ML Analysis — MORTON HOSPITAL
CCN 220073 | 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 Position10/20
Demand Defensibility13/15
Operational Efficiency6/15
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
Margin Prediction (Trained Ridge Model)
-8.7%
R²=0.34 | n=4,907 | Grade B | Actual: -6.0%
Ridge regression trained on 4,907 HCRIS hospitals. 90% CI: [-37.0%, 19.6%]. P40 nationally.
| Driver | Value | Effect | Explanation | |
|---|---|---|---|---|
| State Peer Margin | -0.122 | -0.0566 | Lower State Peer Margin decreases predicted margin | |
| Revenue/Bed | 1251640.104 | -0.0457 | Lower Revenue/Bed decreases predicted margin | |
| Expense/Bed | 1326534.056 | +0.0407 | Higher Expense/Bed increases predicted margin | |
| Net-to-Gross | 0.490 | +0.0136 | Higher Net-to-Gross increases predicted margin | |
| Occupancy × Net-to-Gross | 0.345 | +0.0118 | Higher Occupancy × Net-to-Gross increases predicte |
Turnaround: 35%Turnaround possible (35%) but uncertain. Margin improvement depends on improving State Peer Margin.
Suburban Community Hospit
Archetype
49.4%
Distress Risk
$5.4M
RCM Opportunity
D
Opportunity Grade
-2.5%
Projected Margin
Cluster: Suburban Community Hospital
Percentile within cluster: P69. 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%
MA distress rate: 61.8%
Model AUC: 0.629
| Factor | Value | Contribution | Direction |
|---|---|---|---|
| Occupancy Rate | 0.705 | -0.167 | ▼ risk |
| Medicaid Day Pct | 0.168 | +0.079 | ▲ risk |
| Net To Gross Ratio | 0.490 | +0.054 | ▲ risk |
| Medicare Day Pct | 0.445 | +0.020 | ▲ risk |
| Revenue Per Bed | 1251640.104 | +0.019 | ▲ risk |
| Beds | 125.000 | -0.003 | ▼ risk |
RCM Improvement Opportunity
Total (risk-adjusted): $5.4M
Current margin: -6.0%
Projected margin: -2.5%
Grade: D
Comps: 57
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 | 0.387 | 0.636 | 24.9% | $3.7M | 50% | 24mo |
| Net-to-Gross Ratio Improvement | 0.490 | 0.545 | 5.5% | $998K | 65% | 18mo |
| Occupancy Improvement | 0.705 | 0.809 | 10.5% | $691K | 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. |