ORTHOPAEDIC HOSPITAL OF WISCONSIN
1. Target Overview & Investment Thesis
ORTHOPAEDIC HOSPITAL OF WISCONSIN is a 30-bed suburban community hospital in MILWAUKEE, WI with $80.2M in net patient revenue and a 35.1% operating margin. The hospital serves a payer mix of 32.2% Medicare, 0.5% Medicaid, and 67.3% commercial.
Thesis: Turnaround. Our ML models identify $5.9M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 35.1% to 42.5% (+736bps).
| Net Revenue HCRIS | $80.2M |
| Current EBITDA COMPUTED | $28.2M |
| Operating Margin COMPUTED | 35.1% |
| Occupancy HCRIS | 19.3% |
| Revenue / Bed COMPUTED | $2.7M |
| Net-to-Gross HCRIS | 36.0% |
| Distress Probability ML | 52.8% |
2. Market Context & Competitive Position
WI has 150 Medicare-certified hospitals with a median operating margin of 0.4%. The target's margin of 35.1% places it above the state median. Among 91 size-comparable peers (15-60 beds), the median margin is -0.3%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (15-60), prioritizing same-state peers. 91 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ORTHOPAEDIC HOSPITAL OF WISCON (Target) | WI | 30 | $80.2M | 35.1% |
| MERCY WALWORTH HOSPITAL | WI | 25 | $616.4M | 4.4% |
| MARSHFIELD MEDICAL CENTER-EAU | WI | 56 | $214.6M | -21.8% |
| MONROE CLINIC | WI | 58 | $195.3M | -4.4% |
| ASPIRUS RIVERVIEW HOSPITAL & C | WI | 44 | $161.3M | 13.1% |
| MEMORIAL MEDICAL CENTER INC. | WI | 25 | $138.4M | 8.1% |
| LAKEVIEW MEDICAL CENTER OF RIC | WI | 40 | $137.4M | -12.0% |
| MARSHFIELD MEDICAL CENTER-MINO | WI | 19 | $129.6M | -12.4% |
| FORT ATKINSON MEMORIAL HOSPITA | WI | 49 | $127.0M | -10.1% |
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: $5.9M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $1.7M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $1.6M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $1.6M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $976K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $51K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $28.2M |
| + RCM Uplift | +$5.9M |
| Pro Forma EBITDA | $34.1M |
| Current Margin | 35.1% |
| Pro Forma Margin | 42.5% |
| WC Released (1x) | $3.1M |
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 | $43.4M | $244.9M | 5.65x | 41.4% |
| Base (11x exit) | 10.0x | 11.0x | $43.4M | $283.5M | 6.54x | 45.6% |
| Bull Case | 9.0x | 11.0x | $39.0M | $317.1M | 8.12x | 52.0% |
| Bull (12x exit) | 9.0x | 12.0x | $39.0M | $357.4M | 9.16x | 55.7% |
| Bear Case | 11.0x | 10.0x | $47.7M | $201.3M | 4.22x | 33.4% |
| Bear (11x exit) | 11.0x | 11.0x | $47.7M | $237.0M | 4.97x | 37.8% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Low occupancy | At 19.3%, fixed costs are spread over fewer patient days. Mitigant: volume growth is an additional upside lever not modeled in base case |
| High | Elevated distress probability | Model estimates 52.8% 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
- 91 hospitals with 15-60 beds
- Same-state prioritization (n=92)
- Comp margins: P25=-11.2% / P50=-0.3% / P75=8.2%
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 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.