THE MOUNT VERNON HOSPITAL
1. Target Overview & Investment Thesis
THE MOUNT VERNON HOSPITAL is a 63-bed under-performing / distressed in WESTCHESTER, NY with $56.2M in net patient revenue and a -56.0% operating margin. The hospital serves a payer mix of 13.6% Medicare, 20.0% Medicaid, and 66.4% commercial.
Thesis: Turnaround. Our ML models identify $4.1M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -56.0% to -48.6% (+736bps).
| Net Revenue HCRIS | $56.2M |
| Current EBITDA COMPUTED | $-31.4M |
| Operating Margin COMPUTED | -56.0% |
| Occupancy HCRIS | 22.9% |
| Revenue / Bed COMPUTED | $891K |
| Net-to-Gross HCRIS | 30.3% |
| Distress Probability ML | 58.1% |
2. Market Context & Competitive Position
NY has 196 Medicare-certified hospitals with a median operating margin of -17.5%. The target's margin of -56.0% places it below the state median. Among 43 size-comparable peers (32-126 beds), the median margin is -14.1%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (32-126), prioritizing same-state peers. 43 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| THE MOUNT VERNON HOSPITAL (Target) | NY | 63 | $56.2M | -56.0% |
| CAYUGA MEDICAL CENTER AT ITHAC | NY | 107 | $302.3M | -13.1% |
| CANTON-POTSDAM HOSPITAL | NY | 94 | $231.6M | -5.7% |
| EPISCOPAL HEALTH SERVICES | NY | 126 | $214.7M | -50.0% |
| ST. JOSEPHS MEDICAL CENTER | NY | 106 | $212.9M | -24.1% |
| FREDRICK FERRIS THOMPSON HOSPI | NY | 113 | $197.8M | -9.0% |
| 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% |
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: $4.1M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $1.2M | +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% | $683K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $36K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-31.4M |
| + RCM Uplift | +$4.1M |
| Pro Forma EBITDA | $-27.3M |
| Current Margin | -56.0% |
| Pro Forma Margin | -48.6% |
| WC Released (1x) | $2.2M |
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 | $-48.4M | $-166.0M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-48.4M | $-198.3M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-43.5M | $-200.4M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-43.5M | $-231.4M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-53.2M | $-171.0M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-53.2M | $-205.3M | 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 22.9%, 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 58.1% 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
- 43 hospitals with 32-126 beds
- Same-state prioritization (n=44)
- Comp margins: P25=-26.1% / P50=-14.1% / P75=-9.0%
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.