KINGSBROOK JEWISH MEDICAL CENTER
1. Target Overview & Investment Thesis
KINGSBROOK JEWISH MEDICAL CENTER is a 2342-bed large academic medical center in KINGS, NY with $189.4M in net patient revenue and a -67.5% operating margin. The hospital serves a payer mix of 25.5% Medicare, 25.9% Medicaid, and 48.6% commercial.
Thesis: Undervalued. Our ML models identify $13.9M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -67.5% to -60.1% (+736bps).
| Net Revenue HCRIS | $189.4M |
| Current EBITDA COMPUTED | $-127.8M |
| Operating Margin COMPUTED | -67.5% |
| Occupancy HCRIS | 63.2% |
| Revenue / Bed COMPUTED | $81K |
| Net-to-Gross HCRIS | 25.0% |
| Distress Probability ML | 58.9% |
2. Market Context & Competitive Position
NY has 196 Medicare-certified hospitals with a median operating margin of -17.5%. The target's margin of -67.5% places it below the state median. Among 18 size-comparable peers (1171-4684 beds), the median margin is -6.9%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (1171-4684), prioritizing same-state peers. 18 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| KINGSBROOK JEWISH MEDICAL CENT (Target) | NY | 2342 | $189.4M | -67.5% |
| NEW YORK PRESBYTERIAN HOSPITAL | NY | 2850 | $7.69B | -1.4% |
| NYU LANGONE HOSPITALS | NY | 1618 | $7.24B | -7.8% |
| CLEVELAND CLINIC HOSPITAL | OH | 1326 | $6.38B | -17.7% |
| ADVENTHEALTH ORLANDO | FL | 2738 | $5.40B | 2.5% |
| INDIANA UNIVERSITY HEALTH | IN | 1269 | $3.58B | -38.4% |
| YALE NEW HAVEN HOSPITAL | CT | 1306 | $3.45B | -15.7% |
| MONTEFIORE MEDICAL CENTER | NY | 1410 | $3.01B | -50.0% |
| LEHIGH VALLEY | PA | 1190 | $2.84B | -5.9% |
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: $13.9M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $4.0M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $3.8M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $3.8M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $2.3M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $121K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-127.8M |
| + RCM Uplift | +$13.9M |
| Pro Forma EBITDA | $-113.8M |
| Current Margin | -67.5% |
| Pro Forma Margin | -60.1% |
| WC Released (1x) | $7.3M |
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 | $-196.6M | $-703.5M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-196.6M | $-837.7M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-176.9M | $-855.5M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-176.9M | $-985.5M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-216.3M | $-709.3M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-216.3M | $-850.5M | 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 | Elevated Medicaid exposure (25.9%) | Medicaid reimburses below cost in most states. Mitigant: denial reduction lever has highest impact on Medicaid claims |
| High | Elevated distress probability | Model estimates 58.9% 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
- 18 hospitals with 1171-4684 beds
- Same-state prioritization (n=4)
- Comp margins: P25=-17.2% / P50=-6.9% / P75=2.3%
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.