WILLAMETTE VALLEY MEDICAL CENTER
1. Target Overview & Investment Thesis
WILLAMETTE VALLEY MEDICAL CENTER is a 50-bed suburban community hospital in nan, OR with $110.4M in net patient revenue and a -6.1% operating margin. The hospital serves a payer mix of 29.0% Medicare, 3.9% Medicaid, and 67.1% commercial.
Thesis: Turnaround. Our ML models identify $8.1M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -6.1% to 1.2% (+736bps).
| Net Revenue HCRIS | $110.4M |
| Current EBITDA COMPUTED | $-6.8M |
| Operating Margin COMPUTED | -6.1% |
| Occupancy HCRIS | 53.4% |
| Revenue / Bed COMPUTED | $2.2M |
| Net-to-Gross HCRIS | 27.1% |
| Distress Probability ML | 45.4% |
2. Market Context & Competitive Position
OR has 63 Medicare-certified hospitals with a median operating margin of -8.1%. The target's margin of -6.1% places it above the state median. Among 25 size-comparable peers (25-100 beds), the median margin is -7.4%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (25-100), prioritizing same-state peers. 25 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| WILLAMETTE VALLEY MEDICAL CENT (Target) | OR | 50 | $110.4M | -6.1% |
| SKY LAKES MEDICAL CENTER | OR | 90 | $251.4M | -20.9% |
| PROVIDENCE MEDFORD MEDICAL CEN | OR | 96 | $239.8M | -17.3% |
| SAMARITAN ALBANY GENERAL HOSPI | OR | 67 | $220.1M | -12.0% |
| LEGACY MOUNT HOOD MEDICAL CENT | OR | 99 | $197.2M | -10.2% |
| GOOD SHEPHERD MEDICAL CENTER | OR | 25 | $177.5M | 5.3% |
| COLUMBIA MEMORIAL HOSPITAL | OR | 25 | $165.9M | 5.2% |
| SAMARITAN LEBANON COMM HOSPITA | OR | 25 | $157.9M | 3.9% |
| PROVIDENCE NEWBERG MEDICAL CEN | OR | 40 | $151.5M | 10.0% |
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: $8.1M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $2.3M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $2.2M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $2.2M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.3M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $71K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-6.8M |
| + RCM Uplift | +$8.1M |
| Pro Forma EBITDA | $1.4M |
| Current Margin | -6.1% |
| Pro Forma Margin | 1.2% |
| WC Released (1x) | $4.2M |
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 | $-10.4M | $36.8M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-10.4M | $37.1M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-9.3M | $60.5M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-9.3M | $63.3M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-11.4M | $-514K | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-11.4M | $-4.3M | 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 |
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
- 25 hospitals with 25-100 beds
- Same-state prioritization (n=26)
- Comp margins: P25=-16.1% / P50=-7.4% / P75=3.7%
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.