WEATHERFORD REGIONAL HOSPITAL
1. Target Overview & Investment Thesis
WEATHERFORD REGIONAL HOSPITAL is a 25-bed rural/critical access in CUSTER, OK with $20.3M in net patient revenue and a -9.1% operating margin. The hospital serves a payer mix of 47.7% Medicare, 24.6% Medicaid, and 27.7% commercial.
Thesis: Turnaround. Our ML models identify $1.5M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -9.1% to -1.7% (+736bps).
| Net Revenue HCRIS | $20.3M |
| Current EBITDA COMPUTED | $-1.8M |
| Operating Margin COMPUTED | -9.1% |
| Occupancy HCRIS | 25.8% |
| Revenue / Bed COMPUTED | $810K |
| Net-to-Gross HCRIS | 41.1% |
| Distress Probability ML | 61.1% |
2. Market Context & Competitive Position
OK has 147 Medicare-certified hospitals with a median operating margin of -8.8%. The target's margin of -9.1% places it below the state median. Among 83 size-comparable peers (12-50 beds), the median margin is -16.7%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (12-50), prioritizing same-state peers. 83 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| WEATHERFORD REGIONAL HOSPITAL (Target) | OK | 25 | $20.3M | -9.1% |
| OKLAHOMA HEART HOSPITAL SOUTH | OK | 43 | $148.5M | -0.6% |
| COMMUNITY HOSPITAL | OK | 45 | $143.9M | 21.7% |
| 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% |
| HILLCREST HOSPITAL CLAREMORE | OK | 41 | $68.5M | 5.8% |
| BAILEY MEDICAL CENTER | OK | 33 | $54.6M | 13.3% |
| INTEGRIS GROVE HOSPITAL | OK | 41 | $53.0M | -16.8% |
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: $1.5M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $425K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $405K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $401K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $246K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $13K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-1.8M |
| + RCM Uplift | +$1.5M |
| Pro Forma EBITDA | $-343K |
| Current Margin | -9.1% |
| Pro Forma Margin | -1.7% |
| WC Released (1x) | $777K |
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 | $-2.8M | $2.8M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-2.8M | $2.2M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-2.5M | $6.2M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-2.5M | $6.0M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-3.1M | $-3.7M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-3.1M | $-5.1M | 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 | Elevated Medicaid exposure (24.6%) | Medicaid reimburses below cost in most states. Mitigant: denial reduction lever has highest impact on Medicaid claims |
| Medium | Low occupancy | At 25.8%, 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 61.1% 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
- 83 hospitals with 12-50 beds
- Same-state prioritization (n=84)
- Comp margins: P25=-26.3% / P50=-16.7% / P75=-0.9%
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 27, 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.