MARSHFIELD MEDICAL CENTER WESTON
1. Target Overview & Investment Thesis
MARSHFIELD MEDICAL CENTER WESTON is a 99-bed under-performing / distressed in MARATHON, WI with $192.5M in net patient revenue and a -18.5% operating margin. The hospital serves a payer mix of 32.1% Medicare, 3.5% Medicaid, and 64.4% commercial.
Thesis: Turnaround. Our ML models identify $14.2M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -18.5% to -11.1% (+736bps).
| Net Revenue HCRIS | $192.5M |
| Current EBITDA COMPUTED | $-35.6M |
| Operating Margin COMPUTED | -18.5% |
| Occupancy HCRIS | 51.8% |
| Revenue / Bed COMPUTED | $1.9M |
| Net-to-Gross HCRIS | 34.9% |
| Distress Probability ML | 47.2% |
2. Market Context & Competitive Position
WI has 150 Medicare-certified hospitals with a median operating margin of 0.4%. The target's margin of -18.5% places it below the state median. Among 41 size-comparable peers (50-198 beds), the median margin is -2.3%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (50-198), prioritizing same-state peers. 41 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| MARSHFIELD MEDICAL CENTER WEST (Target) | WI | 99 | $192.5M | -18.5% |
| MARSHFIELD MEDICAL CENTER | WI | 194 | $765.7M | -13.0% |
| MCHS EAU CLAIRE HOSPITAL | WI | 186 | $676.4M | -5.5% |
| BELLIN MEMORIAL HOSPITAL | WI | 175 | $652.3M | 13.7% |
| AURORA BAYCARE MEDICAL CENTER | WI | 190 | $558.0M | 17.6% |
| ST. JOSEPHS COMM. HOSPT. | WI | 70 | $436.8M | 66.1% |
| MCHS FRANCISCAN HEALTHCARE IN | WI | 103 | $413.8M | -7.2% |
| FROEDTERT SOUTH | WI | 173 | $372.2M | 3.9% |
| THEDACARE REGIONAL MEDICAL CEN | WI | 172 | $352.3M | 7.0% |
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: $14.2M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $4.0M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $3.9M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $3.8M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $2.3M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $123K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-35.6M |
| + RCM Uplift | +$14.2M |
| Pro Forma EBITDA | $-21.4M |
| Current Margin | -18.5% |
| Pro Forma Margin | -11.1% |
| WC Released (1x) | $7.4M |
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 | $-54.7M | $-92.8M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-54.7M | $-119.9M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-49.2M | $-90.9M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-49.2M | $-113.7M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-60.2M | $-145.9M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-60.2M | $-180.1M | 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 |
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
- 41 hospitals with 50-198 beds
- Same-state prioritization (n=42)
- Comp margins: P25=-12.3% / P50=-2.3% / P75=13.7%
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.