SAINT THOMAS RUTHERFORD HOSPITAL
1. Target Overview & Investment Thesis
SAINT THOMAS RUTHERFORD HOSPITAL is a 354-bed community hospital in RUTHERFORD, TN with $447.4M in net patient revenue and a 1.3% operating margin. The hospital serves a payer mix of 22.9% Medicare, 0.0% Medicaid, and 77.1% commercial.
Thesis: Undervalued. Our ML models identify $32.9M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 1.3% to 8.7% (+736bps).
| Net Revenue HCRIS | $447.4M |
| Current EBITDA COMPUTED | $6.0M |
| Operating Margin COMPUTED | 1.3% |
| Occupancy HCRIS | 87.6% |
| Revenue / Bed COMPUTED | $1.3M |
| Net-to-Gross HCRIS | 21.9% |
| 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 1.3% places it above the state median. Among 22 size-comparable peers (177-708 beds), the median margin is 0.8%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (177-708), prioritizing same-state peers. 22 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| SAINT THOMAS RUTHERFORD HOSPIT (Target) | TN | 354 | $447.4M | 1.3% |
| UNIVERSITY OF TENNESSEE MEDICA | TN | 698 | $1.08B | -17.6% |
| SAINT THOMAS WEST HOSPITAL | TN | 643 | $1.06B | 0.2% |
| TRISTAR CENTENNIAL MEDICAL CEN | TN | 598 | $991.8M | 23.0% |
| JACKSON-MADISON COUNTY GENERAL | TN | 580 | $797.1M | 1.4% |
| MEMORIAL HEALTH CARE SYSTEM IN | TN | 431 | $583.9M | -9.0% |
| JOHNSON CITY MEDICAL CENTER | TN | 537 | $546.1M | -8.6% |
| PARKRIDGE MEDICAL CENTER | TN | 396 | $433.4M | 30.1% |
| REGIONAL ONE HEALTH | TN | 291 | $407.9M | -50.0% |
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: $32.9M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $9.4M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $8.9M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $8.9M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $5.4M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $286K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $6.0M |
| + RCM Uplift | +$32.9M |
| Pro Forma EBITDA | $39.0M |
| Current Margin | 1.3% |
| Pro Forma Margin | 8.7% |
| WC Released (1x) | $17.2M |
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 | $9.3M | $369.2M | 39.74x | 108.9% |
| Base (11x exit) | 10.0x | 11.0x | $9.3M | $409.1M | 44.03x | 113.2% |
| Bull Case | 9.0x | 11.0x | $8.4M | $520.8M | 62.29x | 128.5% |
| Bull (12x exit) | 9.0x | 12.0x | $8.4M | $570.6M | 68.24x | 132.7% |
| Bear Case | 11.0x | 10.0x | $10.2M | $201.5M | 19.72x | 81.5% |
| Bear (11x exit) | 11.0x | 11.0x | $10.2M | $225.0M | 22.01x | 85.6% |
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
- 22 hospitals with 177-708 beds
- Same-state prioritization (n=23)
- Comp margins: P25=-8.9% / P50=0.8% / P75=7.9%
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.