HOSPITAL HIMA SAN PABLO FAJARDO
1. Target Overview & Investment Thesis
HOSPITAL HIMA SAN PABLO FAJARDO is a 179-bed under-performing / distressed in FAJARDO, PR with $14.6M in net patient revenue and a -45.9% operating margin. The hospital serves a payer mix of 4.5% Medicare, 16.7% Medicaid, and 78.8% commercial.
Thesis: Undervalued. Our ML models identify $1.1M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -45.9% to -38.6% (+736bps).
| Net Revenue HCRIS | $14.6M |
| Current EBITDA COMPUTED | $-6.7M |
| Operating Margin COMPUTED | -45.9% |
| Occupancy HCRIS | 18.4% |
| Revenue / Bed COMPUTED | $82K |
| Net-to-Gross HCRIS | 57.0% |
| Distress Probability ML | 62.3% |
2. Market Context & Competitive Position
PR has 61 Medicare-certified hospitals with a median operating margin of -8.8%. The target's margin of -45.9% places it below the state median. Among 37 size-comparable peers (90-358 beds), the median margin is -4.9%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (90-358), prioritizing same-state peers. 37 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| HOSPITAL HIMA SAN PABLO FAJARD (Target) | PR | 179 | $14.6M | -45.9% |
| HOSPITAL MENONITA DE CAYEY | PR | 225 | $186.2M | 15.0% |
| SAN LUCAS PONCE | PR | 348 | $141.1M | 9.2% |
| HOSPITAL DR. ALEJANDRO OTERO | PR | 263 | $129.0M | -1.0% |
| HOSPITAL MENONITA CAGUAS INC | PR | 232 | $114.1M | 6.8% |
| DOCTOR CENTER HOSPITAL MANATI | PR | 258 | $103.4M | 1.6% |
| MAYAGUEZ MEDICAL CENTER | PR | 210 | $102.8M | 7.6% |
| HOSPITAL PAVIA SANTURCE | PR | 156 | $101.9M | -9.4% |
| UNIVERSITY DISCTRICT HOSPITAL | PR | 210 | $97.4M | -43.2% |
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% | $307K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $292K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $289K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $178K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +7bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-6.7M |
| + RCM Uplift | +$1.1M |
| Pro Forma EBITDA | $-5.6M |
| Current Margin | -45.9% |
| Pro Forma Margin | -38.6% |
| WC Released (1x) | $560K |
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 | $-10.3M | $-33.5M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-10.3M | $-40.2M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-9.3M | $-40.0M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-9.3M | $-46.4M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-11.4M | $-35.5M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-11.4M | $-42.8M | 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 |
| Medium | Low occupancy | At 18.4%, fixed costs are spread over fewer patient days. Mitigant: volume growth is an additional upside lever not modeled in base case |
| High | Elevated distress probability | Model estimates 62.3% probability of financial distress. Mitigant: distressed entry pricing (7-9x) compensates for risk |
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
- 37 hospitals with 90-358 beds
- Same-state prioritization (n=38)
- Comp margins: P25=-17.6% / P50=-4.9% / P75=1.6%
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.