OREGON STATE HOSPITAL
1. Target Overview & Investment Thesis
OREGON STATE HOSPITAL is a 577-bed suburban community hospital in MARION, OR with $159.5M in net patient revenue and a -100.0% operating margin. The hospital serves a payer mix of 0.4% Medicare, 4.6% Medicaid, and 95.0% commercial.
Thesis: Undervalued. Our ML models identify $11.7M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -100.0% to -145.9% (+736bps).
| Net Revenue HCRIS | $159.5M |
| Current EBITDA COMPUTED | $-244.4M |
| Operating Margin COMPUTED | -100.0% |
| Occupancy HCRIS | 91.6% |
| Revenue / Bed COMPUTED | $276K |
| Net-to-Gross HCRIS | 100.0% |
| Distress Probability ML | 48.2% |
2. Market Context & Competitive Position
OR has 63 Medicare-certified hospitals with a median operating margin of -8.1%. The target's margin of -100.0% places it below the state median. Among 9 size-comparable peers (288-1154 beds), the median margin is -6.3%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (288-1154), prioritizing same-state peers. 9 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| OREGON STATE HOSPITAL (Target) | OR | 577 | $159.5M | -100.0% |
| OHSU HOSPITAL AND CLINICS | OR | 549 | $2.57B | -6.3% |
| PROVIDENCE ST. VINCENT MEDICAL | OR | 536 | $1.00B | -6.2% |
| LEGACY EMANUEL HOSPITAL & HEAL | OR | 388 | $983.2M | -23.2% |
| PROVIDENCE PORTLAND MEDICAL CE | OR | 369 | $927.8M | -21.0% |
| SHMC-RIVERBEND | OR | 385 | $860.7M | -2.1% |
| SALEM HOSPITAL | OR | 520 | $842.8M | -26.2% |
| ROGUE REGIONAL MEDICAL CENTER | OR | 313 | $737.1M | -5.6% |
| ST CHARLES MEDICAL CENTER | OR | 300 | $731.5M | 6.5% |
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: $11.7M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $3.3M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $3.2M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $3.2M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.9M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $102K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-244.4M |
| + RCM Uplift | +$11.7M |
| Pro Forma EBITDA | $-232.6M |
| Current Margin | -100.0% |
| Pro Forma Margin | -145.9% |
| WC Released (1x) | $6.1M |
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 | $-376.0M | $-1.49B | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-376.0M | $-1.77B | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-338.4M | $-1.85B | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-338.4M | $-2.12B | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-413.6M | $-1.43B | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-413.6M | $-1.71B | 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
- 9 hospitals with 288-1154 beds
- Same-state prioritization (n=10)
- Comp margins: P25=-21.5% / P50=-6.3% / P75=-4.7%
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.