SUMMIT MEDICAL CENTER
1. Target Overview & Investment Thesis
SUMMIT MEDICAL CENTER is a 9-bed suburban community hospital in nan, OK with $36.1M in net patient revenue and a -0.3% operating margin. The hospital serves a payer mix of 4.9% Medicare, 0.2% Medicaid, and 94.9% commercial.
Thesis: Turnaround. Our ML models identify $2.7M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -0.3% to 7.0% (+736bps).
| Net Revenue HCRIS | $36.1M |
| Current EBITDA COMPUTED | $-124K |
| Operating Margin COMPUTED | -0.3% |
| Occupancy HCRIS | 37.9% |
| Revenue / Bed COMPUTED | $4.0M |
| Net-to-Gross HCRIS | 13.1% |
| Distress Probability ML | 42.7% |
2. Market Context & Competitive Position
OK has 147 Medicare-certified hospitals with a median operating margin of -8.8%. The target's margin of -0.3% places it above the state median. Among 15 size-comparable peers (4-18 beds), the median margin is -19.8%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (4-18), prioritizing same-state peers. 15 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| SUMMIT MEDICAL CENTER (Target) | OK | 9 | $36.1M | -0.3% |
| SURGICAL HOSPITAL OF OKLAHOMA | OK | 12 | $31.2M | -13.0% |
| 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% |
| SEILING MUNICIPAL HOSPITAL | OK | 18 | $11.4M | -5.5% |
| PURCELL MUNICIPAL HOSPITAL | OK | 10 | $8.1M | -45.1% |
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: $2.7M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $759K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $723K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $715K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $440K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $23K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-124K |
| + RCM Uplift | +$2.7M |
| Pro Forma EBITDA | $2.5M |
| Current Margin | -0.3% |
| Pro Forma Margin | 7.0% |
| WC Released (1x) | $1.4M |
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 | $-191K | $25.8M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-191K | $28.3M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-172K | $37.0M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-172K | $40.3M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-210K | $12.5M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-210K | $13.7M | 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 |
| 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
- 15 hospitals with 4-18 beds
- Same-state prioritization (n=21)
- Comp margins: P25=-27.6% / P50=-19.8% / P75=-13.8%
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.