AURELIA OSBORN FOX MEMORIAL HOSPITAL
1. Target Overview & Investment Thesis
AURELIA OSBORN FOX MEMORIAL HOSPITAL is a 53-bed rural/critical access in OTSEGO, NY with $78.8M in net patient revenue and a -9.8% operating margin. The hospital serves a payer mix of 52.4% Medicare, 1.5% Medicaid, and 46.1% commercial.
Thesis: Turnaround. Our ML models identify $5.8M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -9.8% to -2.5% (+736bps).
| Net Revenue HCRIS | $78.8M |
| Current EBITDA COMPUTED | $-7.7M |
| Operating Margin COMPUTED | -9.8% |
| Occupancy HCRIS | 26.1% |
| Revenue / Bed COMPUTED | $1.5M |
| Net-to-Gross HCRIS | 35.0% |
| Distress Probability ML | 54.1% |
2. Market Context & Competitive Position
NY has 196 Medicare-certified hospitals with a median operating margin of -17.5%. The target's margin of -9.8% places it above the state median. Among 33 size-comparable peers (26-106 beds), the median margin is -15.1%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (26-106), prioritizing same-state peers. 33 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| AURELIA OSBORN FOX MEMORIAL HO (Target) | NY | 53 | $78.8M | -9.8% |
| CANTON-POTSDAM HOSPITAL | NY | 94 | $231.6M | -5.7% |
| ST. JOSEPHS MEDICAL CENTER | NY | 106 | $212.9M | -24.1% |
| GLEN COVE HOSPITAL | NY | 54 | $176.5M | -24.6% |
| NORTHERN DUTCHESS HOSPITAL | NY | 79 | $176.1M | 4.9% |
| CORNING HOSPITAL | NY | 65 | $169.3M | 5.0% |
| ST. MARYS HEALTHCARE | NY | 100 | $151.8M | -21.9% |
| ONEIDA HEALTH | NY | 101 | $131.1M | -11.5% |
| AUBURN MEMORIAL HOSPITAL | NY | 85 | $129.6M | -8.8% |
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: $5.8M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $1.7M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $1.6M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $1.6M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $959K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $50K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-7.7M |
| + RCM Uplift | +$5.8M |
| Pro Forma EBITDA | $-1.9M |
| Current Margin | -9.8% |
| Pro Forma Margin | -2.5% |
| WC Released (1x) | $3.0M |
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 | $-11.9M | $6.9M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-11.9M | $3.8M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-10.7M | $19.0M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-10.7M | $17.6M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-13.1M | $-18.2M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-13.1M | $-24.3M | 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 | Low occupancy | At 26.1%, 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 54.1% 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
- 33 hospitals with 26-106 beds
- Same-state prioritization (n=34)
- Comp margins: P25=-24.5% / P50=-15.1% / P75=-8.9%
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.