ASPIRUS MERRILL HOSPITAL
1. Target Overview & Investment Thesis
ASPIRUS MERRILL HOSPITAL is a 12-bed suburban community hospital in LINCOLN, WI with $26.7M in net patient revenue and a 13.1% operating margin. The hospital serves a payer mix of 39.9% Medicare, 0.5% Medicaid, and 59.6% commercial.
Thesis: Turnaround. Our ML models identify $2.0M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 13.1% to 20.4% (+736bps).
| Net Revenue HCRIS | $26.7M |
| Current EBITDA COMPUTED | $3.5M |
| Operating Margin COMPUTED | 13.1% |
| Occupancy HCRIS | 51.4% |
| Revenue / Bed COMPUTED | $2.2M |
| Net-to-Gross HCRIS | 44.9% |
| Distress Probability ML | 47.3% |
2. Market Context & Competitive Position
WI has 150 Medicare-certified hospitals with a median operating margin of 0.4%. The target's margin of 13.1% places it above the state median. Among 24 size-comparable peers (6-24 beds), the median margin is -2.1%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (6-24), prioritizing same-state peers. 24 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ASPIRUS MERRILL HOSPITAL (Target) | WI | 12 | $26.7M | 13.1% |
| MARSHFIELD MEDICAL CENTER-MINO | WI | 19 | $129.6M | -12.4% |
| OAK LEAF SURGICAL HOSPITAL LLC | WI | 13 | $109.8M | 34.1% |
| ST MARYS HOSPITAL SUPERIOR | WI | 16 | $98.2M | 18.6% |
| OCONTO HOSPITAL & MEDICAL CENT | WI | 10 | $80.4M | 1.1% |
| MOSH | WI | 16 | $78.4M | 37.0% |
| PRAIRIE DU CHIEN MEMORIAL HOSP | WI | 24 | $60.4M | 4.4% |
| NORTH CENTRAL HEALTH CARE FACI | WI | 16 | $59.7M | -47.4% |
| STOUGHTON HOSPITAL ASSOCIATION | WI | 22 | $56.8M | 10.2% |
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: $2.0M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $561K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $535K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $529K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $325K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $17K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $3.5M |
| + RCM Uplift | +$2.0M |
| Pro Forma EBITDA | $5.5M |
| Current Margin | 13.1% |
| Pro Forma Margin | 20.4% |
| WC Released (1x) | $1.0M |
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 | $5.4M | $42.7M | 7.95x | 51.4% |
| Base (11x exit) | 10.0x | 11.0x | $5.4M | $48.7M | 9.07x | 55.4% |
| Bull Case | 9.0x | 11.0x | $4.8M | $57.0M | 11.78x | 63.8% |
| Bull (12x exit) | 9.0x | 12.0x | $4.8M | $63.6M | 13.15x | 67.4% |
| Bear Case | 11.0x | 10.0x | $5.9M | $31.1M | 5.27x | 39.4% |
| Bear (11x exit) | 11.0x | 11.0x | $5.9M | $36.2M | 6.12x | 43.7% |
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
- 24 hospitals with 6-24 beds
- Same-state prioritization (n=25)
- Comp margins: P25=-20.4% / P50=-2.1% / P75=7.6%
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.