BIG SOUTH FORK MEDICAL CENTER
1. Target Overview & Investment Thesis
BIG SOUTH FORK MEDICAL CENTER is a 25-bed suburban community hospital in SCOTT, TN with $13.4M in net patient revenue and a 11.2% operating margin. The hospital serves a payer mix of 36.6% Medicare, 16.3% Medicaid, and 47.1% commercial.
Thesis: Turnaround. Our ML models identify $989K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 11.2% to 18.6% (+737bps).
| Net Revenue HCRIS | $13.4M |
| Current EBITDA COMPUTED | $1.5M |
| Operating Margin COMPUTED | 11.2% |
| Occupancy HCRIS | 10.3% |
| Revenue / Bed COMPUTED | $537K |
| Net-to-Gross HCRIS | 25.8% |
| Distress Probability ML | 60.9% |
2. Market Context & Competitive Position
TN has 141 Medicare-certified hospitals with a median operating margin of -0.6%. The target's margin of 11.2% places it above the state median. Among 55 size-comparable peers (12-50 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 (12-50), prioritizing same-state peers. 55 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| BIG SOUTH FORK MEDICAL CENTER (Target) | TN | 25 | $13.4M | 11.2% |
| BAPTIST MEM HOSPITAL TIPTON CO | TN | 48 | $179.0M | -5.8% |
| INDIAN PATH COMMUNITY HOSPITAL | TN | 35 | $142.8M | 12.0% |
| HENRY COUNTY MEDICAL CENTER | TN | 43 | $81.7M | -13.0% |
| THE CENTER FOR SPINAL SURGERY | TN | 23 | $78.7M | 39.3% |
| TRUSTPOINT HOSPITAL | TN | 18 | $50.8M | -0.8% |
| BAPTIST MEM HOSPITAL UNION CIT | TN | 43 | $50.5M | 5.1% |
| VANDERBILT BEDFORD COUNTY HOSP | TN | 24 | $49.5M | 1.9% |
| NEWPORT MEDICAL CENTER | TN | 32 | $47.8M | 11.6% |
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: $989K (737bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $282K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $268K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $267K | +199bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $163K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +7bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $1.5M |
| + RCM Uplift | +$989K |
| Pro Forma EBITDA | $2.5M |
| Current Margin | 11.2% |
| Pro Forma Margin | 18.6% |
| WC Released (1x) | $515K |
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 | $2.3M | $19.8M | 8.56x | 53.6% |
| Base (11x exit) | 10.0x | 11.0x | $2.3M | $22.6M | 9.74x | 57.7% |
| Bull Case | 9.0x | 11.0x | $2.1M | $26.6M | 12.75x | 66.4% |
| Bull (12x exit) | 9.0x | 12.0x | $2.1M | $29.6M | 14.21x | 70.0% |
| Bear Case | 11.0x | 10.0x | $2.5M | $14.1M | 5.54x | 40.9% |
| Bear (11x exit) | 11.0x | 11.0x | $2.5M | $16.4M | 6.42x | 45.1% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Low occupancy | At 10.3%, fixed costs are spread over fewer patient days. Mitigant: volume growth is an additional upside lever not modeled in base case |
| High | Elevated distress probability | Model estimates 60.9% probability of financial distress. Mitigant: distressed entry pricing (7-9x) compensates for risk |
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
- 55 hospitals with 12-50 beds
- Same-state prioritization (n=56)
- Comp margins: P25=-14.4% / P50=-0.8% / P75=8.8%
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.