ST. ELIZABETH HEALTH CENTER
1. Target Overview & Investment Thesis
ST. ELIZABETH HEALTH CENTER is a 341-bed suburban community hospital in MAHONING, OH with $461.6M in net patient revenue and a -2.7% operating margin. The hospital serves a payer mix of 22.2% Medicare, 3.7% Medicaid, and 74.1% commercial.
Thesis: Undervalued. Our ML models identify $34.0M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -2.7% to 4.7% (+736bps).
| Net Revenue HCRIS | $461.6M |
| Current EBITDA COMPUTED | $-12.3M |
| Operating Margin COMPUTED | -2.7% |
| Occupancy HCRIS | 72.1% |
| Revenue / Bed COMPUTED | $1.4M |
| Net-to-Gross HCRIS | 20.4% |
| Distress Probability ML | 42.2% |
2. Market Context & Competitive Position
OH has 235 Medicare-certified hospitals with a median operating margin of -0.3%. The target's margin of -2.7% places it below the state median. Among 52 size-comparable peers (170-682 beds), the median margin is 0.0%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (170-682), prioritizing same-state peers. 52 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ST. ELIZABETH HEALTH CENTER (Target) | OH | 341 | $461.6M | -2.7% |
| UH CLEVELAND MEDICAL CENTER | OH | 660 | $2.22B | -5.0% |
| RAINBOW BABIES & CHILDRENS HOS | OH | 231 | $2.22B | -5.0% |
| ARTHUR G JAMES CANCER HOSPITAL | OH | 356 | $1.95B | 21.0% |
| UNIVER.OF CINCINNATI MED CENTE | OH | 542 | $1.30B | 2.8% |
| METROHEALTH MEDICAL CENTER | OH | 580 | $1.18B | -35.5% |
| CHILDRENS HOSPITAL MEDICAL CEN | OH | 424 | $1.04B | -7.7% |
| GRANT MEDICAL CENTER | OH | 448 | $1.01B | 8.1% |
| SUMMA HEALTH SYSTEM | OH | 560 | $1.00B | -22.8% |
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: $34.0M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $9.7M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $9.2M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $9.1M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $5.6M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $295K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-12.3M |
| + RCM Uplift | +$34.0M |
| Pro Forma EBITDA | $21.6M |
| Current Margin | -2.7% |
| Pro Forma Margin | 4.7% |
| WC Released (1x) | $17.7M |
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 | $-19.0M | $258.4M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-19.0M | $278.1M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-17.1M | $384.1M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-17.1M | $413.9M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-20.9M | $94.7M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-20.9M | $97.4M | 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
- 52 hospitals with 170-682 beds
- Same-state prioritization (n=53)
- Comp margins: P25=-5.6% / P50=0.0% / P75=3.5%
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.