PRISMA HEALTH RICHLAND HOSPITAL
1. Target Overview & Investment Thesis
PRISMA HEALTH RICHLAND HOSPITAL is a 600-bed suburban community hospital in RICHLAND, SC with $913.3M in net patient revenue and a 0.4% operating margin. The hospital serves a payer mix of 18.8% Medicare, 10.0% Medicaid, and 71.2% commercial.
Thesis: Undervalued. Our ML models identify $67.2M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 0.4% to 7.8% (+736bps).
| Net Revenue HCRIS | $913.3M |
| Current EBITDA COMPUTED | $4.0M |
| Operating Margin COMPUTED | 0.4% |
| Occupancy HCRIS | 77.7% |
| Revenue / Bed COMPUTED | $1.5M |
| Net-to-Gross HCRIS | 25.9% |
| Distress Probability ML | 43.6% |
2. Market Context & Competitive Position
SC has 85 Medicare-certified hospitals with a median operating margin of 1.3%. The target's margin of 0.4% places it below the state median. Among 12 size-comparable peers (300-1200 beds), the median margin is 3.0%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (300-1200), prioritizing same-state peers. 12 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| PRISMA HEALTH RICHLAND HOSPITA (Target) | SC | 600 | $913.3M | 0.4% |
| MEDICAL UNIVERSITY OF SOUTH CA | SC | 817 | $2.61B | -2.0% |
| GHS GREENVILLE MEMORIAL HOSPIT | SC | 721 | $1.57B | 16.3% |
| LEXINGTON MEDICAL CENTER | SC | 541 | $1.43B | 1.1% |
| SPARTANBURG REGIONAL MEDICAL C | SC | 665 | $1.18B | 7.2% |
| MCLEOD REGIONAL MEDICAL CENTER | SC | 524 | $792.5M | -4.9% |
| ST. FRANCIS HOSPITAL INC | SC | 327 | $691.4M | 4.9% |
| TRIDENT REGIONAL MEDICAL CENTE | SC | 388 | $637.5M | 16.1% |
| GRAND STRAND REGIONAL MEDICAL | SC | 336 | $602.2M | 32.8% |
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: $67.2M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $19.2M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $18.3M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $18.1M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $11.1M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $585K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $4.0M |
| + RCM Uplift | +$67.2M |
| Pro Forma EBITDA | $71.2M |
| Current Margin | 0.4% |
| Pro Forma Margin | 7.8% |
| WC Released (1x) | $35.0M |
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 | $6.2M | $698.8M | 113.05x | 157.4% |
| Base (11x exit) | 10.0x | 11.0x | $6.2M | $770.7M | 124.68x | 162.5% |
| Bull Case | 9.0x | 11.0x | $5.6M | $994.5M | 178.77x | 182.1% |
| Bull (12x exit) | 9.0x | 12.0x | $5.6M | $1.09B | 195.32x | 187.2% |
| Bear Case | 11.0x | 10.0x | $6.8M | $360.6M | 53.04x | 121.3% |
| Bear (11x exit) | 11.0x | 11.0x | $6.8M | $398.9M | 58.67x | 125.8% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Standard execution risk | RCM improvement requires management buy-in and 12-18 month implementation timeline |
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
- 12 hospitals with 300-1200 beds
- Same-state prioritization (n=13)
- Comp margins: P25=-2.9% / P50=3.0% / P75=10.2%
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.