GRANT MEDICAL CENTER
1. Target Overview & Investment Thesis
GRANT MEDICAL CENTER is a 448-bed suburban community hospital in FRANKLIN, OH with $1.01B in net patient revenue and a 8.1% operating margin. The hospital serves a payer mix of 17.4% Medicare, 9.2% Medicaid, and 73.4% commercial.
Thesis: Platform Growth. Our ML models identify $74.5M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 8.1% to 15.4% (+736bps).
| Net Revenue HCRIS | $1.01B |
| Current EBITDA COMPUTED | $81.7M |
| Operating Margin COMPUTED | 8.1% |
| Occupancy HCRIS | 67.6% |
| Revenue / Bed COMPUTED | $2.3M |
| Net-to-Gross HCRIS | 26.9% |
| Distress Probability ML | 44.2% |
2. Market Context & Competitive Position
OH has 235 Medicare-certified hospitals with a median operating margin of -0.3%. The target's margin of 8.1% places it above the state median. Among 35 size-comparable peers (224-896 beds), the median margin is -0.1%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (224-896), prioritizing same-state peers. 35 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| GRANT MEDICAL CENTER (Target) | OH | 448 | $1.01B | 8.1% |
| CHILDRENS HOSPITAL MEDICAL CEN | OH | 711 | $2.51B | -20.1% |
| UH CLEVELAND MEDICAL CENTER | OH | 660 | $2.22B | -5.0% |
| RAINBOW BABIES & CHILDRENS HOS | OH | 231 | $2.22B | -5.0% |
| NATIONWIDE CHILDRENS HOSPITAL | OH | 694 | $2.05B | 8.1% |
| ARTHUR G JAMES CANCER HOSPITAL | OH | 356 | $1.95B | 21.0% |
| RIVERSIDE METHODIST HOSPITAL | OH | 743 | $1.70B | 3.4% |
| THE TOLEDO HOSPITAL | OH | 732 | $1.34B | 0.8% |
| UNIVER.OF CINCINNATI MED CENTE | OH | 542 | $1.30B | 2.8% |
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: $74.5M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $21.3M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $20.2M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $20.0M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $12.3M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $648K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $81.7M |
| + RCM Uplift | +$74.5M |
| Pro Forma EBITDA | $156.3M |
| Current Margin | 8.1% |
| Pro Forma Margin | 15.4% |
| WC Released (1x) | $38.8M |
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 | $125.8M | $1.28B | 10.21x | 59.2% |
| Base (11x exit) | 10.0x | 11.0x | $125.8M | $1.45B | 11.56x | 63.1% |
| Bull Case | 9.0x | 11.0x | $113.2M | $1.74B | 15.38x | 72.7% |
| Bull (12x exit) | 9.0x | 12.0x | $113.2M | $1.93B | 17.07x | 76.4% |
| Bear Case | 11.0x | 10.0x | $138.3M | $870.9M | 6.30x | 44.5% |
| Bear (11x exit) | 11.0x | 11.0x | $138.3M | $1.00B | 7.25x | 48.6% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Standard execution risk | RCM improvement requires management buy-in and 12-18 month implementation timeline |
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
- 35 hospitals with 224-896 beds
- Same-state prioritization (n=36)
- Comp margins: P25=-6.1% / P50=-0.1% / P75=4.1%
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.