CORDELL MEMORIAL HOSPITAL
1. Target Overview & Investment Thesis
CORDELL MEMORIAL HOSPITAL is a 14-bed rural/critical access in WASHITA, OK with $5.9M in net patient revenue and a -19.6% operating margin. The hospital serves a payer mix of 64.8% Medicare, 9.2% Medicaid, and 26.0% commercial.
Thesis: Turnaround. Our ML models identify $445K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -19.6% to -12.1% (+754bps).
| Net Revenue HCRIS | $5.9M |
| Current EBITDA COMPUTED | $-1.2M |
| Operating Margin COMPUTED | -19.6% |
| Occupancy HCRIS | 14.3% |
| Revenue / Bed COMPUTED | $421K |
| Net-to-Gross HCRIS | 44.7% |
| Distress Probability ML | 61.6% |
2. Market Context & Competitive Position
OK has 147 Medicare-certified hospitals with a median operating margin of -8.8%. The target's margin of -19.6% places it below the state median. Among 53 size-comparable peers (7-28 beds), the median margin is -17.6%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (7-28), prioritizing same-state peers. 53 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| CORDELL MEMORIAL HOSPITAL (Target) | OK | 14 | $5.9M | -19.6% |
| OKLAHOMA SPINE HOSPITAL | OK | 23 | $79.0M | 8.4% |
| BRISTOW MEDICAL CENTER | OK | 25 | $48.5M | -12.6% |
| JEFFERSON COUNTY HOSPITAL | OK | 25 | $41.1M | 14.4% |
| PHYSICIANS HOSPITAL AT ANADARK | OK | 25 | $34.1M | -48.1% |
| LAKESIDE WOMENS HOSPITAL | OK | 23 | $33.0M | 16.5% |
| STROUD REGIONAL MEDICAL CENTER | OK | 25 | $31.4M | -50.0% |
| SURGICAL HOSPITAL OF OKLAHOMA | OK | 12 | $31.2M | -13.0% |
| HILLCREST HOSPITAL PRYOR | OK | 21 | $30.6M | -7.2% |
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: $445K (754bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $124K | +210bp | 18mo |
| Denial Rate Reduction | 12.0% | 6.5% | $122K | +206bp | 12mo |
| Cost to Collect | 4.5% | 2.5% | $118K | +200bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $72K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +16bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-1.2M |
| + RCM Uplift | +$445K |
| Pro Forma EBITDA | $-713K |
| Current Margin | -19.6% |
| Pro Forma Margin | -12.1% |
| WC Released (1x) | $226K |
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 | $-1.8M | $-3.2M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-1.8M | $-4.1M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-1.6M | $-3.2M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-1.6M | $-4.0M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-2.0M | $-4.8M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-2.0M | $-6.0M | 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 | Heavy Medicare dependence | Medicare comprises 64.8% of days; rate updates may lag inflation. Mitigant: CDI/CMI lever directly increases Medicare reimbursement |
| Medium | Low occupancy | At 14.3%, 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 61.6% 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
- 53 hospitals with 7-28 beds
- Same-state prioritization (n=58)
- Comp margins: P25=-45.2% / P50=-17.6% / P75=-5.8%
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.