ST LUKE HOSPITAL ANDERSON CAMPUS
1. Target Overview & Investment Thesis
ST LUKE HOSPITAL ANDERSON CAMPUS is a 193-bed suburban community hospital in NORTHHAMPTON, PA with $433.0M in net patient revenue and a 20.6% operating margin. The hospital serves a payer mix of 30.3% Medicare, 11.3% Medicaid, and 58.3% commercial.
Thesis: Turnaround. Our ML models identify $31.9M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 20.6% to 27.9% (+736bps).
| Net Revenue HCRIS | $433.0M |
| Current EBITDA COMPUTED | $89.0M |
| Operating Margin COMPUTED | 20.6% |
| Occupancy HCRIS | 78.5% |
| Revenue / Bed COMPUTED | $2.2M |
| Net-to-Gross HCRIS | 14.8% |
| Distress Probability ML | 40.6% |
2. Market Context & Competitive Position
PA has 225 Medicare-certified hospitals with a median operating margin of -4.4%. The target's margin of 20.6% places it above the state median. Among 98 size-comparable peers (96-386 beds), the median margin is -7.6%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (96-386), prioritizing same-state peers. 98 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ST LUKE HOSPITAL ANDERSON CAMP (Target) | PA | 193 | $433.0M | 20.6% |
| PRESBYTERIAN MEDICAL CENTER | PA | 328 | $988.5M | -18.9% |
| UPMC MAGEE-WOMENS HOSPITAL | PA | 347 | $910.8M | -23.9% |
| UPMC CHILDRENS HOSPITAL OF PGH | PA | 317 | $816.7M | -2.5% |
| GEISINGER WYOMING VALLEY MED C | PA | 309 | $782.7M | 5.9% |
| WESTERN PENNSYLVANIA HOSPITAL | PA | 255 | $776.4M | 11.1% |
| LANKENAU MEDICAL CENTER | PA | 370 | $621.6M | -16.4% |
| UPMC ALTOONA | PA | 337 | $526.8M | -4.8% |
| COMMUNITY MEDICAL CENTER | PA | 266 | $474.1M | 3.1% |
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: $31.9M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $9.1M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $8.7M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $8.6M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $5.3M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $277K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $89.0M |
| + RCM Uplift | +$31.9M |
| Pro Forma EBITDA | $120.9M |
| Current Margin | 20.6% |
| Pro Forma Margin | 27.9% |
| WC Released (1x) | $16.6M |
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 | $137.0M | $906.1M | 6.61x | 45.9% |
| Base (11x exit) | 10.0x | 11.0x | $137.0M | $1.04B | 7.60x | 50.0% |
| Bull Case | 9.0x | 11.0x | $123.3M | $1.19B | 9.66x | 57.4% |
| Bull (12x exit) | 9.0x | 12.0x | $123.3M | $1.34B | 10.83x | 61.0% |
| Bear Case | 11.0x | 10.0x | $150.7M | $702.2M | 4.66x | 36.0% |
| Bear (11x exit) | 11.0x | 11.0x | $150.7M | $821.4M | 5.45x | 40.4% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| 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
- 98 hospitals with 96-386 beds
- Same-state prioritization (n=99)
- Comp margins: P25=-17.9% / P50=-7.6% / P75=2.0%
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.