UNM SANDOVAL REGIONAL MEDICAL CENTER
1. Target Overview & Investment Thesis
UNM SANDOVAL REGIONAL MEDICAL CENTER is a 60-bed suburban community hospital in SANDOVAL, NM with $104.5M in net patient revenue and a -11.9% operating margin. The hospital serves a payer mix of 23.7% Medicare, 3.8% Medicaid, and 72.5% commercial.
Thesis: Turnaround. Our ML models identify $7.7M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -11.9% to -4.5% (+736bps).
| Net Revenue HCRIS | $104.5M |
| Current EBITDA COMPUTED | $-12.4M |
| Operating Margin COMPUTED | -11.9% |
| Occupancy HCRIS | 73.4% |
| Revenue / Bed COMPUTED | $1.7M |
| Net-to-Gross HCRIS | 40.3% |
| Distress Probability ML | 42.7% |
2. Market Context & Competitive Position
NM has 55 Medicare-certified hospitals with a median operating margin of -2.7%. The target's margin of -11.9% places it below the state median. Among 24 size-comparable peers (30-120 beds), the median margin is 5.9%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (30-120), prioritizing same-state peers. 24 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| UNM SANDOVAL REGIONAL MEDICAL (Target) | NM | 60 | $104.5M | -11.9% |
| GERALD CHAMPION REGIONAL MEDIC | NM | 66 | $245.9M | -11.6% |
| EASTERN NEW MEXICO MEDICAL CEN | NM | 120 | $117.8M | 54.3% |
| PLAINS REGIONAL MEDICAL CTR - | NM | 100 | $113.3M | -1.4% |
| 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% |
| LOVELACE WESTSIDE HOSPITAL | NM | 92 | $65.1M | 8.9% |
| LOVELACE REHABILITATION HOSPIT | NM | 58 | $54.8M | 22.0% |
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: $7.7M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $2.2M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $2.1M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $2.1M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.3M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $67K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-12.4M |
| + RCM Uplift | +$7.7M |
| Pro Forma EBITDA | $-4.8M |
| Current Margin | -11.9% |
| Pro Forma Margin | -4.5% |
| WC Released (1x) | $4.0M |
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 | $-19.2M | $-5.2M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-19.2M | $-11.9M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-17.2M | $7.2M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-17.2M | $2.8M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-21.1M | $-37.4M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-21.1M | $-48.0M | 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
- 24 hospitals with 30-120 beds
- Same-state prioritization (n=25)
- Comp margins: P25=-9.7% / P50=5.9% / P75=12.8%
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.