PELHAM MEDICAL CENTER
1. Target Overview & Investment Thesis
PELHAM MEDICAL CENTER is a 48-bed suburban community hospital in SPARTANBURG, SC with $137.2M in net patient revenue and a 17.1% operating margin. The hospital serves a payer mix of 28.5% Medicare, 1.8% Medicaid, and 69.7% commercial.
Thesis: Turnaround. Our ML models identify $10.1M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 17.1% to 24.4% (+736bps).
| Net Revenue HCRIS | $137.2M |
| Current EBITDA COMPUTED | $23.4M |
| Operating Margin COMPUTED | 17.1% |
| Occupancy HCRIS | 86.2% |
| Revenue / Bed COMPUTED | $2.9M |
| Net-to-Gross HCRIS | 26.9% |
| Distress Probability ML | 36.6% |
2. Market Context & Competitive Position
SC has 85 Medicare-certified hospitals with a median operating margin of 1.3%. The target's margin of 17.1% places it above the state median. Among 43 size-comparable peers (24-96 beds), the median margin is 2.0%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (24-96), prioritizing same-state peers. 43 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| PELHAM MEDICAL CENTER (Target) | SC | 48 | $137.2M | 17.1% |
| PH PATEWOOD HOSPITAL | SC | 64 | $229.8M | 38.0% |
| GEORGETOWN MEMORIAL HOSPITAL | SC | 68 | $168.0M | -4.6% |
| PH GREER MEMORIAL HOSPITAL | SC | 66 | $161.3M | 31.3% |
| PH BAPTIST PARKRIDGE HOSPITAL | SC | 78 | $159.8M | 18.1% |
| MUSC HEALTH LANCASTER MEDICAL | SC | 78 | $128.2M | -10.4% |
| 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% |
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: $10.1M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $2.9M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $2.7M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $2.7M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.7M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $88K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $23.4M |
| + RCM Uplift | +$10.1M |
| Pro Forma EBITDA | $33.5M |
| Current Margin | 17.1% |
| Pro Forma Margin | 24.4% |
| WC Released (1x) | $5.3M |
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 | $36.1M | $255.7M | 7.09x | 47.9% |
| Base (11x exit) | 10.0x | 11.0x | $36.1M | $292.9M | 8.12x | 52.0% |
| Bull Case | 9.0x | 11.0x | $32.5M | $338.0M | 10.41x | 59.8% |
| Bull (12x exit) | 9.0x | 12.0x | $32.5M | $378.3M | 11.65x | 63.4% |
| Bear Case | 11.0x | 10.0x | $39.7M | $193.4M | 4.88x | 37.3% |
| Bear (11x exit) | 11.0x | 11.0x | $39.7M | $225.7M | 5.69x | 41.6% |
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
- 43 hospitals with 24-96 beds
- Same-state prioritization (n=44)
- Comp margins: P25=-11.5% / P50=2.0% / P75=16.6%
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.