SEQUOYAH COUNTY CITY OF SALLISAW HOS
1. Target Overview & Investment Thesis
SEQUOYAH COUNTY CITY OF SALLISAW HOS is a 41-bed rural/critical access in SEQUOYAH, OK with $18.6M in net patient revenue and a 2.2% operating margin. The hospital serves a payer mix of 49.1% Medicare, 7.0% Medicaid, and 43.9% commercial.
Thesis: Turnaround. Our ML models identify $1.4M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 2.2% to 9.6% (+736bps).
| Net Revenue HCRIS | $18.6M |
| Current EBITDA COMPUTED | $412K |
| Operating Margin COMPUTED | 2.2% |
| Occupancy HCRIS | 26.1% |
| Revenue / Bed COMPUTED | $454K |
| Net-to-Gross HCRIS | 32.4% |
| Distress Probability ML | 56.4% |
2. Market Context & Competitive Position
OK has 147 Medicare-certified hospitals with a median operating margin of -8.8%. The target's margin of 2.2% places it above the state median. Among 92 size-comparable peers (20-82 beds), the median margin is -9.3%. 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. 92 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| SEQUOYAH COUNTY CITY OF SALLIS (Target) | OK | 41 | $18.6M | 2.2% |
| STILLWATER MEDICAL CENTER | OK | 52 | $270.2M | -9.9% |
| 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% |
| INTEGRIS HEALTH EDMOND | OK | 77 | $119.4M | -3.8% |
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: $1.4M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $391K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $372K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $369K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $226K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $12K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $412K |
| + RCM Uplift | +$1.4M |
| Pro Forma EBITDA | $1.8M |
| Current Margin | 2.2% |
| Pro Forma Margin | 9.6% |
| WC Released (1x) | $714K |
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 | $634K | $16.4M | 25.91x | 91.7% |
| Base (11x exit) | 10.0x | 11.0x | $634K | $18.3M | 28.82x | 95.9% |
| Bull Case | 9.0x | 11.0x | $570K | $23.0M | 40.31x | 109.5% |
| Bull (12x exit) | 9.0x | 12.0x | $570K | $25.3M | 44.27x | 113.4% |
| Bear Case | 11.0x | 10.0x | $697K | $9.4M | 13.43x | 68.1% |
| Bear (11x exit) | 11.0x | 11.0x | $697K | $10.5M | 15.10x | 72.1% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Low occupancy | At 26.1%, 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 56.4% 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
- 92 hospitals with 20-82 beds
- Same-state prioritization (n=93)
- Comp margins: P25=-23.3% / P50=-9.3% / P75=3.3%
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.