BATH COUNTY COMMUNITY HOSPITAL
1. Target Overview & Investment Thesis
BATH COUNTY COMMUNITY HOSPITAL is a 14-bed community hospital in BATH, VA with $17.4M in net patient revenue and a -42.4% operating margin. The hospital serves a payer mix of 77.9% Medicare, 0.0% Medicaid, and 22.1% commercial.
Thesis: Turnaround. Our ML models identify $1.3M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -42.4% to -35.1% (+736bps).
| Net Revenue HCRIS | $17.4M |
| Current EBITDA COMPUTED | $-7.4M |
| Operating Margin COMPUTED | -42.4% |
| Occupancy HCRIS | 28.7% |
| Revenue / Bed COMPUTED | $1.2M |
| Net-to-Gross HCRIS | 62.1% |
| Distress Probability ML | nan% |
2. Market Context & Competitive Position
VA has 111 Medicare-certified hospitals with a median operating margin of 4.4%. The target's margin of -42.4% places it below the state median. Among 11 size-comparable peers (7-28 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 (7-28), prioritizing same-state peers. 11 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| BATH COUNTY COMMUNITY HOSPITAL (Target) | VA | 14 | $17.4M | -42.4% |
| SHENANDOAH MEMORIAL HOSPITAL | VA | 25 | $78.2M | 7.6% |
| CARILION GILES COMMUNITY HOSPI | VA | 25 | $72.5M | -17.5% |
| CARILION STONEWALL JACKSON HOS | VA | 25 | $60.2M | -0.8% |
| SMYTH COUNTY COMMUNITY HOSPITA | VA | 20 | $45.8M | -4.4% |
| PAGE MEMORIAL HOSPITAL | VA | 25 | $43.7M | 1.3% |
| RAPPAHANNOCK GENERAL HOSPITAL | VA | 25 | $42.2M | -17.9% |
| CARILION TAZEWELL COMMUNITY HO | VA | 23 | $18.4M | -32.9% |
| SSH - HAMPTON ROADS | VA | 25 | $15.2M | -1.9% |
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: $1.3M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $365K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $348K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $344K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $212K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $11K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-7.4M |
| + RCM Uplift | +$1.3M |
| Pro Forma EBITDA | $-6.1M |
| Current Margin | -42.4% |
| Pro Forma Margin | -35.1% |
| WC Released (1x) | $667K |
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 | $-11.4M | $-35.9M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-11.4M | $-43.1M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-10.2M | $-42.6M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-10.2M | $-49.5M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-12.5M | $-38.6M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-12.5M | $-46.5M | 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 | Heavy Medicare dependence | Medicare comprises 77.9% of days; rate updates may lag inflation. Mitigant: CDI/CMI lever directly increases Medicare reimbursement |
| Medium | Low occupancy | At 28.7%, fixed costs are spread over fewer patient days. Mitigant: volume growth is an additional upside lever not modeled in base case |
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
- 11 hospitals with 7-28 beds
- Same-state prioritization (n=12)
- Comp margins: P25=-11.0% / P50=-0.8% / P75=11.2%
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 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.