ST. CLARE HOSPITAL
1. Target Overview & Investment Thesis
ST. CLARE HOSPITAL is a 43-bed suburban community hospital in SAUK, WI with $86.6M in net patient revenue and a 25.1% operating margin. The hospital serves a payer mix of 46.1% Medicare, 7.3% Medicaid, and 46.6% commercial.
Thesis: Turnaround. Our ML models identify $6.4M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 25.1% to 32.4% (+736bps).
| Net Revenue HCRIS | $86.6M |
| Current EBITDA COMPUTED | $21.7M |
| Operating Margin COMPUTED | 25.1% |
| Occupancy HCRIS | 39.0% |
| Revenue / Bed COMPUTED | $2.0M |
| Net-to-Gross HCRIS | 33.9% |
| Distress Probability ML | 51.3% |
2. Market Context & Competitive Position
WI has 150 Medicare-certified hospitals with a median operating margin of 0.4%. The target's margin of 25.1% places it above the state median. Among 89 size-comparable peers (22-86 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 (22-86), prioritizing same-state peers. 89 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ST. CLARE HOSPITAL (Target) | WI | 43 | $86.6M | 25.1% |
| MERCY WALWORTH HOSPITAL | WI | 25 | $616.4M | 4.4% |
| ST. JOSEPHS COMM. HOSPT. | WI | 70 | $436.8M | 66.1% |
| ST. AGNES HOSPITAL | WI | 77 | $275.9M | -3.0% |
| AURORA MEDICAL CENTER OF OSHKO | WI | 79 | $222.3M | 17.9% |
| MARSHFIELD MEDICAL CENTER-EAU | WI | 56 | $214.6M | -21.8% |
| ASPIRUS STEVENS POINT HOSPITAL | WI | 82 | $201.4M | 28.9% |
| MONROE CLINIC | WI | 58 | $195.3M | -4.4% |
| ASPIRUS RIVERVIEW HOSPITAL & C | WI | 44 | $161.3M | 13.1% |
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: $6.4M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $1.8M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $1.7M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $1.7M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.1M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $55K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $21.7M |
| + RCM Uplift | +$6.4M |
| Pro Forma EBITDA | $28.1M |
| Current Margin | 25.1% |
| Pro Forma Margin | 32.4% |
| WC Released (1x) | $3.3M |
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 | $33.4M | $206.9M | 6.20x | 44.0% |
| Base (11x exit) | 10.0x | 11.0x | $33.4M | $238.4M | 7.14x | 48.2% |
| Bull Case | 9.0x | 11.0x | $30.1M | $270.3M | 8.99x | 55.2% |
| Bull (12x exit) | 9.0x | 12.0x | $30.1M | $303.7M | 10.11x | 58.8% |
| Bear Case | 11.0x | 10.0x | $36.7M | $164.2M | 4.47x | 34.9% |
| Bear (11x exit) | 11.0x | 11.0x | $36.7M | $192.5M | 5.24x | 39.3% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| High | Elevated distress probability | Model estimates 51.3% probability of financial distress. Mitigant: distressed entry pricing (7-9x) compensates for risk |
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
- 89 hospitals with 22-86 beds
- Same-state prioritization (n=90)
- Comp margins: P25=-8.4% / P50=0.8% / P75=8.4%
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.