STILLWATER MEDICAL CENTER
1. Target Overview & Investment Thesis
STILLWATER MEDICAL CENTER is a 52-bed suburban community hospital in PAYNE, OK with $270.2M in net patient revenue and a -9.9% operating margin. The hospital serves a payer mix of 42.9% Medicare, 22.8% Medicaid, and 34.3% commercial.
Thesis: Turnaround. Our ML models identify $19.9M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -9.9% to -2.5% (+736bps).
| Net Revenue HCRIS | $270.2M |
| Current EBITDA COMPUTED | $-26.7M |
| Operating Margin COMPUTED | -9.9% |
| Occupancy HCRIS | 82.2% |
| Revenue / Bed COMPUTED | $5.2M |
| Net-to-Gross HCRIS | 27.4% |
| Distress Probability ML | 39.8% |
2. Market Context & Competitive Position
OK has 147 Medicare-certified hospitals with a median operating margin of -8.8%. The target's margin of -9.9% places it below the state median. Among 61 size-comparable peers (26-104 beds), the median margin is -2.8%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (26-104), prioritizing same-state peers. 61 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| STILLWATER MEDICAL CENTER (Target) | OK | 52 | $270.2M | -9.9% |
| OKLAHOMA HEART HOSPITAL | OK | 97 | $342.0M | -2.8% |
| SAINT FRANCIS HOSPITAL SOUTH | OK | 104 | $198.3M | 34.4% |
| ST ANTHONY SHAWNEE HOSPITAL | OK | 57 | $169.2M | -6.1% |
| MCBRIDE CLINIC ORTHOPEDIC HOSP | OK | 68 | $166.9M | -5.0% |
| OKLAHOMA HEART HOSPITAL SOUTH | OK | 43 | $148.5M | -0.6% |
| OKLAHOMA SURGICAL HOSPITAL | OK | 74 | $146.2M | 17.7% |
| COMMUNITY HOSPITAL | OK | 45 | $143.9M | 21.7% |
| NORTHEASTERN HEALTH SYSTEM | OK | 80 | $134.6M | -9.6% |
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: $19.9M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $5.7M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $5.4M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $5.4M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $3.3M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $173K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-26.7M |
| + RCM Uplift | +$19.9M |
| Pro Forma EBITDA | $-6.8M |
| Current Margin | -9.9% |
| Pro Forma Margin | -2.5% |
| WC Released (1x) | $10.4M |
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 | $-41.1M | $22.9M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-41.1M | $11.8M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-36.9M | $64.2M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-36.9M | $59.1M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-45.2M | $-63.2M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-45.2M | $-84.2M | 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 (22.8%) | Medicaid reimburses below cost in most states. Mitigant: denial reduction lever has highest impact on Medicaid claims |
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
- 61 hospitals with 26-104 beds
- Same-state prioritization (n=62)
- Comp margins: P25=-18.7% / P50=-2.8% / P75=6.4%
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.