ROLLING HILLS HOSPITAL
1. Target Overview & Investment Thesis
ROLLING HILLS HOSPITAL is a 130-bed community hospital in WILLIAMSON, TN with $29.3M in net patient revenue and a 12.2% operating margin. The hospital serves a payer mix of 7.0% Medicare, 0.0% Medicaid, and 93.0% commercial.
Thesis: Turnaround. Our ML models identify $2.2M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 12.2% to 19.5% (+736bps).
| Net Revenue HCRIS | $29.3M |
| Current EBITDA COMPUTED | $3.6M |
| Operating Margin COMPUTED | 12.2% |
| Occupancy HCRIS | 68.9% |
| Revenue / Bed COMPUTED | $225K |
| Net-to-Gross HCRIS | 44.0% |
| 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 12.2% places it above the state median. Among 43 size-comparable peers (65-260 beds), the median margin is 1.8%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (65-260), prioritizing same-state peers. 43 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ROLLING HILLS HOSPITAL (Target) | TN | 130 | $29.3M | 12.2% |
| COOKEVILLE REGIONAL MEDICAL CE | TN | 212 | $372.5M | 2.1% |
| MAURY REGIONAL HOSPITAL | TN | 244 | $334.0M | -9.7% |
| TENNOVA HEALTHCARE - TURKEY CR | TN | 219 | $326.2M | 8.1% |
| BLOUNT MEMORIAL HOSPITAL | TN | 145 | $326.0M | -8.5% |
| SUMMIT MEDICAL CENTER | TN | 188 | $298.0M | 40.6% |
| BRISTOL REGIONAL MEDICAL CENTE | TN | 244 | $293.9M | 3.2% |
| METRO NASHVILLE GENERAL HOSPIT | TN | 114 | $287.4M | 48.9% |
| WILLIAMSON HEALTH | TN | 203 | $271.4M | -3.3% |
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: $2.2M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $615K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $585K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $580K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $356K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $19K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $3.6M |
| + RCM Uplift | +$2.2M |
| Pro Forma EBITDA | $5.7M |
| Current Margin | 12.2% |
| Pro Forma Margin | 19.5% |
| WC Released (1x) | $1.1M |
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 | $5.5M | $45.0M | 8.22x | 52.4% |
| Base (11x exit) | 10.0x | 11.0x | $5.5M | $51.3M | 9.37x | 56.4% |
| Bull Case | 9.0x | 11.0x | $4.9M | $60.2M | 12.21x | 65.0% |
| Bull (12x exit) | 9.0x | 12.0x | $4.9M | $67.1M | 13.62x | 68.6% |
| Bear Case | 11.0x | 10.0x | $6.0M | $32.5M | 5.39x | 40.1% |
| Bear (11x exit) | 11.0x | 11.0x | $6.0M | $37.7M | 6.25x | 44.3% |
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
- 43 hospitals with 65-260 beds
- Same-state prioritization (n=44)
- Comp margins: P25=-7.2% / P50=1.8% / P75=14.5%
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.