SSH -MADISON
1. Target Overview & Investment Thesis
SSH -MADISON is a 58-bed suburban community hospital in DANE, WI with $26.4M in net patient revenue and a 4.7% operating margin. The hospital serves a payer mix of 40.4% Medicare, 5.6% Medicaid, and 54.0% commercial.
Thesis: Turnaround. Our ML models identify $1.9M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 4.7% to 12.1% (+736bps).
| Net Revenue HCRIS | $26.4M |
| Current EBITDA COMPUTED | $1.2M |
| Operating Margin COMPUTED | 4.7% |
| Occupancy HCRIS | 52.3% |
| Revenue / Bed COMPUTED | $456K |
| Net-to-Gross HCRIS | 20.1% |
| Distress Probability ML | 48.4% |
2. Market Context & Competitive Position
WI has 150 Medicare-certified hospitals with a median operating margin of 0.4%. The target's margin of 4.7% places it above the state median. Among 46 size-comparable peers (29-116 beds), the median margin is -4.4%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (29-116), prioritizing same-state peers. 46 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| SSH -MADISON (Target) | WI | 58 | $26.4M | 4.7% |
| ST. JOSEPHS COMM. HOSPT. | WI | 70 | $436.8M | 66.1% |
| MCHS FRANCISCAN HEALTHCARE IN | WI | 103 | $413.8M | -7.2% |
| ST. AGNES HOSPITAL | WI | 77 | $275.9M | -3.0% |
| BELOIT MEMORIAL HOSPITAL INC. | WI | 97 | $249.6M | -3.0% |
| AURORA MEDICAL CENTER OF OSHKO | WI | 79 | $222.3M | 17.9% |
| MARSHFIELD MEDICAL CENTER-EAU | WI | 56 | $214.6M | -21.8% |
| AURORA MEDICAL CTR SHEBOYGAN C | WI | 116 | $211.8M | 7.7% |
| ASPIRUS STEVENS POINT HOSPITAL | WI | 82 | $201.4M | 28.9% |
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: $1.9M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $555K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $529K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $523K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $322K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $17K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $1.2M |
| + RCM Uplift | +$1.9M |
| Pro Forma EBITDA | $3.2M |
| Current Margin | 4.7% |
| Pro Forma Margin | 12.1% |
| 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 | $1.9M | $27.7M | 14.41x | 70.5% |
| Base (11x exit) | 10.0x | 11.0x | $1.9M | $31.1M | 16.17x | 74.5% |
| Bull Case | 9.0x | 11.0x | $1.7M | $38.1M | 22.04x | 85.6% |
| Bull (12x exit) | 9.0x | 12.0x | $1.7M | $42.1M | 24.34x | 89.3% |
| Bear Case | 11.0x | 10.0x | $2.1M | $17.3M | 8.20x | 52.3% |
| Bear (11x exit) | 11.0x | 11.0x | $2.1M | $19.8M | 9.35x | 56.4% |
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
- 46 hospitals with 29-116 beds
- Same-state prioritization (n=47)
- Comp margins: P25=-12.7% / P50=-4.4% / P75=15.3%
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.