PROVO CANYON HOSPITAL
1. Target Overview & Investment Thesis
PROVO CANYON HOSPITAL is a 80-bed suburban community hospital in UTAH, UT with $21.2M in net patient revenue and a 20.6% operating margin. The hospital serves a payer mix of 2.4% Medicare, 4.5% Medicaid, and 93.2% commercial.
Thesis: Turnaround. Our ML models identify $1.6M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 20.6% to 28.0% (+736bps).
| Net Revenue HCRIS | $21.2M |
| Current EBITDA COMPUTED | $4.4M |
| Operating Margin COMPUTED | 20.6% |
| Occupancy HCRIS | 74.0% |
| Revenue / Bed COMPUTED | $265K |
| Net-to-Gross HCRIS | 42.4% |
| Distress Probability ML | 44.3% |
2. Market Context & Competitive Position
UT has 59 Medicare-certified hospitals with a median operating margin of 8.0%. The target's margin of 20.6% places it above the state median. Among 18 size-comparable peers (40-160 beds), the median margin is 15.2%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (40-160), prioritizing same-state peers. 18 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| PROVO CANYON HOSPITAL (Target) | UT | 80 | $21.2M | 20.6% |
| LOGAN REGIONAL HOSPITAL | UT | 114 | $320.1M | 29.3% |
| 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% |
| CEDAR CITY HOSPITAL | UT | 48 | $136.8M | 31.4% |
| LONE PEAK HOSPITAL | UT | 61 | $133.1M | 25.2% |
| ALTA VIEW HOSPITAL | UT | 57 | $130.9M | -0.6% |
| AMEND #1 LAKEVIEW HOSPITAL | UT | 84 | $111.5M | 33.2% |
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: $1.6M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $444K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $423K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $419K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $258K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $14K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $4.4M |
| + RCM Uplift | +$1.6M |
| Pro Forma EBITDA | $5.9M |
| Current Margin | 20.6% |
| Pro Forma Margin | 28.0% |
| WC Released (1x) | $812K |
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 | $6.7M | $44.4M | 6.61x | 45.9% |
| Base (11x exit) | 10.0x | 11.0x | $6.7M | $51.0M | 7.59x | 50.0% |
| Bull Case | 9.0x | 11.0x | $6.0M | $58.3M | 9.65x | 57.4% |
| Bull (12x exit) | 9.0x | 12.0x | $6.0M | $65.4M | 10.82x | 61.0% |
| Bear Case | 11.0x | 10.0x | $7.4M | $34.4M | 4.66x | 36.0% |
| Bear (11x exit) | 11.0x | 11.0x | $7.4M | $40.2M | 5.45x | 40.4% |
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
- 18 hospitals with 40-160 beds
- Same-state prioritization (n=19)
- Comp margins: P25=-8.1% / P50=15.2% / P75=30.7%
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.