REHABILITATION HOSPITAL OF BRISTOL
1. Target Overview & Investment Thesis
REHABILITATION HOSPITAL OF BRISTOL is a 25-bed suburban community hospital in WASHINGTON, VA with $11.7M in net patient revenue and a 14.8% operating margin. The hospital serves a payer mix of 56.8% Medicare, 0.2% Medicaid, and 43.0% commercial.
Thesis: Turnaround. Our ML models identify $869K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 14.8% to 22.2% (+739bps).
| Net Revenue HCRIS | $11.7M |
| Current EBITDA COMPUTED | $1.7M |
| Operating Margin COMPUTED | 14.8% |
| Occupancy HCRIS | 90.2% |
| Revenue / Bed COMPUTED | $470K |
| Net-to-Gross HCRIS | 62.0% |
| Distress Probability ML | 43.5% |
2. Market Context & Competitive Position
VA has 111 Medicare-certified hospitals with a median operating margin of 4.4%. The target's margin of 14.8% places it above the state median. Among 26 size-comparable peers (12-50 beds), the median margin is -0.8%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (12-50), prioritizing same-state peers. 26 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| REHABILITATION HOSPITAL OF BRI (Target) | VA | 25 | $11.7M | 14.8% |
| 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: $869K (739bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $247K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $235K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $234K | +200bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $143K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +8bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $1.7M |
| + RCM Uplift | +$869K |
| Pro Forma EBITDA | $2.6M |
| Current Margin | 14.8% |
| Pro Forma Margin | 22.2% |
| WC Released (1x) | $451K |
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 | $2.7M | $20.2M | 7.52x | 49.7% |
| Base (11x exit) | 10.0x | 11.0x | $2.7M | $23.1M | 8.60x | 53.8% |
| Bull Case | 9.0x | 11.0x | $2.4M | $26.8M | 11.11x | 61.9% |
| Bull (12x exit) | 9.0x | 12.0x | $2.4M | $30.0M | 12.41x | 65.5% |
| Bear Case | 11.0x | 10.0x | $3.0M | $15.0M | 5.07x | 38.4% |
| Bear (11x exit) | 11.0x | 11.0x | $3.0M | $17.4M | 5.91x | 42.6% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Heavy Medicare dependence | Medicare comprises 56.8% of days; rate updates may lag inflation. Mitigant: CDI/CMI lever directly increases Medicare reimbursement |
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
- 26 hospitals with 12-50 beds
- Same-state prioritization (n=27)
- Comp margins: P25=-11.8% / P50=-0.8% / P75=10.1%
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.