OCONTO HOSPITAL & MEDICAL CENTER
1. Target Overview & Investment Thesis
OCONTO HOSPITAL & MEDICAL CENTER is a 10-bed suburban community hospital in OCONTO, WI with $80.4M in net patient revenue and a 1.1% operating margin. The hospital serves a payer mix of 39.9% Medicare, 0.3% Medicaid, and 59.8% commercial.
Thesis: Turnaround. Our ML models identify $5.9M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 1.1% to 8.5% (+736bps).
| Net Revenue HCRIS | $80.4M |
| Current EBITDA COMPUTED | $923K |
| Operating Margin COMPUTED | 1.1% |
| Occupancy HCRIS | 47.6% |
| Revenue / Bed COMPUTED | $8.0M |
| Net-to-Gross HCRIS | 44.0% |
| Distress Probability ML | 39.6% |
2. Market Context & Competitive Position
WI has 150 Medicare-certified hospitals with a median operating margin of 0.4%. The target's margin of 1.1% places it above the state median. Among 16 size-comparable peers (5-20 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 (5-20), prioritizing same-state peers. 16 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| OCONTO HOSPITAL & MEDICAL CENT (Target) | WI | 10 | $80.4M | 1.1% |
| 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% |
| MOSH | WI | 16 | $78.4M | 37.0% |
| NORTH CENTRAL HEALTH CARE FACI | WI | 16 | $59.7M | -47.4% |
| MARSHFIELD MEDICAL CENTER NEIL | WI | 16 | $37.8M | -11.8% |
| FROEDTERT HLTH NEIGHORHOOD HOS | WI | 16 | $34.1M | 18.3% |
| SPOONER HEALTH SYSTEM | WI | 20 | $33.4M | 8.6% |
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% | $978K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $51K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $923K |
| + RCM Uplift | +$5.9M |
| Pro Forma EBITDA | $6.8M |
| Current Margin | 1.1% |
| Pro Forma Margin | 8.5% |
| 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 | $1.4M | $65.3M | 45.97x | 115.0% |
| Base (11x exit) | 10.0x | 11.0x | $1.4M | $72.3M | 50.89x | 119.4% |
| Bull Case | 9.0x | 11.0x | $1.3M | $92.3M | 72.19x | 135.3% |
| Bull (12x exit) | 9.0x | 12.0x | $1.3M | $101.0M | 79.05x | 139.7% |
| Bear Case | 11.0x | 10.0x | $1.6M | $35.2M | 22.55x | 86.5% |
| Bear (11x exit) | 11.0x | 11.0x | $1.6M | $39.3M | 25.13x | 90.6% |
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
- 16 hospitals with 5-20 beds
- Same-state prioritization (n=18)
- Comp margins: P25=-15.0% / P50=-2.1% / P75=15.7%
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.