ML Analysis — ENCOMPASS HEALTH REHABILITATION HOSP
CCN 033029 | Clustering + Distress + RCM Opportunity
🛡️ Public data only — no PHI permitted on this instance.
Investability Score
Hold / Selective — investigate specific opportunities but be prepared for execution risk.
48
/ 100 (C)
Financial Health7/25
RCM Upside17/25
Market Position9/20
Demand Defensibility11/15
Operational Efficiency4/15
Entry Multiple: 8.0x – 10.0x
Est. MOIC: 1.9x
Risk Factors:
- Negative operating margin
Catalysts:
- Strong commercial payer base protects revenue
Margin Prediction (Trained Ridge Model)
-3.9%
R²=0.34 | n=4,907 | Grade B | Actual: -0.8%
Ridge regression trained on 4,907 HCRIS hospitals. 90% CI: [-32.2%, 24.4%]. P52 nationally.
| Driver | Value | Effect | Explanation | |
|---|---|---|---|---|
| Revenue/Bed | 327521.283 | -0.1747 | Lower Revenue/Bed decreases predicted margin | |
| Expense/Bed | 330004.033 | +0.1635 | Higher Expense/Bed increases predicted margin | |
| Reimbursement Quality | 0.311 | -0.0316 | Higher Reimbursement Quality decreases predicted m | |
| Net-to-Gross | 0.621 | +0.0283 | Higher Net-to-Gross increases predicted margin | |
| State Peer Margin | -0.008 | +0.0279 | Higher State Peer Margin increases predicted margi |
Turnaround: 43%Turnaround possible (43%) but uncertain. Margin improvement depends on improving Revenue/Bed.
Suburban Community Hospit
Archetype
50.9%
Distress Risk
$3.9M
RCM Opportunity
A
Opportunity Grade
19.1%
Projected Margin
Cluster: Suburban Community Hospital
Percentile within cluster: P52. 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: High
National distress rate: 49.3%
AZ distress rate: 35.5%
Model AUC: 0.629
| Factor | Value | Contribution | Direction |
|---|---|---|---|
| Net To Gross Ratio | 0.621 | +0.113 | ▲ risk |
| Medicaid Day Pct | 0.009 | -0.080 | ▼ risk |
| Revenue Per Bed | 327521.283 | +0.074 | ▲ risk |
| Occupancy Rate | 0.590 | -0.060 | ▼ risk |
| Medicare Day Pct | 0.490 | +0.028 | ▲ risk |
| Beds | 60.000 | -0.012 | ▼ risk |
RCM Improvement Opportunity
Total (risk-adjusted): $3.9M
Current margin: -0.8%
Projected margin: 19.1%
Grade: A
Comps: 47
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 | 0.501 | 0.699 | 19.8% | $3.0M | 50% | 24mo |
| Occupancy Improvement | 0.590 | 0.732 | 14.2% | $940K | 55% | 24mo |
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 | 25.0 | [25.0, 75.0] | P0 | 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. |