ML Analysis — ENCOMPASS HEALTH REHABILITATION HOSP
CCN 063034 | 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.
47
/ 100 (C)
Financial Health4/25
RCM Upside19/25
Market Position9/20
Demand Defensibility12/15
Operational Efficiency4/15
Entry Multiple: 8.0x – 10.0x
Est. MOIC: 1.9x
Risk Factors:
- Negative operating margin
- Expenses exceed revenue
Catalysts:
Margin Prediction (Trained Ridge Model)
-5.7%
R²=0.34 | n=4,907 | Grade B | Actual: -5.9%
Ridge regression trained on 4,907 HCRIS hospitals. 90% CI: [-34.0%, 22.6%]. P48 nationally.
| Driver | Value | Effect | Explanation | |
|---|---|---|---|---|
| Revenue/Bed | 362854.283 | -0.1698 | Lower Revenue/Bed decreases predicted margin | |
| Expense/Bed | 384283.617 | +0.1568 | Higher Expense/Bed increases predicted margin | |
| Net-to-Gross | 0.561 | +0.0215 | Higher Net-to-Gross increases predicted margin | |
| Bed Utilization Value | 245895.910 | -0.0208 | Lower Bed Utilization Value decreases predicted ma | |
| Medicaid % | 0.234 | -0.0176 | Higher Medicaid % decreases predicted margin |
Turnaround: 40%Turnaround possible (40%) but uncertain. Margin improvement depends on improving Revenue/Bed.
Suburban Community Hospit
Archetype
53.6%
Distress Risk
$5.5M
RCM Opportunity
A
Opportunity Grade
19.3%
Projected Margin
Cluster: Suburban Community Hospital
Percentile within cluster: P88. 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%
CO distress rate: 46.7%
Model AUC: 0.629
| Factor | Value | Contribution | Direction |
|---|---|---|---|
| Medicaid Day Pct | 0.234 | +0.145 | ▲ risk |
| Occupancy Rate | 0.678 | -0.142 | ▼ risk |
| Net To Gross Ratio | 0.561 | +0.086 | ▲ risk |
| Revenue Per Bed | 362854.283 | +0.072 | ▲ risk |
| Medicare Day Pct | 0.462 | +0.023 | ▲ risk |
| Beds | 60.000 | -0.012 | ▼ risk |
RCM Improvement Opportunity
Total (risk-adjusted): $5.5M
Current margin: -5.9%
Projected margin: 19.3%
Grade: A
Comps: 42
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 | 0.303 | 0.625 | 32.1% | $4.8M | 50% | 24mo |
| Occupancy Improvement | 0.678 | 0.780 | 10.3% | $677K | 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 | 25.8 | [25.0, 75.0] | P33 | 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. |