LOS ALAMOS MEDICAL CENTER
1. Target Overview & Investment Thesis
LOS ALAMOS MEDICAL CENTER is a 47-bed rural/critical access in LOS ALAMOS, NM with $54.2M in net patient revenue and a 5.0% operating margin. The hospital serves a payer mix of 47.3% Medicare, 0.2% Medicaid, and 52.5% commercial.
Thesis: Turnaround. Our ML models identify $4.0M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 5.0% to 12.4% (+736bps).
| Net Revenue HCRIS | $54.2M |
| Current EBITDA COMPUTED | $2.7M |
| Operating Margin COMPUTED | 5.0% |
| Occupancy HCRIS | 10.9% |
| Revenue / Bed COMPUTED | $1.2M |
| Net-to-Gross HCRIS | 33.1% |
| Distress Probability ML | 57.2% |
2. Market Context & Competitive Position
NM has 55 Medicare-certified hospitals with a median operating margin of -2.7%. The target's margin of 5.0% places it above the state median. Among 34 size-comparable peers (24-94 beds), the median margin is -3.2%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (24-94), prioritizing same-state peers. 34 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| LOS ALAMOS MEDICAL CENTER (Target) | NM | 47 | $54.2M | 5.0% |
| GERALD CHAMPION REGIONAL MEDIC | NM | 66 | $245.9M | -11.6% |
| NOR-LEA HOSPITAL | NM | 25 | $131.5M | 0.9% |
| UNM SANDOVAL REGIONAL MEDICAL | NM | 60 | $104.5M | -11.9% |
| CARLSBAD MEDICAL CENTER | NM | 53 | $97.1M | 19.9% |
| SANTA FE MEDICAL CENTER | NM | 36 | $95.0M | -26.5% |
| ESPANOLA HOSPITAL | NM | 70 | $84.1M | -2.3% |
| GILA REGIONAL MEDICAL CENTER | NM | 25 | $83.6M | -3.6% |
| HOLY CROSS HOSPITAL | NM | 25 | $72.9M | -20.0% |
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: $4.0M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $1.1M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $1.1M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $1.1M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $659K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $35K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $2.7M |
| + RCM Uplift | +$4.0M |
| Pro Forma EBITDA | $6.7M |
| Current Margin | 5.0% |
| Pro Forma Margin | 12.4% |
| WC Released (1x) | $2.1M |
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 | $4.2M | $57.8M | 13.81x | 69.1% |
| Base (11x exit) | 10.0x | 11.0x | $4.2M | $65.0M | 15.51x | 73.0% |
| Bull Case | 9.0x | 11.0x | $3.8M | $79.5M | 21.09x | 84.0% |
| Bull (12x exit) | 9.0x | 12.0x | $3.8M | $87.8M | 23.30x | 87.7% |
| Bear Case | 11.0x | 10.0x | $4.6M | $36.5M | 7.93x | 51.3% |
| Bear (11x exit) | 11.0x | 11.0x | $4.6M | $41.7M | 9.05x | 55.4% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Low occupancy | At 10.9%, 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 57.2% 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
- 34 hospitals with 24-94 beds
- Same-state prioritization (n=35)
- Comp margins: P25=-20.6% / P50=-3.2% / P75=8.8%
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.