CARILION TAZEWELL COMMUNITY HOSPITAL
1. Target Overview & Investment Thesis
CARILION TAZEWELL COMMUNITY HOSPITAL is a 23-bed under-performing / distressed in TAZEWELL, VA with $18.4M in net patient revenue and a -32.9% operating margin. The hospital serves a payer mix of 35.7% Medicare, 2.2% Medicaid, and 62.1% commercial.
Thesis: Turnaround. Our ML models identify $1.4M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -32.9% to -25.5% (+736bps).
| Net Revenue HCRIS | $18.4M |
| Current EBITDA COMPUTED | $-6.0M |
| Operating Margin COMPUTED | -32.9% |
| Occupancy HCRIS | 39.2% |
| Revenue / Bed COMPUTED | $800K |
| Net-to-Gross HCRIS | 21.8% |
| Distress Probability ML | 49.9% |
2. Market Context & Competitive Position
VA has 111 Medicare-certified hospitals with a median operating margin of 4.4%. The target's margin of -32.9% places it below the state median. Among 24 size-comparable peers (12-46 beds), the median margin is -0.8%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (12-46), prioritizing same-state peers. 24 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| CARILION TAZEWELL COMMUNITY HO (Target) | VA | 23 | $18.4M | -32.9% |
| HALIFAX REGIONAL HOSPITAL | VA | 44 | $104.6M | -16.5% |
| WARREN MEMORIAL HOSPITAL | VA | 46 | $97.7M | -6.4% |
| UVA HEALTH HAYMARKET MEDICAL C | VA | 44 | $95.4M | 13.4% |
| SHENANDOAH MEMORIAL HOSPITAL | VA | 25 | $78.2M | 7.6% |
| RIVERSIDE DOCTORS HOSPITAL WIL | VA | 40 | $74.0M | 15.9% |
| CARILION GILES COMMUNITY HOSPI | VA | 25 | $72.5M | -17.5% |
| LEWISGALE HOSPITAL-PULASKI | VA | 44 | $70.4M | 4.0% |
| CARILION FRANKLIN MEMORIAL HOS | VA | 37 | $61.8M | -0.7% |
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: $1.4M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $387K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $368K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $365K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $224K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $12K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-6.0M |
| + RCM Uplift | +$1.4M |
| Pro Forma EBITDA | $-4.7M |
| Current Margin | -32.9% |
| Pro Forma Margin | -25.5% |
| WC Released (1x) | $706K |
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 | $-9.3M | $-26.3M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-9.3M | $-32.0M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-8.4M | $-30.6M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-8.4M | $-35.8M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-10.2M | $-30.1M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-10.2M | $-36.4M | 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 |
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
- 24 hospitals with 12-46 beds
- Same-state prioritization (n=25)
- Comp margins: P25=-9.8% / P50=-0.8% / P75=13.8%
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 27, 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.