FORT HAMILTON HOSPITAL
1. Target Overview & Investment Thesis
FORT HAMILTON HOSPITAL is a 138-bed suburban community hospital in BUTLER, OH with $166.8M in net patient revenue and a -8.8% operating margin. The hospital serves a payer mix of 22.3% Medicare, 5.4% Medicaid, and 72.3% commercial.
Thesis: Undervalued. Our ML models identify $12.3M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -8.8% to -1.5% (+736bps).
| Net Revenue HCRIS | $166.8M |
| Current EBITDA COMPUTED | $-14.7M |
| Operating Margin COMPUTED | -8.8% |
| Occupancy HCRIS | 54.8% |
| Revenue / Bed COMPUTED | $1.2M |
| Net-to-Gross HCRIS | 17.8% |
| Distress Probability ML | 45.9% |
2. Market Context & Competitive Position
OH has 235 Medicare-certified hospitals with a median operating margin of -0.3%. The target's margin of -8.8% places it below the state median. Among 92 size-comparable peers (69-276 beds), the median margin is 0.2%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (69-276), prioritizing same-state peers. 92 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| FORT HAMILTON HOSPITAL (Target) | OH | 138 | $166.8M | -8.8% |
| RAINBOW BABIES & CHILDRENS HOS | OH | 231 | $2.22B | -5.0% |
| DAYTON CHILDRENS HOSPITAL | OH | 181 | $569.1M | 7.9% |
| MARIETTA MEMORIAL HOSPITAL | OH | 188 | $475.8M | -12.4% |
| ADENA REGIONAL MEDICAL CENTER | OH | 209 | $470.7M | 3.5% |
| SOUTHERN OHIO MEDICAL CENTER | OH | 192 | $424.3M | -4.9% |
| SOUTHWEST GENERAL HEALTH CENTE | OH | 191 | $406.9M | 2.5% |
| MEDCENTRAL HEALTH SYSTEM | OH | 240 | $382.6M | 0.2% |
| MARION GENERAL HOSPITAL | OH | 177 | $365.7M | 35.5% |
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: $12.3M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $3.5M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $3.3M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $3.3M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $2.0M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $107K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-14.7M |
| + RCM Uplift | +$12.3M |
| Pro Forma EBITDA | $-2.5M |
| Current Margin | -8.8% |
| Pro Forma Margin | -1.5% |
| WC Released (1x) | $6.4M |
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 | $-22.7M | $25.6M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-22.7M | $20.8M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-20.4M | $53.9M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-20.4M | $52.8M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-24.9M | $-28.5M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-24.9M | $-39.4M | 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 |
| Low | Low net-to-gross ratio | Large contractual allowances suggest pricing discipline issues. Mitigant: payer renegotiation is an additional upside lever |
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
- 92 hospitals with 69-276 beds
- Same-state prioritization (n=93)
- Comp margins: P25=-12.3% / P50=0.2% / 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.