ML Analysis — MCLAREN NORTHERN MICHIGAN
CCN 230105 | 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 Health8/25
RCM Upside17/25
Market Position15/20
Demand Defensibility11/15
Operational Efficiency4/15
Entry Multiple: 9.5x – 11.5x
Est. MOIC: 2.3x
Risk Factors:
- Negative operating margin
Catalysts:
- RCM optimization could add 3-5pp margin
- Strong commercial payer base protects revenue
- Limited competition supports pricing power
- Volume growth opportunity from low occupancy
Margin Prediction (Trained Ridge Model)
-5.7%
R²=0.34 | n=4,907 | Grade B | Actual: -0.6%
Ridge regression trained on 4,907 HCRIS hospitals. 90% CI: [-34.0%, 22.6%]. P48 nationally.
| Driver | Value | Effect | Explanation | |
|---|---|---|---|---|
| Expense/Bed | 1335521.751 | +0.0396 | Higher Expense/Bed increases predicted margin | |
| Revenue/Bed | 1327519.955 | -0.0351 | Lower Revenue/Bed decreases predicted margin | |
| Log(Beds) | 5.176 | +0.0186 | Higher Log(Beds) increases predicted margin | |
| Bed Utilization Value | 663708.607 | -0.0069 | Lower Bed Utilization Value decreases predicted ma | |
| State Peer Margin | -0.052 | -0.0046 | State Peer Margin has minimal effect |
Turnaround: 40%Turnaround possible (40%) but uncertain. Margin improvement depends on Expense/Bed.
Suburban Community Hospit
Archetype
49.5%
Distress Risk
$5.5M
RCM Opportunity
D
Opportunity Grade
1.8%
Projected Margin
Cluster: Suburban Community Hospital
Percentile within cluster: P8. 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%
MI distress rate: 50.9%
Model AUC: 0.629
| Factor | Value | Contribution | Direction |
|---|---|---|---|
| Medicaid Day Pct | 0.061 | -0.028 | ▼ risk |
| Occupancy Rate | 0.500 | +0.023 | ▲ risk |
| Revenue Per Bed | 1327519.955 | +0.015 | ▲ risk |
| Net To Gross Ratio | 0.339 | -0.013 | ▼ risk |
| Beds | 177.000 | +0.004 | ▲ risk |
| Medicare Day Pct | 0.346 | +0.003 | ▲ risk |
RCM Improvement Opportunity
Total (risk-adjusted): $5.5M
Current margin: -0.6%
Projected margin: 1.8%
Grade: D
Comps: 55
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 | 0.592 | 0.763 | 17.1% | $2.6M | 50% | 24mo |
| Occupancy Improvement | 0.500 | 0.812 | 31.2% | $2.1M | 55% | 24mo |
| Net-to-Gross Ratio Improvement | 0.339 | 0.372 | 3.3% | $900K | 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 | 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. |