JELLICO MEDICAL CENTER INC.
1. Target Overview & Investment Thesis
JELLICO MEDICAL CENTER INC. is a 54-bed community hospital in CAMPBELL, TN with $3.6M in net patient revenue and a -100.0% operating margin. The hospital serves a payer mix of 47.0% Medicare, 0.0% Medicaid, and 53.0% commercial.
Thesis: Turnaround. Our ML models identify $279K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -100.0% to -176.6% (+774bps).
| Net Revenue HCRIS | $3.6M |
| Current EBITDA COMPUTED | $-6.7M |
| Operating Margin COMPUTED | -100.0% |
| Occupancy HCRIS | 1.3% |
| Revenue / Bed COMPUTED | $67K |
| Net-to-Gross HCRIS | 22.0% |
| 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 -100.0% places it below the state median. Among 58 size-comparable peers (27-108 beds), the median margin is 1.9%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (27-108), prioritizing same-state peers. 58 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| JELLICO MEDICAL CENTER INC. (Target) | TN | 54 | $3.6M | -100.0% |
| 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: $279K (774bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Denial Rate Reduction | 12.0% | 6.5% | $78K | +215bp | 12mo |
| Net Collection Rate | 93.5% | 97.0% | $76K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $72K | +200bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $44K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +27bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-6.7M |
| + RCM Uplift | +$279K |
| Pro Forma EBITDA | $-6.4M |
| Current Margin | -100.0% |
| Pro Forma Margin | -176.6% |
| WC Released (1x) | $139K |
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 | $-10.2M | $-41.1M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-10.2M | $-48.6M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-9.2M | $-51.0M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-9.2M | $-58.3M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-11.3M | $-39.2M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-11.3M | $-46.8M | 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 1.3%, fixed costs are spread over fewer patient days. Mitigant: volume growth is an additional upside lever not modeled in base case |
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
- 58 hospitals with 27-108 beds
- Same-state prioritization (n=59)
- Comp margins: P25=-10.9% / P50=1.9% / 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.