ST. FRANCIS BARTLETT MED CTR
1. Target Overview & Investment Thesis
ST. FRANCIS BARTLETT MED CTR is a 196-bed suburban community hospital in SHELBY, TN with $129.2M in net patient revenue and a 1.5% operating margin. The hospital serves a payer mix of 32.7% Medicare, 3.9% Medicaid, and 63.4% commercial.
Thesis: Undervalued. Our ML models identify $9.5M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 1.5% to 8.9% (+736bps).
| Net Revenue HCRIS | $129.2M |
| Current EBITDA COMPUTED | $2.0M |
| Operating Margin COMPUTED | 1.5% |
| Occupancy HCRIS | 49.9% |
| Revenue / Bed COMPUTED | $659K |
| Net-to-Gross HCRIS | 9.8% |
| Distress Probability ML | 47.2% |
2. Market Context & Competitive Position
TN has 141 Medicare-certified hospitals with a median operating margin of -0.6%. The target's margin of 1.5% places it above the state median. Among 35 size-comparable peers (98-392 beds), the median margin is 1.7%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (98-392), prioritizing same-state peers. 35 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ST. FRANCIS BARTLETT MED CTR (Target) | TN | 196 | $129.2M | 1.5% |
| SAINT THOMAS RUTHERFORD HOSPIT | TN | 354 | $447.4M | 1.3% |
| REGIONAL ONE HEALTH | TN | 291 | $407.9M | -50.0% |
| PARKWEST MEDICAL CENTER | TN | 361 | $396.4M | -5.5% |
| COOKEVILLE REGIONAL MEDICAL CE | TN | 212 | $372.5M | 2.1% |
| SKYLINE MEDICAL CENTER | TN | 350 | $360.4M | 15.1% |
| FORT SANDERS REGIONAL MEDICAL | TN | 304 | $346.2M | -9.4% |
| HOLSTON VALLEY HOSP & MED CTR | TN | 286 | $344.6M | -7.4% |
| MAURY REGIONAL HOSPITAL | TN | 244 | $334.0M | -9.7% |
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: $9.5M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $2.7M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $2.6M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $2.6M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.6M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $83K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $2.0M |
| + RCM Uplift | +$9.5M |
| Pro Forma EBITDA | $11.5M |
| Current Margin | 1.5% |
| Pro Forma Margin | 8.9% |
| WC Released (1x) | $5.0M |
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 | $3.1M | $108.2M | 35.41x | 104.1% |
| Base (11x exit) | 10.0x | 11.0x | $3.1M | $120.0M | 39.28x | 108.4% |
| Bull Case | 9.0x | 11.0x | $2.8M | $152.4M | 55.42x | 123.2% |
| Bull (12x exit) | 9.0x | 12.0x | $2.8M | $167.1M | 60.75x | 127.4% |
| Bear Case | 11.0x | 10.0x | $3.4M | $59.7M | 17.75x | 77.8% |
| Bear (11x exit) | 11.0x | 11.0x | $3.4M | $66.7M | 19.85x | 81.8% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| 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
- 35 hospitals with 98-392 beds
- Same-state prioritization (n=36)
- Comp margins: P25=-7.7% / P50=1.7% / 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.