NJ with $10.1M in net patient revenue and a -25.7% operating margin. The hospital serves a payer mix of 28.6% Medicare, 1.0% Medicaid, and 70.4% commercial.
Thesis: Turnaround. Our ML models identify $749K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -25.7% to -18.3% (+742bps).
| Net Revenue HCRIS | $10.1M |
| Current EBITDA COMPUTED | $-2.6M |
| Operating Margin COMPUTED | -25.7% |
| Occupancy HCRIS | 70.8% |
| Revenue / Bed COMPUTED | $252K |
| Net-to-Gross HCRIS | 54.5% |
| Distress Probability ML | 46.5% |
2. Market Context & Competitive Position
NJ has 95 Medicare-certified hospitals with a median operating margin of -3.9%. The target's margin of -25.7% places it below the state median. Among 18 size-comparable peers (20-80 beds), the median margin is -1.3%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (20-80), prioritizing same-state peers. 18 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| SAINT BARNABAS BEHAVIORAL HEAL (Target) | NJ | 40 | $10.1M | -25.7% |
| CHILDRENS SPECIALIZED HOPSITAL | NJ | 68 | $150.1M | -18.1% |
| HACKENSACK UMC AT PASCACK VALL | NJ | 78 | $148.8M | 15.0% |
| RAMAPO RIDGE PSYCHIATRIC | NJ | 58 | $78.4M | -34.4% |
| SILVER LAKE (12 MONTH FOR FILI | NJ | 63 | $55.3M | -24.8% |
| MARLTON REHAB HOSPITAL | NJ | 61 | $38.4M | 9.5% |
| UNIVERSITY BEHAVIORAL HEALTHCA | NJ | 64 | $38.1M | -50.0% |
| SSH WILLINGBORO | NJ | 69 | $32.9M | 9.2% |
| SSH - NORTHEAST NEW JERSEY IN | NJ | 62 | $29.8M | 1.8% |
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: $749K (742bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $212K | +210bp | 18mo |
| Denial Rate Reduction | 12.0% | 6.5% | $203K | +201bp | 12mo |
| Cost to Collect | 4.5% | 2.5% | $202K | +200bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $123K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +10bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-2.6M |
| + RCM Uplift | +$749K |
| Pro Forma EBITDA | $-1.8M |
| Current Margin | -25.7% |
| Pro Forma Margin | -18.3% |
| WC Released (1x) | $387K |
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 | $-4.0M | $-9.6M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-4.0M | $-11.9M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-3.6M | $-10.7M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-3.6M | $-12.7M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-4.4M | $-12.1M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-4.4M | $-14.7M | 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 |
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
- 18 hospitals with 20-80 beds
- Same-state prioritization (n=19)
- Comp margins: P25=-23.2% / P50=-1.3% / P75=10.9%
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.