GOOD SHEPHERD PENN PARTNERS
1. Target Overview & Investment Thesis
GOOD SHEPHERD PENN PARTNERS is a 18-bed under-performing / distressed in PHILADELPHIA, PA with $66.1M in net patient revenue and a -78.7% operating margin. The hospital serves a payer mix of 36.0% Medicare, 7.7% Medicaid, and 56.3% commercial.
Thesis: Turnaround. Our ML models identify $4.9M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -78.7% to -71.3% (+736bps).
| Net Revenue HCRIS | $66.1M |
| Current EBITDA COMPUTED | $-52.0M |
| Operating Margin COMPUTED | -78.7% |
| Occupancy HCRIS | 81.3% |
| Revenue / Bed COMPUTED | $3.7M |
| Net-to-Gross HCRIS | 19.1% |
| Distress Probability ML | 37.3% |
2. Market Context & Competitive Position
PA has 225 Medicare-certified hospitals with a median operating margin of -4.4%. The target's margin of -78.7% places it below the state median. Among 40 size-comparable peers (9-36 beds), the median margin is 0.0%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (9-36), prioritizing same-state peers. 40 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| GOOD SHEPHERD PENN PARTNERS (Target) | PA | 18 | $66.1M | -78.7% |
| 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% |
| LVH-COORDINATED ALLENTOWN | PA | 20 | $89.6M | 2.3% |
| CHARLES COLE MEMORIAL HOSPITAL | PA | 25 | $88.1M | -9.0% |
| WELLSBORO | PA | 25 | $85.6M | 2.3% |
| FRICK HOSPITAL | PA | 33 | $67.4M | 9.3% |
| PENN HIGHLANDS ELK | PA | 25 | $67.4M | -0.5% |
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: $4.9M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $1.4M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $1.3M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $1.3M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $805K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $42K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-52.0M |
| + RCM Uplift | +$4.9M |
| Pro Forma EBITDA | $-47.2M |
| Current Margin | -78.7% |
| Pro Forma Margin | -71.3% |
| WC Released (1x) | $2.5M |
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 | $-80.0M | $-294.5M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-80.0M | $-350.0M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-72.0M | $-359.9M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-72.0M | $-413.9M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-88.1M | $-292.9M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-88.1M | $-350.8M | 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 |
| 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
- 40 hospitals with 9-36 beds
- Same-state prioritization (n=41)
- Comp margins: P25=-14.3% / P50=0.0% / P75=8.1%
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.