DOMINION HOSPITAL
1. Target Overview & Investment Thesis
DOMINION HOSPITAL is a 116-bed community hospital in FAIRFAX, VA with $45.6M in net patient revenue and a 20.6% operating margin. The hospital serves a payer mix of 5.1% Medicare, 0.0% Medicaid, and 94.9% commercial.
Thesis: Turnaround. Our ML models identify $3.4M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 20.6% to 28.0% (+736bps).
| Net Revenue HCRIS | $45.6M |
| Current EBITDA COMPUTED | $9.4M |
| Operating Margin COMPUTED | 20.6% |
| Occupancy HCRIS | 78.5% |
| Revenue / Bed COMPUTED | $393K |
| Net-to-Gross HCRIS | 26.4% |
| 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 20.6% places it above the state median. Among 51 size-comparable peers (58-232 beds), the median margin is 6.0%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (58-232), prioritizing same-state peers. 51 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| DOMINION HOSPITAL (Target) | VA | 116 | $45.6M | 20.6% |
| CHILDRENS HOSPITAL OF THE KING | VA | 202 | $546.2M | -9.9% |
| INOVA LOUDOUN HOSPITAL CENTER | VA | 189 | $510.3M | 22.9% |
| AUGUSTA MEDICAL CENTER | VA | 223 | $401.1M | 6.0% |
| RESTON HOSPITAL | VA | 201 | $385.5M | 34.6% |
| INOVA FAIR OAKS HOSPITAL | VA | 174 | $382.5M | 28.5% |
| SENTARA MARTHA JEFFERSON HOSPI | VA | 150 | $362.0M | -6.4% |
| SENTARA PRINCESS ANNE HOSPITAL | VA | 174 | $361.5M | 10.3% |
| DANVILLE REGIONAL MEDICAL CENT | VA | 232 | $352.1M | 6.8% |
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: $3.4M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $958K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $912K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $903K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $555K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $29K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $9.4M |
| + RCM Uplift | +$3.4M |
| Pro Forma EBITDA | $12.8M |
| Current Margin | 20.6% |
| Pro Forma Margin | 28.0% |
| WC Released (1x) | $1.7M |
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 | $14.5M | $95.7M | 6.61x | 45.9% |
| Base (11x exit) | 10.0x | 11.0x | $14.5M | $110.0M | 7.59x | 50.0% |
| Bull Case | 9.0x | 11.0x | $13.0M | $125.7M | 9.65x | 57.4% |
| Bull (12x exit) | 9.0x | 12.0x | $13.0M | $141.0M | 10.82x | 61.0% |
| Bear Case | 11.0x | 10.0x | $15.9M | $74.2M | 4.66x | 36.0% |
| Bear (11x exit) | 11.0x | 11.0x | $15.9M | $86.8M | 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
- 51 hospitals with 58-232 beds
- Same-state prioritization (n=52)
- Comp margins: P25=-6.9% / P50=6.0% / P75=15.1%
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 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.