MUSC HEALTH KERSHAW MEDICAL CENTER
1. Target Overview & Investment Thesis
MUSC HEALTH KERSHAW MEDICAL CENTER is a 99-bed under-performing / distressed in nan, SC with $85.0M in net patient revenue and a -19.3% operating margin. The hospital serves a payer mix of 33.8% Medicare, 7.3% Medicaid, and 59.0% commercial.
Thesis: Turnaround. Our ML models identify $6.3M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -19.3% to -11.9% (+736bps).
| Net Revenue HCRIS | $85.0M |
| Current EBITDA COMPUTED | $-16.4M |
| Operating Margin COMPUTED | -19.3% |
| Occupancy HCRIS | 38.6% |
| Revenue / Bed COMPUTED | $858K |
| Net-to-Gross HCRIS | 18.7% |
| Distress Probability ML | 51.1% |
2. Market Context & Competitive Position
SC has 85 Medicare-certified hospitals with a median operating margin of 1.3%. The target's margin of -19.3% places it below the state median. Among 33 size-comparable peers (50-198 beds), the median margin is 8.3%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (50-198), prioritizing same-state peers. 33 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| MUSC HEALTH KERSHAW MEDICAL CE (Target) | SC | 99 | $85.0M | -19.3% |
| BON SECOURS ST. FRANCIS XAVIER | SC | 186 | $304.6M | 12.2% |
| BEAUFORT MEMORIAL HOSPITAL | SC | 167 | $269.0M | -7.3% |
| MCLEOD LORIS SEACOAST HOSPITAL | SC | 155 | $262.3M | 10.1% |
| MUSC HEALTH FLORENCE MEDICAL C | SC | 187 | $252.9M | -6.9% |
| CONWAY HOSPITAL | SC | 171 | $250.2M | -14.7% |
| 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% |
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: $6.3M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $1.8M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $1.7M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $1.7M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.0M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $54K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-16.4M |
| + RCM Uplift | +$6.3M |
| Pro Forma EBITDA | $-10.1M |
| Current Margin | -19.3% |
| Pro Forma Margin | -11.9% |
| WC Released (1x) | $3.3M |
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 | $-25.2M | $-45.6M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-25.2M | $-58.3M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-22.7M | $-45.9M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-22.7M | $-56.8M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-27.7M | $-68.7M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-27.7M | $-84.5M | 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 |
| High | Elevated distress probability | Model estimates 51.1% 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
- 33 hospitals with 50-198 beds
- Same-state prioritization (n=34)
- Comp margins: P25=-7.2% / P50=8.3% / P75=19.6%
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.