ST. JAMES HOSPITAL
1. Target Overview & Investment Thesis
ST. JAMES HOSPITAL is a 15-bed suburban community hospital in STEUBEN, NY with $46.3M in net patient revenue and a -27.4% operating margin. The hospital serves a payer mix of 31.1% Medicare, 2.2% Medicaid, and 66.7% commercial.
Thesis: Turnaround. Our ML models identify $3.4M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -27.4% to -20.0% (+736bps).
| Net Revenue HCRIS | $46.3M |
| Current EBITDA COMPUTED | $-12.7M |
| Operating Margin COMPUTED | -27.4% |
| Occupancy HCRIS | 85.8% |
| Revenue / Bed COMPUTED | $3.1M |
| Net-to-Gross HCRIS | 36.3% |
| Distress Probability ML | 37.4% |
2. Market Context & Competitive Position
NY has 196 Medicare-certified hospitals with a median operating margin of -17.5%. The target's margin of -27.4% places it below the state median. Among 25 size-comparable peers (8-30 beds), the median margin is -14.5%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (8-30), prioritizing same-state peers. 25 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ST. JAMES HOSPITAL (Target) | NY | 15 | $46.3M | -27.4% |
| NEW YORK EYE AND EAR INFIRMARY | NY | 15 | $112.8M | -28.0% |
| LEWIS COUNTY GENERAL HOSPITAL | NY | 25 | $70.3M | -17.6% |
| CARTHAGE AREA HOSPITAL | NY | 25 | $59.4M | -12.3% |
| SUNNYVIEW HOSPITAL AND REHABIL | NY | 17 | $56.6M | -9.4% |
| COMMUNITY MEMORIAL HOSPITAL | NY | 25 | $53.2M | -6.7% |
| MASSENA MEMORIAL HOSPITAL | NY | 25 | $48.4M | -14.4% |
| ELIZABETHTOWN COMMUNITY HOSPIT | NY | 25 | $47.4M | -7.8% |
| LITTLE FALLS HOSPITAL | NY | 25 | $42.5M | 7.5% |
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: $3.4M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $971K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $925K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $916K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $563K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $30K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-12.7M |
| + RCM Uplift | +$3.4M |
| Pro Forma EBITDA | $-9.3M |
| Current Margin | -27.4% |
| Pro Forma Margin | -20.0% |
| WC Released (1x) | $1.8M |
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 | $-19.5M | $-49.6M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-19.5M | $-60.9M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-17.6M | $-56.0M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-17.6M | $-66.2M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-21.5M | $-60.3M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-21.5M | $-73.3M | 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 |
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
- 25 hospitals with 8-30 beds
- Same-state prioritization (n=26)
- Comp margins: P25=-25.7% / P50=-14.5% / P75=-7.5%
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.