POMERENE HOSPITAL
1. Target Overview & Investment Thesis
POMERENE HOSPITAL is a 41-bed suburban community hospital in HOLMES, OH with $38.9M in net patient revenue and a 9.4% operating margin. The hospital serves a payer mix of 20.3% Medicare, 3.0% Medicaid, and 76.7% commercial.
Thesis: Turnaround. Our ML models identify $2.9M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 9.4% to 16.8% (+736bps).
| Net Revenue HCRIS | $38.9M |
| Current EBITDA COMPUTED | $3.7M |
| Operating Margin COMPUTED | 9.4% |
| Occupancy HCRIS | 23.5% |
| Revenue / Bed COMPUTED | $948K |
| Net-to-Gross HCRIS | 49.3% |
| Distress Probability ML | 56.0% |
2. Market Context & Competitive Position
OH has 235 Medicare-certified hospitals with a median operating margin of -0.3%. The target's margin of 9.4% places it above the state median. Among 110 size-comparable peers (20-82 beds), the median margin is -1.8%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (20-82), prioritizing same-state peers. 110 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| POMERENE HOSPITAL (Target) | OH | 41 | $38.9M | 9.4% |
| KNOX COMMUNITY HOSPITAL | OH | 64 | $196.0M | -16.7% |
| CRYSTAL CLINIC ORTHOPAEDIC CEN | OH | 59 | $173.3M | -14.9% |
| THE SURGICAL HOSPITAL AT SOUTH | OH | 24 | $166.6M | -3.1% |
| OBLENESS MEMORIAL HOSPITAL | OH | 67 | $160.9M | 29.9% |
| MEMORIAL HOSPITAL OF UNION COU | OH | 51 | $151.0M | 8.0% |
| FISHER-TITUS MEDICAL CENTER | OH | 78 | $148.3M | -6.9% |
| GRADY MEMORIAL HOSPITAL | OH | 60 | $146.7M | 16.5% |
| GALION COMMUNITY HOSPITAL | OH | 25 | $128.2M | 16.6% |
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: $2.9M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $816K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $778K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $770K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $473K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $25K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $3.7M |
| + RCM Uplift | +$2.9M |
| Pro Forma EBITDA | $6.5M |
| Current Margin | 9.4% |
| Pro Forma Margin | 16.8% |
| WC Released (1x) | $1.5M |
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 | $5.6M | $52.7M | 9.38x | 56.5% |
| Base (11x exit) | 10.0x | 11.0x | $5.6M | $59.8M | 10.65x | 60.5% |
| Bull Case | 9.0x | 11.0x | $5.1M | $71.1M | 14.06x | 69.7% |
| Bull (12x exit) | 9.0x | 12.0x | $5.1M | $79.0M | 15.63x | 73.3% |
| Bear Case | 11.0x | 10.0x | $6.2M | $36.6M | 5.92x | 42.7% |
| Bear (11x exit) | 11.0x | 11.0x | $6.2M | $42.2M | 6.84x | 46.9% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Low occupancy | At 23.5%, fixed costs are spread over fewer patient days. Mitigant: volume growth is an additional upside lever not modeled in base case |
| High | Elevated distress probability | Model estimates 56.0% 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
- 110 hospitals with 20-82 beds
- Same-state prioritization (n=111)
- Comp margins: P25=-13.3% / P50=-1.8% / P75=10.6%
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.