MARSHFIELD MEDICAL CENTER-MINOCQUA
1. Target Overview & Investment Thesis
MARSHFIELD MEDICAL CENTER-MINOCQUA is a 19-bed suburban community hospital in nan, WI with $129.6M in net patient revenue and a -12.4% operating margin. The hospital serves a payer mix of 31.8% Medicare, 5.3% Medicaid, and 62.9% commercial.
Thesis: Turnaround. Our ML models identify $9.5M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -12.4% to -5.0% (+736bps).
| Net Revenue HCRIS | $129.6M |
| Current EBITDA COMPUTED | $-16.1M |
| Operating Margin COMPUTED | -12.4% |
| Occupancy HCRIS | 67.1% |
| Revenue / Bed COMPUTED | $6.8M |
| Net-to-Gross HCRIS | 38.4% |
| Distress Probability ML | 37.3% |
2. Market Context & Competitive Position
WI has 150 Medicare-certified hospitals with a median operating margin of 0.4%. The target's margin of -12.4% places it below the state median. Among 73 size-comparable peers (10-38 beds), the median margin is 3.5%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (10-38), prioritizing same-state peers. 73 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| MARSHFIELD MEDICAL CENTER-MINO (Target) | WI | 19 | $129.6M | -12.4% |
| MERCY WALWORTH HOSPITAL | WI | 25 | $616.4M | 4.4% |
| MEMORIAL MEDICAL CENTER INC. | WI | 25 | $138.4M | 8.1% |
| MCHS-RED CEDAR | WI | 25 | $123.4M | 16.8% |
| MEMORIAL HOSPITAL OF BURLINGTO | WI | 33 | $118.8M | 15.3% |
| OAK LEAF SURGICAL HOSPITAL LLC | WI | 13 | $109.8M | 34.1% |
| SAUK PRAIRIE MEMORIAL HOSPITAL | WI | 36 | $109.1M | -0.1% |
| ST CROIX REGIONAL MEDICAL CENT | WI | 25 | $108.4M | -31.2% |
| DOOR COUNTY MEMORIAL HOSPITAL | WI | 25 | $106.2M | -2.7% |
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: $9.5M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $2.7M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $2.6M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $2.6M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.6M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $83K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-16.1M |
| + RCM Uplift | +$9.5M |
| Pro Forma EBITDA | $-6.5M |
| Current Margin | -12.4% |
| Pro Forma Margin | -5.0% |
| WC Released (1x) | $5.0M |
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 | $-24.7M | $-10.6M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-24.7M | $-19.7M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-22.2M | $3.8M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-22.2M | $-2.4M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-27.2M | $-50.3M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-27.2M | $-64.1M | 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
- 73 hospitals with 10-38 beds
- Same-state prioritization (n=74)
- Comp margins: P25=-3.0% / P50=3.5% / P75=8.6%
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.