BEHAVIORAL HOSPITAL OF BELLAIRE
1. Target Overview & Investment Thesis
BEHAVIORAL HOSPITAL OF BELLAIRE is a 122-bed suburban community hospital in nan, TX with $27.6M in net patient revenue and a 7.6% operating margin. The hospital serves a payer mix of 10.6% Medicare, 0.2% Medicaid, and 89.2% commercial.
Thesis: Turnaround. Our ML models identify $2.0M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 7.6% to 15.0% (+736bps).
| Net Revenue HCRIS | $27.6M |
| Current EBITDA COMPUTED | $2.1M |
| Operating Margin COMPUTED | 7.6% |
| Occupancy HCRIS | 78.0% |
| Revenue / Bed COMPUTED | $227K |
| Net-to-Gross HCRIS | 36.3% |
| Distress Probability ML | 42.2% |
2. Market Context & Competitive Position
TX has 583 Medicare-certified hospitals with a median operating margin of -0.7%. The target's margin of 7.6% places it above the state median. Among 173 size-comparable peers (61-244 beds), the median margin is 2.2%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (61-244), prioritizing same-state peers. 173 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| BEHAVIORAL HOSPITAL OF BELLAIR (Target) | TX | 122 | $27.6M | 7.6% |
| DRISCOLL CHILDRENS HOSPITAL | TX | 215 | $694.3M | 29.4% |
| ROUND ROCK HOSPITAL | TX | 165 | $681.4M | 8.7% |
| HILLCREST BAPTIST MEDICAL CENT | TX | 236 | $464.8M | -6.7% |
| THE HEART HOSPITAL BAYLOR PLAN | TX | 109 | $464.6M | 25.7% |
| DELL SETON MEDICAL CENTER AT T | TX | 225 | $438.6M | -4.2% |
| UNITED REGIONAL HEALTH CARE SY | TX | 244 | $422.1M | 3.3% |
| COVENANT CHILDRENS HOSPITAL | TX | 181 | $410.3M | 15.5% |
| COLLEGE STATION HOSPITAL | TX | 135 | $397.7M | -0.9% |
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: $2.0M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $580K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $553K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $547K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $336K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $18K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $2.1M |
| + RCM Uplift | +$2.0M |
| Pro Forma EBITDA | $4.1M |
| Current Margin | 7.6% |
| Pro Forma Margin | 15.0% |
| 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 | $3.2M | $34.2M | 10.59x | 60.3% |
| Base (11x exit) | 10.0x | 11.0x | $3.2M | $38.6M | 11.97x | 64.3% |
| Bull Case | 9.0x | 11.0x | $2.9M | $46.4M | 15.98x | 74.1% |
| Bull (12x exit) | 9.0x | 12.0x | $2.9M | $51.5M | 17.72x | 77.7% |
| Bear Case | 11.0x | 10.0x | $3.6M | $23.0M | 6.47x | 45.3% |
| Bear (11x exit) | 11.0x | 11.0x | $3.6M | $26.4M | 7.44x | 49.4% |
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
- 173 hospitals with 61-244 beds
- Same-state prioritization (n=174)
- Comp margins: P25=-9.5% / P50=2.2% / P75=12.1%
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.