JOHNSON COUNTY COMMUNITY HOSPITAL
1. Target Overview & Investment Thesis
JOHNSON COUNTY COMMUNITY HOSPITAL is a 2-bed community hospital in JOHNSON, TN with $10.5M in net patient revenue and a 1.3% operating margin. The hospital serves a payer mix of 36.9% Medicare, 0.0% Medicaid, and 63.1% commercial.
Thesis: Turnaround. Our ML models identify $780K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 1.3% to 8.7% (+741bps).
| Net Revenue HCRIS | $10.5M |
| Current EBITDA COMPUTED | $139K |
| Operating Margin COMPUTED | 1.3% |
| Occupancy HCRIS | 11.5% |
| Revenue / Bed COMPUTED | $5.3M |
| Net-to-Gross HCRIS | 26.6% |
| 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 0 size-comparable peers (1-4 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 (1-4), prioritizing same-state peers. 0 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| JOHNSON COUNTY COMMUNITY HOSPI (Target) | TN | 2 | $10.5M | 1.3% |
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: $780K (741bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $221K | +210bp | 18mo |
| Denial Rate Reduction | 12.0% | 6.5% | $211K | +200bp | 12mo |
| Cost to Collect | 4.5% | 2.5% | $210K | +200bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $128K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +9bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $139K |
| + RCM Uplift | +$780K |
| Pro Forma EBITDA | $919K |
| Current Margin | 1.3% |
| Pro Forma Margin | 8.7% |
| WC Released (1x) | $404K |
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 | $214K | $8.7M | 40.75x | 109.9% |
| Base (11x exit) | 10.0x | 11.0x | $214K | $9.7M | 45.15x | 114.2% |
| Bull Case | 9.0x | 11.0x | $193K | $12.3M | 63.89x | 129.7% |
| Bull (12x exit) | 9.0x | 12.0x | $193K | $13.5M | 70.00x | 133.9% |
| Bear Case | 11.0x | 10.0x | $235K | $4.7M | 20.18x | 82.4% |
| Bear (11x exit) | 11.0x | 11.0x | $235K | $5.3M | 22.52x | 86.4% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Low occupancy | At 11.5%, 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
- 0 hospitals with 1-4 beds
- Same-state prioritization (n=1)
- Comp margins: P25=nan% / P50=0.0% / P75=nan%
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 27, 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.