SSH - ERIE
1. Target Overview & Investment Thesis
SSH - ERIE is a 50-bed community hospital in ERIE, PA with $15.3M in net patient revenue and a 1.9% operating margin. The hospital serves a payer mix of 34.0% Medicare, 0.0% Medicaid, and 66.0% commercial.
Thesis: Turnaround. Our ML models identify $1.1M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 1.9% to 9.2% (+736bps).
| Net Revenue HCRIS | $15.3M |
| Current EBITDA COMPUTED | $288K |
| Operating Margin COMPUTED | 1.9% |
| Occupancy HCRIS | 42.5% |
| Revenue / Bed COMPUTED | $305K |
| Net-to-Gross HCRIS | 14.2% |
| Distress Probability ML | nan% |
2. Market Context & Competitive Position
PA has 225 Medicare-certified hospitals with a median operating margin of -4.4%. The target's margin of 1.9% places it above the state median. Among 90 size-comparable peers (25-100 beds), the median margin is 0.1%. 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. 90 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| SSH - ERIE (Target) | PA | 50 | $15.3M | 1.9% |
| THE GETTYSBURG HOSPITAL | PA | 76 | $341.8M | 18.4% |
| AMERICAN ONCOLOGIC HOSPIAL | PA | 100 | $229.8M | -11.1% |
| ST. LUKES HOSPITAL - MONROE CA | PA | 98 | $221.8M | 7.8% |
| UPMC HANOVER | PA | 73 | $200.8M | 18.2% |
| MEMORIAL HOSPITAL | PA | 80 | $184.5M | 13.1% |
| UPMC CARLISLE | PA | 72 | $165.0M | 19.5% |
| UPMC HORIZON HOSPITAL | PA | 99 | $156.4M | -16.5% |
| OSS ORTHOPAEDIC HOSPITAL | PA | 30 | $149.4M | -5.0% |
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: $1.1M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $321K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $305K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $302K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $186K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $288K |
| + RCM Uplift | +$1.1M |
| Pro Forma EBITDA | $1.4M |
| Current Margin | 1.9% |
| Pro Forma Margin | 9.2% |
| WC Released (1x) | $586K |
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 | $443K | $13.1M | 29.68x | 97.0% |
| Base (11x exit) | 10.0x | 11.0x | $443K | $14.6M | 32.97x | 101.2% |
| Bull Case | 9.0x | 11.0x | $399K | $18.5M | 46.30x | 115.3% |
| Bull (12x exit) | 9.0x | 12.0x | $399K | $20.2M | 50.81x | 119.4% |
| Bear Case | 11.0x | 10.0x | $487K | $7.4M | 15.14x | 72.2% |
| Bear (11x exit) | 11.0x | 11.0x | $487K | $8.3M | 16.98x | 76.2% |
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
- 90 hospitals with 25-100 beds
- Same-state prioritization (n=91)
- Comp margins: P25=-16.5% / P50=0.1% / P75=8.5%
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.