ML Analysis — ENCOMPASS HEALTH REHABILITATION OF M
CCN 053042 | 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 Health6/25
RCM Upside18/25
Market Position9/20
Demand Defensibility10/15
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)
-6.3%
R²=0.34 | n=4,907 | Grade B | Actual: -2.8%
Ridge regression trained on 4,907 HCRIS hospitals. 90% CI: [-34.6%, 22.0%]. P46 nationally.
| Driver | Value | Effect | Explanation | |
|---|---|---|---|---|
| Revenue/Bed | 500008.380 | -0.1507 | Lower Revenue/Bed decreases predicted margin | |
| Expense/Bed | 513860.060 | +0.1408 | Higher Expense/Bed increases predicted margin | |
| Reimbursement Quality | 0.335 | -0.0383 | Higher Reimbursement Quality decreases predicted m | |
| Net-to-Gross | 0.627 | +0.0290 | Higher Net-to-Gross increases predicted margin | |
| Occupancy × Net-to-Gross | 0.458 | +0.0202 | Higher Occupancy × Net-to-Gross increases predicte |
Turnaround: 39%Turnaround possible (39%) but uncertain. Margin improvement depends on improving Revenue/Bed.
Suburban Community Hospit
Archetype
48.5%
Distress Risk
$2.5M
RCM Opportunity
B
Opportunity Grade
7.3%
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: Elevated
National distress rate: 49.3%
CA distress rate: 49.7%
Model AUC: 0.629
| Factor | Value | Contribution | Direction |
|---|---|---|---|
| Occupancy Rate | 0.730 | -0.190 | ▼ risk |
| Net To Gross Ratio | 0.627 | +0.115 | ▲ risk |
| Revenue Per Bed | 500008.380 | +0.064 | ▲ risk |
| Medicaid Day Pct | 0.068 | -0.021 | ▼ risk |
| Beds | 50.000 | -0.013 | ▼ risk |
| Medicare Day Pct | 0.398 | +0.012 | ▲ risk |
RCM Improvement Opportunity
Total (risk-adjusted): $2.5M
Current margin: -2.8%
Projected margin: 7.3%
Grade: B
Comps: 104
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 | 0.534 | 0.701 | 16.8% | $2.5M | 50% | 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. |