MCLEOD MEDICAL CENTER - DILLON
1. Target Overview & Investment Thesis
MCLEOD MEDICAL CENTER - DILLON is a 72-bed suburban community hospital in DILLON, SC with $53.2M in net patient revenue and a 11.0% operating margin. The hospital serves a payer mix of 24.5% Medicare, 5.9% Medicaid, and 69.6% commercial.
Thesis: Turnaround. Our ML models identify $3.9M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 11.0% to 18.4% (+736bps).
| Net Revenue HCRIS | $53.2M |
| Current EBITDA COMPUTED | $5.9M |
| Operating Margin COMPUTED | 11.0% |
| Occupancy HCRIS | 30.0% |
| Revenue / Bed COMPUTED | $739K |
| Net-to-Gross HCRIS | 18.5% |
| Distress Probability ML | 52.4% |
2. Market Context & Competitive Position
SC has 85 Medicare-certified hospitals with a median operating margin of 1.3%. The target's margin of 11.0% places it above the state median. Among 46 size-comparable peers (36-144 beds), the median margin is 5.2%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (36-144), prioritizing same-state peers. 46 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| MCLEOD MEDICAL CENTER - DILLON (Target) | SC | 72 | $53.2M | 11.0% |
| PH PATEWOOD HOSPITAL | SC | 64 | $229.8M | 38.0% |
| EAST COOPER REGIONAL MEDICAL C | SC | 120 | $206.1M | 28.3% |
| OCONEE MEMORIAL HOSPITAL | SC | 131 | $190.4M | 5.2% |
| WACCAMAW COMMUNITY HOSPITAL | SC | 124 | $182.8M | 2.7% |
| GEORGETOWN MEMORIAL HOSPITAL | SC | 68 | $168.0M | -4.6% |
| HILTON HEAD HOSPITAL | SC | 109 | $165.7M | 29.2% |
| PH GREER MEMORIAL HOSPITAL | SC | 66 | $161.3M | 31.3% |
| PH BAPTIST PARKRIDGE HOSPITAL | SC | 78 | $159.8M | 18.1% |
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: $3.9M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $1.1M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $1.1M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $1.1M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $647K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $34K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $5.9M |
| + RCM Uplift | +$3.9M |
| Pro Forma EBITDA | $9.8M |
| Current Margin | 11.0% |
| Pro Forma Margin | 18.4% |
| WC Released (1x) | $2.0M |
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 | $9.0M | $77.9M | 8.62x | 53.8% |
| Base (11x exit) | 10.0x | 11.0x | $9.0M | $88.7M | 9.81x | 57.9% |
| Bull Case | 9.0x | 11.0x | $8.1M | $104.5M | 12.85x | 66.6% |
| Bull (12x exit) | 9.0x | 12.0x | $8.1M | $116.4M | 14.31x | 70.3% |
| Bear Case | 11.0x | 10.0x | $9.9M | $55.4M | 5.57x | 41.0% |
| Bear (11x exit) | 11.0x | 11.0x | $9.9M | $64.2M | 6.45x | 45.2% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Low occupancy | At 30.0%, 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 52.4% probability of financial distress. Mitigant: distressed entry pricing (7-9x) compensates for risk |
| 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
- 46 hospitals with 36-144 beds
- Same-state prioritization (n=47)
- Comp margins: P25=-7.0% / P50=5.2% / P75=17.4%
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.