ML Analysis — CORNERSTONE SPECIALTY TUCSON
CCN 032004 | Clustering + Distress + RCM Opportunity
🛡️ Public data only — no PHI permitted on this instance.
Investability Score
Speculative — only pursue if turnaround thesis is strong and entry multiple reflects risk.
45
/ 100 (D)
Financial Health6/25
RCM Upside20/25
Market Position9/20
Demand Defensibility10/15
Operational Efficiency0/15
Entry Multiple: 8.0x – 10.0x
Est. MOIC: 1.9x
Risk Factors:
- Negative operating margin
- Small facility (<50 beds) — limited scale
- Expenses exceed revenue
Catalysts:
- Strong commercial payer base protects revenue
Margin Prediction (Trained Ridge Model)
-4.9%
R²=0.34 | n=4,907 | Grade B | Actual: -9.5%
Ridge regression trained on 4,907 HCRIS hospitals. 90% CI: [-33.2%, 23.4%]. P50 nationally.
| Driver | Value | Effect | Explanation | |
|---|---|---|---|---|
| Revenue/Bed | 441857.147 | -0.1588 | Lower Revenue/Bed decreases predicted margin | |
| Expense/Bed | 483684.941 | +0.1446 | Higher Expense/Bed increases predicted margin | |
| State Peer Margin | -0.008 | +0.0279 | Higher State Peer Margin increases predicted margi | |
| Reimbursement Quality | 0.112 | +0.0257 | Higher Reimbursement Quality increases predicted m | |
| Net-to-Gross | 0.181 | -0.0210 | Lower Net-to-Gross decreases predicted margin |
Turnaround: 41%Turnaround possible (41%) but uncertain. Margin improvement depends on improving Revenue/Bed.
Suburban Community Hospit
Archetype
43.4%
Distress Risk
$1.5M
RCM Opportunity
C
Opportunity Grade
0.5%
Projected Margin
Cluster: Suburban Community Hospital
Percentile within cluster: P58. Community hospitals — the largest PE deal category. Focus on RCM improvement and cost optimization at 9-11x.
Nearest Peers
| Hospital | State | Beds |
|---|---|---|
| PROMEDICA HICKMAN HOSPITAL | MI | 58 |
| WATAUGA MEDICAL CENTER | NC | 95 |
| ST LUKES HOSPITAL - EASTON CAMPUS | PA | 29 |
| CULPEPER MEMORIAL HOSPITAL | VA | 70 |
| SOUTHSIDE COMMUNITY HOSPITAL | VA | 80 |
| SPECTRUM HEALTH LUDINGTON | MI | 45 |
Distress Analysis
Risk: Elevated
National distress rate: 49.3%
AZ distress rate: 35.5%
Model AUC: 0.629
| Factor | Value | Contribution | Direction |
|---|---|---|---|
| Occupancy Rate | 0.665 | -0.130 | ▼ risk |
| Medicaid Day Pct | 0.004 | -0.084 | ▼ risk |
| Net To Gross Ratio | 0.181 | -0.084 | ▼ risk |
| Revenue Per Bed | 441857.147 | +0.067 | ▲ risk |
| Beds | 34.000 | -0.015 | ▼ risk |
| Medicare Day Pct | 0.377 | +0.009 | ▲ risk |
RCM Improvement Opportunity
Total (risk-adjusted): $1.5M
Current margin: -9.5%
Projected margin: 0.5%
Grade: C
Comps: 45
Gap analysis vs P75 peers with 60% closure assumption. Confidence-weighted by lever implementation difficulty.
| Lever | Current | Benchmark | Gap | Impact | Confidence | Timeline |
|---|---|---|---|---|---|---|
| Payer Mix Optimization | 0.619 | 0.681 | 6.3% | $942K | 50% | 24mo |
| Net-to-Gross Ratio Improvement | 0.181 | 0.494 | 31.3% | $550K | 65% | 18mo |
Predicted RCM Performance (Public Data Only)
A
RCM Grade
Strong RCM profile — likely low-risk from an operations perspective. Focus diligence on growth thesis.
| Metric | Predicted | 90% CI | Percentile | Assessment |
|---|---|---|---|---|
| Denial Rate | 2.0% | [2.0%, 25.0%] | P0 | Strong — predicted denial rate is in the top third nationall |
| Days in AR | 30.4 | [25.0, 75.0] | P61 | Strong — predicted days in ar is in the top third nationally |
| Clean Claim Rate | 98.0% | [80.0%, 98.0%] | P0 | Strong — predicted clean claim rate is in the top third. |
| Net Collection Rate | 99.5% | [90.0%, 99.5%] | P8 | Strong — predicted net collection rate is in the top third. |