HILLCREST HOSPITAL PRYOR
1. Target Overview & Investment Thesis
HILLCREST HOSPITAL PRYOR is a 21-bed safety-net/medicaid heavy in nan, OK with $30.6M in net patient revenue and a -7.2% operating margin. The hospital serves a payer mix of 32.3% Medicare, 42.2% Medicaid, and 25.4% commercial.
Thesis: Turnaround. Our ML models identify $2.3M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -7.2% to 0.2% (+736bps).
| Net Revenue HCRIS | $30.6M |
| Current EBITDA COMPUTED | $-2.2M |
| Operating Margin COMPUTED | -7.2% |
| Occupancy HCRIS | 20.5% |
| Revenue / Bed COMPUTED | $1.5M |
| Net-to-Gross HCRIS | 18.6% |
| Distress Probability ML | 62.5% |
2. Market Context & Competitive Position
OK has 147 Medicare-certified hospitals with a median operating margin of -8.8%. The target's margin of -7.2% places it above the state median. Among 73 size-comparable peers (10-42 beds), the median margin is -17.8%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (10-42), prioritizing same-state peers. 73 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| HILLCREST HOSPITAL PRYOR (Target) | OK | 21 | $30.6M | -7.2% |
| OKLAHOMA SPINE HOSPITAL | OK | 23 | $79.0M | 8.4% |
| TULSA SPINE HOSPITAL | OK | 38 | $69.5M | 11.6% |
| HILLCREST HOSPITAL CLAREMORE | OK | 41 | $68.5M | 5.8% |
| BAILEY MEDICAL CENTER | OK | 33 | $54.6M | 13.3% |
| INTEGRIS GROVE HOSPITAL | OK | 41 | $53.0M | -16.8% |
| GREAT PLAINS REGIONAL MEDICAL | OK | 42 | $49.2M | -20.7% |
| BRISTOW MEDICAL CENTER | OK | 25 | $48.5M | -12.6% |
| INTEGRIS MIAMI HOSPITAL | OK | 36 | $43.3M | -32.1% |
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: $2.3M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $643K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $612K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $606K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $372K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $20K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-2.2M |
| + RCM Uplift | +$2.3M |
| Pro Forma EBITDA | $51K |
| Current Margin | -7.2% |
| Pro Forma Margin | 0.2% |
| WC Released (1x) | $1.2M |
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 | $-3.4M | $8.0M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-3.4M | $7.7M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-3.0M | $14.0M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-3.0M | $14.4M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-3.7M | $-2.2M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-3.7M | $-3.6M | 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 | Elevated Medicaid exposure (42.2%) | Medicaid reimburses below cost in most states. Mitigant: denial reduction lever has highest impact on Medicaid claims |
| Medium | Low occupancy | At 20.5%, 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 62.5% probability of financial distress. Mitigant: distressed entry pricing (7-9x) compensates for risk |
| 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
- 73 hospitals with 10-42 beds
- Same-state prioritization (n=74)
- Comp margins: P25=-28.5% / P50=-17.8% / P75=-1.6%
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 27, 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.