ROANE COUNTY MEDICAL CENTER
1. Target Overview & Investment Thesis
ROANE COUNTY MEDICAL CENTER is a 52-bed community hospital in ROANE, TN with $44.3M in net patient revenue and a 2.4% operating margin. The hospital serves a payer mix of 24.9% Medicare, 0.0% Medicaid, and 75.1% commercial.
Thesis: Turnaround. Our ML models identify $3.3M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 2.4% to 9.8% (+736bps).
| Net Revenue HCRIS | $44.3M |
| Current EBITDA COMPUTED | $1.1M |
| Operating Margin COMPUTED | 2.4% |
| Occupancy HCRIS | 60.0% |
| Revenue / Bed COMPUTED | $852K |
| Net-to-Gross HCRIS | 30.0% |
| Distress Probability ML | nan% |
2. Market Context & Competitive Position
TN has 141 Medicare-certified hospitals with a median operating margin of -0.6%. The target's margin of 2.4% places it above the state median. Among 59 size-comparable peers (26-104 beds), the median margin is 0.0%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (26-104), prioritizing same-state peers. 59 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ROANE COUNTY MEDICAL CENTER (Target) | TN | 52 | $44.3M | 2.4% |
| BAPTIST MEM HOSPITAL TIPTON CO | TN | 48 | $179.0M | -5.8% |
| SOUTHERN HILLS MEDICAL CENTER | TN | 101 | $145.2M | 16.4% |
| INDIAN PATH COMMUNITY HOSPITAL | TN | 35 | $142.8M | 12.0% |
| HORIZON MEDICAL CENTER | TN | 96 | $141.3M | 15.3% |
| MORRISTOWN-HAMBLEN HOSPITAL | TN | 102 | $126.6M | 11.8% |
| LECONTE MEDICAL CENTER | TN | 60 | $126.3M | 6.4% |
| FRANKLIN WOODS COMMUNITY HOSPI | TN | 80 | $110.3M | 18.7% |
| GREENEVILLE COMMUNITY HOSPITAL | TN | 81 | $104.5M | -5.1% |
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: $3.3M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $930K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $886K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $877K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $539K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $28K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $1.1M |
| + RCM Uplift | +$3.3M |
| Pro Forma EBITDA | $4.3M |
| Current Margin | 2.4% |
| Pro Forma Margin | 9.8% |
| WC Released (1x) | $1.7M |
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 | $1.6M | $39.6M | 24.15x | 89.1% |
| Base (11x exit) | 10.0x | 11.0x | $1.6M | $44.1M | 26.89x | 93.2% |
| Bull Case | 9.0x | 11.0x | $1.5M | $55.4M | 37.52x | 106.5% |
| Bull (12x exit) | 9.0x | 12.0x | $1.5M | $60.9M | 41.23x | 110.4% |
| Bear Case | 11.0x | 10.0x | $1.8M | $22.8M | 12.63x | 66.1% |
| Bear (11x exit) | 11.0x | 11.0x | $1.8M | $25.7M | 14.22x | 70.0% |
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
- 59 hospitals with 26-104 beds
- Same-state prioritization (n=60)
- Comp margins: P25=-11.3% / P50=0.0% / P75=12.0%
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.