ML Analysis — NOVATO COMMUNITY HOSPITAL
CCN 050131 | 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.
49
/ 100 (C)
Financial Health8/25
RCM Upside17/25
Market Position14/20
Demand Defensibility6/15
Operational Efficiency4/15
Entry Multiple: 8.0x – 10.0x
Est. MOIC: 1.9x
Risk Factors:
- Negative operating margin
- Small facility (<50 beds) — limited scale
Catalysts:
- Strong commercial payer base protects revenue
- Limited competition supports pricing power
Margin Prediction (Trained Ridge Model)
-5.3%
R²=0.34 | n=4,907 | Grade B | Actual: -1.5%
Ridge regression trained on 4,907 HCRIS hospitals. 90% CI: [-33.6%, 23.0%]. P49 nationally.
| Driver | Value | Effect | Explanation | |
|---|---|---|---|---|
| Revenue/Bed | 1932267.894 | +0.0493 | Higher Revenue/Bed increases predicted margin | |
| Expense/Bed | 1961906.277 | -0.0375 | Higher Expense/Bed decreases predicted margin | |
| Reimbursement Quality | 0.115 | +0.0249 | Higher Reimbursement Quality increases predicted m | |
| Bed Count | 47.000 | +0.0159 | Higher Bed Count increases predicted margin | |
| Log(Beds) | 3.850 | -0.0122 | Lower Log(Beds) decreases predicted margin |
Turnaround: 41%Turnaround possible (41%) but uncertain. Margin improvement depends on Revenue/Bed.
Rural/Critical Access
Archetype
50.2%
Distress Risk
$8.1M
RCM Opportunity
C
Opportunity Grade
7.4%
Projected Margin
Cluster: Rural/Critical Access
Percentile within cluster: P23. Rural/small hospitals face structural headwinds. Evaluate CAH conversion, telehealth, and rural health funding.
Nearest Peers
| Hospital | State | Beds |
|---|---|---|
| BRECKINRIDGE HEALTH INC | KY | 25 |
| SHERIDAN MEMORIAL HOSPITAL | MT | 19 |
| DAYTON GENERAL HOSPITAL | WA | 25 |
| BLUE MOUNTAIN HOSPITAL DISTRICT | OR | 16 |
| COMMUNITY HOSPITAL | WY | 25 |
| CARLE EUREKA HOSPITAL | IL | 25 |
Distress Analysis
Risk: High
National distress rate: 49.3%
CA distress rate: 49.7%
Model AUC: 0.629
| Factor | Value | Contribution | Direction |
|---|---|---|---|
| Occupancy Rate | 0.385 | +0.130 | ▲ risk |
| Medicaid Day Pct | 0.040 | -0.049 | ▼ risk |
| Net To Gross Ratio | 0.265 | -0.046 | ▼ risk |
| Medicare Day Pct | 0.528 | +0.034 | ▲ risk |
| Revenue Per Bed | 1932267.894 | -0.021 | ▼ risk |
| Beds | 47.000 | -0.014 | ▼ risk |
RCM Improvement Opportunity
Total (risk-adjusted): $8.1M
Current margin: -1.5%
Projected margin: 7.4%
Grade: C
Comps: 100
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 | 0.432 | 0.683 | 25.1% | $3.8M | 50% | 24mo |
| Occupancy Improvement | 0.385 | 0.715 | 33.0% | $2.2M | 55% | 24mo |
| Net-to-Gross Ratio Improvement | 0.265 | 0.468 | 20.2% | $2.2M | 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 | 30.7 | [25.0, 75.0] | P63 | 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. |