ST. JOHN OWASSO
1. Target Overview & Investment Thesis
ST. JOHN OWASSO is a 54-bed suburban community hospital in TULSA, OK with $38.5M in net patient revenue and a 1.1% operating margin. The hospital serves a payer mix of 21.5% Medicare, 20.0% Medicaid, and 58.5% commercial.
Thesis: Turnaround. Our ML models identify $2.8M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 1.1% to 8.5% (+736bps).
| Net Revenue HCRIS | $38.5M |
| Current EBITDA COMPUTED | $427K |
| Operating Margin COMPUTED | 1.1% |
| Occupancy HCRIS | 26.5% |
| Revenue / Bed COMPUTED | $712K |
| Net-to-Gross HCRIS | 24.0% |
| Distress Probability ML | 57.1% |
2. Market Context & Competitive Position
OK has 147 Medicare-certified hospitals with a median operating margin of -8.8%. The target's margin of 1.1% places it above the state median. Among 61 size-comparable peers (27-108 beds), the median margin is -2.8%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (27-108), prioritizing same-state peers. 61 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ST. JOHN OWASSO (Target) | OK | 54 | $38.5M | 1.1% |
| OKLAHOMA HEART HOSPITAL | OK | 97 | $342.0M | -2.8% |
| STILLWATER MEDICAL CENTER | OK | 52 | $270.2M | -9.9% |
| 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% |
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: $2.8M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $808K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $769K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $761K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $468K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $25K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $427K |
| + RCM Uplift | +$2.8M |
| Pro Forma EBITDA | $3.3M |
| Current Margin | 1.1% |
| Pro Forma Margin | 8.5% |
| WC Released (1x) | $1.5M |
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 | $657K | $31.1M | 47.34x | 116.3% |
| Base (11x exit) | 10.0x | 11.0x | $657K | $34.5M | 52.40x | 120.7% |
| Bull Case | 9.0x | 11.0x | $592K | $44.0M | 74.38x | 136.8% |
| Bull (12x exit) | 9.0x | 12.0x | $592K | $48.2M | 81.43x | 141.1% |
| Bear Case | 11.0x | 10.0x | $723K | $16.8M | 23.17x | 87.5% |
| Bear (11x exit) | 11.0x | 11.0x | $723K | $18.7M | 25.82x | 91.6% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Low occupancy | At 26.5%, 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 57.1% 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
- 61 hospitals with 27-108 beds
- Same-state prioritization (n=62)
- Comp margins: P25=-17.7% / P50=-2.8% / P75=7.6%
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.