SSH - MCKEESPORT
1. Target Overview & Investment Thesis
SSH - MCKEESPORT is a 30-bed community hospital in ALLEGHENY, PA with $12.4M in net patient revenue and a 8.4% operating margin. The hospital serves a payer mix of 34.4% Medicare, 0.0% Medicaid, and 65.6% commercial.
Thesis: Turnaround. Our ML models identify $918K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 8.4% to 15.8% (+739bps).
| Net Revenue HCRIS | $12.4M |
| Current EBITDA COMPUTED | $1.0M |
| Operating Margin COMPUTED | 8.4% |
| Occupancy HCRIS | 60.7% |
| Revenue / Bed COMPUTED | $414K |
| Net-to-Gross HCRIS | 12.4% |
| 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 8.4% places it above the state median. Among 68 size-comparable peers (15-60 beds), the median margin is -0.5%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (15-60), prioritizing same-state peers. 68 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| SSH - MCKEESPORT (Target) | PA | 30 | $12.4M | 8.4% |
| OSS ORTHOPAEDIC HOSPITAL | PA | 30 | $149.4M | -5.0% |
| WELLSPAN SURGERY AND REHAB HOS | PA | 25 | $120.2M | 2.8% |
| UPMC LITITZ | PA | 36 | $114.5M | 14.2% |
| MINERS MEMORIAL MEDICAL CENTER | PA | 49 | $107.7M | 12.4% |
| LVH-COORDINATED ALLENTOWN | PA | 20 | $89.6M | 2.3% |
| CHARLES COLE MEMORIAL HOSPITAL | PA | 25 | $88.1M | -9.0% |
| ST LUKES HOSPITAL-CARBON CAMPU | PA | 52 | $86.4M | 8.1% |
| POCONO MEDICAL CENTER DICKSON | PA | 40 | $85.9M | 0.1% |
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: $918K (739bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $261K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $249K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $247K | +199bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $151K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +8bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $1.0M |
| + RCM Uplift | +$918K |
| Pro Forma EBITDA | $2.0M |
| Current Margin | 8.4% |
| Pro Forma Margin | 15.8% |
| WC Released (1x) | $477K |
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 | $1.6M | $16.1M | 9.99x | 58.5% |
| Base (11x exit) | 10.0x | 11.0x | $1.6M | $18.2M | 11.32x | 62.5% |
| Bull Case | 9.0x | 11.0x | $1.4M | $21.8M | 15.03x | 72.0% |
| Bull (12x exit) | 9.0x | 12.0x | $1.4M | $24.2M | 16.69x | 75.6% |
| Bear Case | 11.0x | 10.0x | $1.8M | $11.0M | 6.20x | 44.0% |
| Bear (11x exit) | 11.0x | 11.0x | $1.8M | $12.6M | 7.14x | 48.2% |
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
- 68 hospitals with 15-60 beds
- Same-state prioritization (n=69)
- Comp margins: P25=-16.1% / P50=-0.5% / P75=8.2%
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.