SURGICAL HOSPITAL OF OKLAHOMA
1. Target Overview & Investment Thesis
SURGICAL HOSPITAL OF OKLAHOMA is a 12-bed under-performing / distressed in OKLAHOMA, OK with $31.2M in net patient revenue and a -13.0% operating margin. The hospital serves a payer mix of 28.6% Medicare, 18.8% Medicaid, and 52.7% commercial.
Thesis: Turnaround. Our ML models identify $2.3M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -13.0% to -5.6% (+736bps).
| Net Revenue HCRIS | $31.2M |
| Current EBITDA COMPUTED | $-4.0M |
| Operating Margin COMPUTED | -13.0% |
| Occupancy HCRIS | 13.7% |
| Revenue / Bed COMPUTED | $2.6M |
| Net-to-Gross HCRIS | 18.2% |
| Distress Probability ML | 56.5% |
2. Market Context & Competitive Position
OK has 147 Medicare-certified hospitals with a median operating margin of -8.8%. The target's margin of -13.0% places it below the state median. Among 22 size-comparable peers (6-24 beds), the median margin is -20.0%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (6-24), prioritizing same-state peers. 22 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| SURGICAL HOSPITAL OF OKLAHOMA (Target) | OK | 12 | $31.2M | -13.0% |
| OKLAHOMA SPINE HOSPITAL | OK | 23 | $79.0M | 8.4% |
| LAKESIDE WOMENS HOSPITAL | OK | 23 | $33.0M | 16.5% |
| HILLCREST HOSPITAL PRYOR | OK | 21 | $30.6M | -7.2% |
| CLEVELAND AREA HOSPITAL | OK | 14 | $20.0M | 3.9% |
| CARNEGIE TRI-COUNTY MUNICIPAL | OK | 17 | $18.2M | -16.6% |
| HILLCREST HOSPITAL HENRYETTA | OK | 15 | $15.8M | -22.8% |
| MANGUM REGIONAL MEDICAL CENTER | OK | 18 | $15.3M | -16.4% |
| OKC-AMG SPECIALTY HOSPITAL | OK | 18 | $14.4M | 26.6% |
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: $2.3M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $655K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $624K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $618K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $380K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $20K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-4.0M |
| + RCM Uplift | +$2.3M |
| Pro Forma EBITDA | $-1.8M |
| Current Margin | -13.0% |
| Pro Forma Margin | -5.6% |
| 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 | $-6.2M | $-3.7M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-6.2M | $-6.1M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-5.6M | $-568K | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-5.6M | $-2.3M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-6.9M | $-13.2M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-6.9M | $-16.7M | 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 13.7%, 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 56.5% 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
- 22 hospitals with 6-24 beds
- Same-state prioritization (n=29)
- Comp margins: P25=-50.0% / P50=-20.0% / P75=-7.2%
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.