CHWC-MONTPELIER
1. Target Overview & Investment Thesis
CHWC-MONTPELIER is a 25-bed rural/critical access in WILLIAMS, OH with $12.3M in net patient revenue and a -11.5% operating margin. The hospital serves a payer mix of 49.9% Medicare, 0.1% Medicaid, and 50.0% commercial.
Thesis: Turnaround. Our ML models identify $910K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -11.5% to -4.2% (+739bps).
| Net Revenue HCRIS | $12.3M |
| Current EBITDA COMPUTED | $-1.4M |
| Operating Margin COMPUTED | -11.5% |
| Occupancy HCRIS | 23.4% |
| Revenue / Bed COMPUTED | $493K |
| Net-to-Gross HCRIS | 57.0% |
| Distress Probability ML | 58.0% |
2. Market Context & Competitive Position
OH has 235 Medicare-certified hospitals with a median operating margin of -0.3%. The target's margin of -11.5% places it below the state median. Among 82 size-comparable peers (12-50 beds), the median margin is -1.9%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (12-50), prioritizing same-state peers. 82 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| CHWC-MONTPELIER (Target) | OH | 25 | $12.3M | -11.5% |
| THE SURGICAL HOSPITAL AT SOUTH | OH | 24 | $166.6M | -3.1% |
| GALION COMMUNITY HOSPITAL | OH | 25 | $128.2M | 16.6% |
| MARY RUTAN HOSPITAL | OH | 39 | $113.0M | -12.5% |
| AVITA ONTARIO HOSPITAL | OH | 49 | $109.2M | 16.0% |
| MERCY HEALTH-TIFFIN HOSPITAL | OH | 35 | $103.0M | 18.1% |
| ALLIANCE COMMUNITY HOSPITAL | OH | 50 | $100.2M | -3.5% |
| JOINT TOWNSHIP DISTRICT MEMORI | OH | 33 | $95.6M | 9.3% |
| FULTON COUNTY HEALTH CENTER | OH | 25 | $95.2M | -7.4% |
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: $910K (739bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $259K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $246K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $245K | +199bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $150K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +8bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-1.4M |
| + RCM Uplift | +$910K |
| Pro Forma EBITDA | $-512K |
| Current Margin | -11.5% |
| Pro Forma Margin | -4.2% |
| WC Released (1x) | $472K |
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 | $-2.2M | $-283K | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-2.2M | $-1.0M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-2.0M | $1.3M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-2.0M | $803K | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-2.4M | $-4.1M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-2.4M | $-5.3M | 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 | Low occupancy | At 23.4%, 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 58.0% 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
- 82 hospitals with 12-50 beds
- Same-state prioritization (n=83)
- Comp margins: P25=-11.3% / P50=-1.9% / P75=11.8%
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.