SAINT FRANCIS HOSPITAL MUSKOGEE
1. Target Overview & Investment Thesis
SAINT FRANCIS HOSPITAL MUSKOGEE is a 236-bed suburban community hospital in MUSKOGEE, OK with $196.5M in net patient revenue and a 11.6% operating margin. The hospital serves a payer mix of 36.0% Medicare, 26.8% Medicaid, and 37.2% commercial.
Thesis: Platform Growth. Our ML models identify $14.5M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 11.6% to 18.9% (+736bps).
| Net Revenue HCRIS | $196.5M |
| Current EBITDA COMPUTED | $22.7M |
| Operating Margin COMPUTED | 11.6% |
| Occupancy HCRIS | 44.5% |
| Revenue / Bed COMPUTED | $833K |
| Net-to-Gross HCRIS | 24.8% |
| Distress Probability ML | 55.8% |
2. Market Context & Competitive Position
OK has 147 Medicare-certified hospitals with a median operating margin of -8.8%. The target's margin of 11.6% places it above the state median. Among 15 size-comparable peers (118-472 beds), the median margin is -8.1%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (118-472), prioritizing same-state peers. 15 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| SAINT FRANCIS HOSPITAL MUSKOGE (Target) | OK | 236 | $196.5M | 11.6% |
| ST ANTHONY HOSPITAL | OK | 430 | $711.2M | -10.3% |
| MERCY HOSPITAL OKC | OK | 344 | $674.3M | 10.5% |
| HILLCREST MEDICAL CENTER | OK | 424 | $590.1M | -3.3% |
| ST. JOHN MEDICAL CENTER | OK | 419 | $547.8M | -0.5% |
| NORMAN REGIONAL HOSPITAL AUTHO | OK | 322 | $540.7M | -8.1% |
| COMANCHE COUNTY MEMORIAL HOSPI | OK | 201 | $304.2M | -7.9% |
| INTEGRIS SOUTHWEST MEDICAL CEN | OK | 169 | $267.6M | -13.5% |
| HILLCREST HOSPITAL SOUTH | OK | 152 | $218.9M | 4.9% |
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: $14.5M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $4.1M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $3.9M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $3.9M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $2.4M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $126K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $22.7M |
| + RCM Uplift | +$14.5M |
| Pro Forma EBITDA | $37.2M |
| Current Margin | 11.6% |
| Pro Forma Margin | 18.9% |
| WC Released (1x) | $7.5M |
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 | $35.0M | $294.6M | 8.43x | 53.1% |
| Base (11x exit) | 10.0x | 11.0x | $35.0M | $335.4M | 9.59x | 57.2% |
| Bull Case | 9.0x | 11.0x | $31.5M | $394.5M | 12.54x | 65.8% |
| Bull (12x exit) | 9.0x | 12.0x | $31.5M | $439.6M | 13.97x | 69.5% |
| Bear Case | 11.0x | 10.0x | $38.5M | $210.9M | 5.48x | 40.5% |
| Bear (11x exit) | 11.0x | 11.0x | $38.5M | $244.4M | 6.36x | 44.8% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Elevated Medicaid exposure (26.8%) | Medicaid reimburses below cost in most states. Mitigant: denial reduction lever has highest impact on Medicaid claims |
| High | Elevated distress probability | Model estimates 55.8% 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
- 15 hospitals with 118-472 beds
- Same-state prioritization (n=16)
- Comp margins: P25=-22.9% / P50=-8.1% / P75=-2.2%
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.