SALT LAKE REGIONAL MEDICAL CENTER
1. Target Overview & Investment Thesis
SALT LAKE REGIONAL MEDICAL CENTER is a 107-bed under-performing / distressed in SALT LAKE, UT with $61.2M in net patient revenue and a -12.9% operating margin. The hospital serves a payer mix of 22.3% Medicare, 8.5% Medicaid, and 69.3% commercial.
Thesis: Undervalued. Our ML models identify $4.5M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -12.9% to -5.6% (+736bps).
| Net Revenue HCRIS | $61.2M |
| Current EBITDA COMPUTED | $-7.9M |
| Operating Margin COMPUTED | -12.9% |
| Occupancy HCRIS | 16.2% |
| Revenue / Bed COMPUTED | $571K |
| Net-to-Gross HCRIS | 33.0% |
| Distress Probability ML | 58.1% |
2. Market Context & Competitive Position
UT has 59 Medicare-certified hospitals with a median operating margin of 8.0%. The target's margin of -12.9% places it below the state median. Among 15 size-comparable peers (54-214 beds), the median margin is 25.2%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (54-214), prioritizing same-state peers. 15 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| SALT LAKE REGIONAL MEDICAL CEN (Target) | UT | 107 | $61.2M | -12.9% |
| LOGAN REGIONAL HOSPITAL | UT | 114 | $320.1M | 29.3% |
| OGDEN REGIONAL MEDICAL CENTER | UT | 174 | $299.3M | 47.4% |
| DAVIS HOSPITAL & MEDICAL CENTE | UT | 175 | $235.1M | 29.1% |
| AMERICAN FORK HOSPITAL | UT | 88 | $216.8M | 25.3% |
| RIVERTON HOSPITAL | UT | 87 | $195.8M | 18.0% |
| TIMPANOGOS REGIONAL HOSPITAL | UT | 117 | $156.1M | 38.3% |
| LONE PEAK HOSPITAL | UT | 61 | $133.1M | 25.2% |
| ALTA VIEW HOSPITAL | UT | 57 | $130.9M | -0.6% |
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: $4.5M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $1.3M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $1.2M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $1.2M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $744K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $39K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-7.9M |
| + RCM Uplift | +$4.5M |
| Pro Forma EBITDA | $-3.4M |
| Current Margin | -12.9% |
| Pro Forma Margin | -5.6% |
| WC Released (1x) | $2.3M |
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 | $-12.2M | $-7.2M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-12.2M | $-11.9M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-11.0M | $-983K | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-11.0M | $-4.3M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-13.4M | $-25.8M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-13.4M | $-32.7M | 0.00x | -100.0% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| High | Negative operating margin | RCM uplift bridge shows clear path to profitability; working capital release provides near-term cash cushion |
| Medium | Low occupancy | At 16.2%, 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 58.1% 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
- 15 hospitals with 54-214 beds
- Same-state prioritization (n=16)
- Comp margins: P25=1.1% / P50=25.2% / P75=31.2%
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.