ML Analysis — STURGIS HOSPITAL INC.
CCN 230096 | 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.
46
/ 100 (C)
Financial Health3/25
RCM Upside18/25
Market Position15/20
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
- Low occupancy (<30%) — demand risk
- Expenses exceed revenue
Catalysts:
- Strong commercial payer base protects revenue
- Limited competition supports pricing power
Margin Prediction (Trained Ridge Model)
-15.6%
R²=0.34 | n=4,907 | Grade B | Actual: -50.0%
Ridge regression trained on 4,907 HCRIS hospitals. 90% CI: [-43.9%, 12.7%]. P27 nationally.
| Driver | Value | Effect | Explanation | |
|---|---|---|---|---|
| Revenue/Bed | 314174.878 | -0.1766 | Lower Revenue/Bed decreases predicted margin | |
| Expense/Bed | 497679.408 | +0.1428 | Higher Expense/Bed increases predicted margin | |
| Bed Utilization Value | 23222.767 | -0.0282 | Lower Bed Utilization Value decreases predicted ma | |
| Occupancy | 0.074 | -0.0256 | Lower Occupancy decreases predicted margin | |
| Bed Count | 49.000 | +0.0156 | Higher Bed Count increases predicted margin |
Turnaround: 25%Low turnaround probability (25%). Structural disadvantages in Revenue/Bed and Expense/Bed.
Under-Performing / Distre
Archetype
60.2%
Distress Risk
$5.7M
RCM Opportunity
A
Opportunity Grade
-13.1%
Projected Margin
Cluster: Under-Performing / Distressed
Percentile within cluster: P86. Deeply negative margins signal severe distress. Evaluate asset-level acquisition at 4-6x normalized EBITDA.
Nearest Peers
| Hospital | State | Beds |
|---|---|---|
| HOLY FAMILY MEMORIAL INC | WI | 58 |
| MIDDLESBORO ARH | KY | 46 |
| ATRIUM HEALTH NAVICENT BALDWIN | GA | 86 |
| BON SECOURS COMMUNITY HOSPITAL | NY | 98 |
| ADVANCED SPECIALTY HOSP. OF TOLEDO | OH | 40 |
| COMMUNITY HEALTH CENTER BRANCH | MI | 75 |
Distress Analysis
Risk: High
National distress rate: 49.3%
MI distress rate: 50.9%
Model AUC: 0.629
| Factor | Value | Contribution | Direction |
|---|---|---|---|
| Occupancy Rate | 0.074 | +0.419 | ▲ risk |
| Revenue Per Bed | 314174.878 | +0.075 | ▲ risk |
| Medicaid Day Pct | 0.026 | -0.063 | ▼ risk |
| Medicare Day Pct | 0.421 | +0.016 | ▲ risk |
| Beds | 49.000 | -0.013 | ▼ risk |
| Net To Gross Ratio | 0.385 | +0.007 | ▲ risk |
RCM Improvement Opportunity
Total (risk-adjusted): $5.7M
Current margin: -50.0%
Projected margin: -13.1%
Grade: A
Comps: 72
Gap analysis vs P75 peers with 60% closure assumption. Confidence-weighted by lever implementation difficulty.
| Lever | Current | Benchmark | Gap | Impact | Confidence | Timeline |
|---|---|---|---|---|---|---|
| Occupancy Improvement | 0.074 | 0.607 | 53.3% | $3.5M | 55% | 24mo |
| Payer Mix Optimization | 0.554 | 0.691 | 13.8% | $2.1M | 50% | 24mo |
| Net-to-Gross Ratio Improvement | 0.385 | 0.444 | 5.9% | $107K | 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 | 34.3 | [25.0, 75.0] | P78 | Average — predicted days in ar is near the median. |
| Clean Claim Rate | 98.0% | [80.0%, 98.0%] | P0 | Strong — predicted clean claim rate is in the top third. |
| Net Collection Rate | 99.4% | [90.0%, 99.5%] | P6 | Strong — predicted net collection rate is in the top third. |