UNICOI COUNTY HOSPITAL
1. Target Overview & Investment Thesis
UNICOI COUNTY HOSPITAL is a 8-bed suburban community hospital in UNICOI, TN with $12.7M in net patient revenue and a -4.9% operating margin. The hospital serves a payer mix of 27.6% Medicare, 3.5% Medicaid, and 68.9% commercial.
Thesis: Turnaround. Our ML models identify $934K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -4.9% to 2.5% (+738bps).
| Net Revenue HCRIS | $12.7M |
| Current EBITDA COMPUTED | $-623K |
| Operating Margin COMPUTED | -4.9% |
| Occupancy HCRIS | 72.9% |
| Revenue / Bed COMPUTED | $1.6M |
| Net-to-Gross HCRIS | 16.5% |
| Distress Probability ML | 40.4% |
2. Market Context & Competitive Position
TN has 141 Medicare-certified hospitals with a median operating margin of -0.6%. The target's margin of -4.9% places it below the state median. Among 383 size-comparable peers (4-16 beds), the median margin is -9.5%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (4-16), prioritizing same-state peers. 383 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| UNICOI COUNTY HOSPITAL (Target) | TN | 8 | $12.7M | -4.9% |
| WENATCHEE VALLEY HOSPITAL | WA | 11 | $277.5M | -4.9% |
| NATIONAL JEWISH HEALTH | CO | 13 | $150.4M | -50.0% |
| FRANCISCAN HEALTH HAMMOND | IN | 10 | $117.7M | -4.3% |
| NEW YORK EYE AND EAR INFIRMARY | NY | 15 | $112.8M | -28.0% |
| OAK LEAF SURGICAL HOSPITAL LLC | WI | 13 | $109.8M | 34.1% |
| ST MARYS HOSPITAL SUPERIOR | WI | 16 | $98.2M | 18.6% |
| ARIZONA GENERAL HOSPITAL | AZ | 16 | $97.1M | 10.4% |
| JEWISH HOME FOR THE AGED | CA | 13 | $88.0M | -48.0% |
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: $934K (738bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $266K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $253K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $252K | +199bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $154K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +8bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-623K |
| + RCM Uplift | +$934K |
| Pro Forma EBITDA | $311K |
| Current Margin | -4.9% |
| Pro Forma Margin | 2.5% |
| WC Released (1x) | $485K |
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 | $-958K | $5.2M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-958K | $5.4M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-863K | $8.2M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-863K | $8.7M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-1.1M | $874K | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-1.1M | $619K | 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 |
| 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
- 383 hospitals with 4-16 beds
- Same-state prioritization (n=9)
- Comp margins: P25=-25.3% / P50=-9.5% / P75=3.1%
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.