BAILEY MEDICAL CENTER
1. Target Overview & Investment Thesis
BAILEY MEDICAL CENTER is a 33-bed suburban community hospital in TULSA, OK with $54.6M in net patient revenue and a 13.3% operating margin. The hospital serves a payer mix of 13.0% Medicare, 24.1% Medicaid, and 62.9% commercial.
Thesis: Turnaround. Our ML models identify $4.0M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 13.3% to 20.7% (+736bps).
| Net Revenue HCRIS | $54.6M |
| Current EBITDA COMPUTED | $7.3M |
| Operating Margin COMPUTED | 13.3% |
| Occupancy HCRIS | 24.7% |
| Revenue / Bed COMPUTED | $1.7M |
| Net-to-Gross HCRIS | 15.8% |
| Distress Probability ML | 55.9% |
2. Market Context & Competitive Position
OK has 147 Medicare-certified hospitals with a median operating margin of -8.8%. The target's margin of 13.3% places it above the state median. Among 88 size-comparable peers (16-66 beds), the median margin is -10.7%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (16-66), prioritizing same-state peers. 88 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| BAILEY MEDICAL CENTER (Target) | OK | 33 | $54.6M | 13.3% |
| STILLWATER MEDICAL CENTER | OK | 52 | $270.2M | -9.9% |
| ST ANTHONY SHAWNEE HOSPITAL | OK | 57 | $169.2M | -6.1% |
| OKLAHOMA HEART HOSPITAL SOUTH | OK | 43 | $148.5M | -0.6% |
| COMMUNITY HOSPITAL | OK | 45 | $143.9M | 21.7% |
| INTEGRIS CANADIAN VALLEY HOSPI | OK | 66 | $84.9M | 4.6% |
| OKLAHOMA SPINE HOSPITAL | OK | 23 | $79.0M | 8.4% |
| JACKSON COUNTY MEMORIAL HOSPIT | OK | 49 | $75.5M | -10.7% |
| TULSA SPINE HOSPITAL | OK | 38 | $69.5M | 11.6% |
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: $4.0M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $1.1M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $1.1M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $1.1M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $665K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $35K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $7.3M |
| + RCM Uplift | +$4.0M |
| Pro Forma EBITDA | $11.3M |
| Current Margin | 13.3% |
| Pro Forma Margin | 20.7% |
| WC Released (1x) | $2.1M |
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 | $11.2M | $88.1M | 7.89x | 51.1% |
| Base (11x exit) | 10.0x | 11.0x | $11.2M | $100.5M | 9.00x | 55.2% |
| Bull Case | 9.0x | 11.0x | $10.1M | $117.4M | 11.68x | 63.5% |
| Bull (12x exit) | 9.0x | 12.0x | $10.1M | $131.1M | 13.04x | 67.1% |
| Bear Case | 11.0x | 10.0x | $12.3M | $64.4M | 5.24x | 39.3% |
| Bear (11x exit) | 11.0x | 11.0x | $12.3M | $74.8M | 6.09x | 43.5% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Elevated Medicaid exposure (24.1%) | Medicaid reimburses below cost in most states. Mitigant: denial reduction lever has highest impact on Medicaid claims |
| Medium | Low occupancy | At 24.7%, 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 55.9% 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
- 88 hospitals with 16-66 beds
- Same-state prioritization (n=89)
- Comp margins: P25=-24.1% / P50=-10.7% / P75=3.0%
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.