ML Analysis — MERCYONE WATERLOO MEDICAL CENTER
CCN 160067 | 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.
55
/ 100 (C)
Financial Health7/25
RCM Upside19/25
Market Position15/20
Demand Defensibility10/15
Operational Efficiency4/15
Entry Multiple: 8.0x – 10.0x
Est. MOIC: 1.9x
Risk Factors:
- Negative operating margin
- Expenses exceed revenue
Catalysts:
- RCM optimization could add 3-5pp margin
- Strong commercial payer base protects revenue
- Limited competition supports pricing power
Margin Prediction (Trained Ridge Model)
-4.9%
R²=0.34 | n=4,907 | Grade B | Actual: -5.1%
Ridge regression trained on 4,907 HCRIS hospitals. 90% CI: [-33.1%, 23.4%]. P50 nationally.
| Driver | Value | Effect | Explanation | |
|---|---|---|---|---|
| Revenue/Bed | 2114389.948 | +0.0747 | Higher Revenue/Bed increases predicted margin | |
| Expense/Bed | 2221854.604 | -0.0696 | Higher Expense/Bed decreases predicted margin | |
| State Peer Margin | -0.082 | -0.0269 | Lower State Peer Margin decreases predicted margin | |
| Net-to-Gross | 0.241 | -0.0143 | Lower Net-to-Gross decreases predicted margin | |
| Bed Utilization Value | 1249699.133 | +0.0125 | Higher Bed Utilization Value increases predicted m |
Turnaround: 42%Turnaround possible (42%) but uncertain. Margin improvement depends on Revenue/Bed.
Suburban Community Hospit
Archetype
43.4%
Distress Risk
$3.2M
RCM Opportunity
D
Opportunity Grade
-3.9%
Projected Margin
Cluster: Suburban Community Hospital
Percentile within cluster: P29. 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%
IA distress rate: 67.2%
Model AUC: 0.629
| Factor | Value | Contribution | Direction |
|---|---|---|---|
| Medicaid Day Pct | 0.018 | -0.071 | ▼ risk |
| Occupancy Rate | 0.591 | -0.061 | ▼ risk |
| Net To Gross Ratio | 0.241 | -0.057 | ▼ risk |
| Revenue Per Bed | 2114389.948 | -0.032 | ▼ risk |
| Medicare Day Pct | 0.245 | -0.014 | ▼ risk |
| Beds | 134.000 | -0.002 | ▼ risk |
RCM Improvement Opportunity
Total (risk-adjusted): $3.2M
Current margin: -5.1%
Projected margin: -3.9%
Grade: D
Comps: 17
Gap analysis vs P75 peers with 60% closure assumption. Confidence-weighted by lever implementation difficulty.
| Lever | Current | Benchmark | Gap | Impact | Confidence | Timeline |
|---|---|---|---|---|---|---|
| Net-to-Gross Ratio Improvement | 0.241 | 0.334 | 9.3% | $3.1M | 65% | 18mo |
| Occupancy Improvement | 0.591 | 0.611 | 2.0% | $132K | 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. |