HAMPTON REGIONAL MEDICAL CENTER
1. Target Overview & Investment Thesis
HAMPTON REGIONAL MEDICAL CENTER is a 32-bed under-performing / distressed in HAMPTON, SC with $24.0M in net patient revenue and a -21.2% operating margin. The hospital serves a payer mix of 27.8% Medicare, 3.0% Medicaid, and 69.3% commercial.
Thesis: Turnaround. Our ML models identify $1.8M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -21.2% to -13.9% (+736bps).
| Net Revenue HCRIS | $24.0M |
| Current EBITDA COMPUTED | $-5.1M |
| Operating Margin COMPUTED | -21.2% |
| Occupancy HCRIS | 22.9% |
| Revenue / Bed COMPUTED | $751K |
| Net-to-Gross HCRIS | 33.1% |
| Distress Probability ML | 54.9% |
2. Market Context & Competitive Position
SC has 85 Medicare-certified hospitals with a median operating margin of 1.3%. The target's margin of -21.2% places it below the state median. Among 36 size-comparable peers (16-64 beds), the median margin is 1.5%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (16-64), prioritizing same-state peers. 36 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| HAMPTON REGIONAL MEDICAL CENTE (Target) | SC | 32 | $24.0M | -21.2% |
| PH PATEWOOD HOSPITAL | SC | 64 | $229.8M | 38.0% |
| PELHAM MEDICAL CENTER | SC | 48 | $137.2M | 17.1% |
| PH HILLCREST HOSPITAL | SC | 43 | $123.6M | 30.8% |
| ROPER ST. FRANCIS HOSPITAL-BER | SC | 46 | $119.0M | 13.0% |
| PH BAPTIST EASLEY HOSPITAL | SC | 64 | $118.3M | 19.6% |
| PH LAURENS COUNTY HOSPITAL | SC | 41 | $109.4M | 13.5% |
| COASTAL CAROLINA MEDICAL CENTE | SC | 41 | $94.8M | 24.9% |
| CHEROKEE MEDICAL CENTER | SC | 25 | $61.2M | 8.3% |
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: $1.8M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $504K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $480K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $476K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $292K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $15K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-5.1M |
| + RCM Uplift | +$1.8M |
| Pro Forma EBITDA | $-3.3M |
| Current Margin | -21.2% |
| Pro Forma Margin | -13.9% |
| WC Released (1x) | $921K |
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 | $-7.8M | $-15.9M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-7.8M | $-20.1M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-7.1M | $-16.8M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-7.1M | $-20.4M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-8.6M | $-22.2M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-8.6M | $-27.2M | 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 22.9%, 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 54.9% 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
- 36 hospitals with 16-64 beds
- Same-state prioritization (n=37)
- Comp margins: P25=-14.1% / P50=1.5% / P75=15.3%
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.