SALT LAKE CITY BEHAVIORAL HEALTH
1. Target Overview & Investment Thesis
SALT LAKE CITY BEHAVIORAL HEALTH is a 118-bed community hospital in SALT LAKE, UT with $26.3M in net patient revenue and a 2.9% operating margin. The hospital serves a payer mix of 13.6% Medicare, 0.0% Medicaid, and 86.4% commercial.
Thesis: Undervalued. Our ML models identify $1.9M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 2.9% to 10.2% (+736bps).
| Net Revenue HCRIS | $26.3M |
| Current EBITDA COMPUTED | $750K |
| Operating Margin COMPUTED | 2.9% |
| Occupancy HCRIS | 56.3% |
| Revenue / Bed COMPUTED | $223K |
| Net-to-Gross HCRIS | 46.4% |
| Distress Probability ML | nan% |
2. Market Context & Competitive Position
UT has 59 Medicare-certified hospitals with a median operating margin of 8.0%. The target's margin of 2.9% places it below the state median. Among 16 size-comparable peers (59-236 beds), the median margin is 22.9%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (59-236), prioritizing same-state peers. 16 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| SALT LAKE CITY BEHAVIORAL HEAL (Target) | UT | 118 | $26.3M | 2.9% |
| MCKAY-DEE HOSPITAL | UT | 236 | $629.9M | 12.6% |
| LOGAN REGIONAL HOSPITAL | UT | 114 | $320.1M | 29.3% |
| LDS HOSPITAL | UT | 216 | $307.0M | -5.5% |
| 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% |
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: $1.9M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $551K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $525K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $520K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $320K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $17K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $750K |
| + RCM Uplift | +$1.9M |
| Pro Forma EBITDA | $2.7M |
| Current Margin | 2.9% |
| Pro Forma Margin | 10.2% |
| WC Released (1x) | $1.0M |
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 | $1.2M | $24.3M | 21.05x | 83.9% |
| Base (11x exit) | 10.0x | 11.0x | $1.2M | $27.1M | 23.47x | 88.0% |
| Bull Case | 9.0x | 11.0x | $1.0M | $33.8M | 32.59x | 100.7% |
| Bull (12x exit) | 9.0x | 12.0x | $1.0M | $37.2M | 35.85x | 104.6% |
| Bear Case | 11.0x | 10.0x | $1.3M | $14.2M | 11.22x | 62.2% |
| Bear (11x exit) | 11.0x | 11.0x | $1.3M | $16.1M | 12.67x | 66.2% |
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
- 16 hospitals with 59-236 beds
- Same-state prioritization (n=17)
- Comp margins: P25=-5.5% / P50=22.9% / P75=30.3%
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.