COMMUNITY HOSPITAL
1. Target Overview & Investment Thesis
COMMUNITY HOSPITAL is a 25-bed rural/critical access in GOSHEN, WY with $35.7M in net patient revenue and a -7.5% operating margin. The hospital serves a payer mix of 68.3% Medicare, 3.6% Medicaid, and 28.1% commercial.
Thesis: Turnaround. Our ML models identify $2.6M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -7.5% to -0.1% (+736bps).
| Net Revenue HCRIS | $35.7M |
| Current EBITDA COMPUTED | $-2.7M |
| Operating Margin COMPUTED | -7.5% |
| Occupancy HCRIS | 33.4% |
| Revenue / Bed COMPUTED | $1.4M |
| Net-to-Gross HCRIS | 59.2% |
| Distress Probability ML | 56.2% |
2. Market Context & Competitive Position
WY has 29 Medicare-certified hospitals with a median operating margin of -7.5%. The target's margin of -7.5% places it below the state median. Among 17 size-comparable peers (12-50 beds), the median margin is -11.0%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (12-50), prioritizing same-state peers. 17 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| COMMUNITY HOSPITAL (Target) | WY | 25 | $35.7M | -7.5% |
| ST. JOHNS HOSPITAL | WY | 48 | $169.8M | -7.8% |
| CODY REGIONAL HEALTH | WY | 25 | $122.8M | -0.9% |
| MEMORIAL HOSPITAL OF CONVERSE | WY | 25 | $92.7M | -1.9% |
| STAR VALLEY HOSPITAL | WY | 22 | $82.0M | -0.5% |
| POWELL VALLEY HEALTH CARE | WY | 25 | $69.6M | -2.6% |
| EVANSTON REGIONAL | WY | 32 | $35.3M | 17.6% |
| HOT SPRINGS COUNTY MEMORIAL | WY | 15 | $31.6M | -15.0% |
| MEMORIAL HOSPITAL OF CARBON CO | WY | 25 | $30.5M | -27.8% |
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: $2.6M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $750K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $715K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $708K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $435K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $23K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-2.7M |
| + RCM Uplift | +$2.6M |
| Pro Forma EBITDA | $-49K |
| Current Margin | -7.5% |
| Pro Forma Margin | -0.1% |
| WC Released (1x) | $1.4M |
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 | $-4.1M | $8.6M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-4.1M | $8.2M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-3.7M | $15.5M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-3.7M | $15.8M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-4.5M | $-3.2M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-4.5M | $-5.0M | 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 |
| Medium | Heavy Medicare dependence | Medicare comprises 68.3% of days; rate updates may lag inflation. Mitigant: CDI/CMI lever directly increases Medicare reimbursement |
| Medium | Low occupancy | At 33.4%, fixed costs are spread over fewer patient days. Mitigant: volume growth is an additional upside lever not modeled in base case |
| High | Elevated distress probability | Model estimates 56.2% probability of financial distress. Mitigant: distressed entry pricing (7-9x) compensates for risk |
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
- 17 hospitals with 12-50 beds
- Same-state prioritization (n=18)
- Comp margins: P25=-21.1% / P50=-11.0% / P75=-1.7%
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.