ML Analysis — SPECTRUM HEALTH LUDINGTON
CCN 230110 | Clustering + Distress + RCM Opportunity
🛡️ Public data only — no PHI permitted on this instance.
Investability Score
Buy — solid fundamentals with identifiable value creation levers. Proceed to detailed diligence.
60
/ 100 (B)
Financial Health15/25
RCM Upside11/25
Market Position15/20
Demand Defensibility8/15
Operational Efficiency11/15
Entry Multiple: 9.5x – 11.5x
Est. MOIC: 2.3x
Risk Factors:
- Small facility (<50 beds) — limited scale
Catalysts:
- Strong commercial payer base protects revenue
- Limited competition supports pricing power
Margin Prediction (Trained Ridge Model)
-2.2%
R²=0.34 | n=4,907 | Grade B | Actual: 5.3%
Ridge regression trained on 4,907 HCRIS hospitals. 90% CI: [-30.5%, 26.1%]. P56 nationally.
| Driver | Value | Effect | Explanation | |
|---|---|---|---|---|
| Revenue/Bed | 2446326.911 | +0.1210 | Higher Revenue/Bed increases predicted margin | |
| Expense/Bed | 2316689.622 | -0.0812 | Higher Expense/Bed decreases predicted margin | |
| Bed Count | 45.000 | +0.0162 | Higher Bed Count increases predicted margin | |
| Reimbursement Quality | 0.250 | -0.0140 | Higher Reimbursement Quality decreases predicted m | |
| Log(Beds) | 3.807 | -0.0132 | Lower Log(Beds) decreases predicted margin |
Suburban Community Hospit
Archetype
48.3%
Distress Risk
$2.5M
RCM Opportunity
D
Opportunity Grade
7.6%
Projected Margin
Cluster: Suburban Community Hospital
Percentile within cluster: P0. Community hospitals — the largest PE deal category. Focus on RCM improvement and cost optimization at 9-11x.
Nearest Peers
Distress Analysis
Risk: Elevated
National distress rate: 49.3%
MI distress rate: 50.9%
Model AUC: 0.629
| Factor | Value | Contribution | Direction |
|---|---|---|---|
| Occupancy Rate | 0.452 | +0.067 | ▲ risk |
| Medicaid Day Pct | 0.028 | -0.061 | ▼ risk |
| Revenue Per Bed | 2446326.911 | -0.051 | ▼ risk |
| Beds | 45.000 | -0.014 | ▼ risk |
| Net To Gross Ratio | 0.397 | +0.013 | ▲ risk |
| Medicare Day Pct | 0.342 | +0.003 | ▲ risk |
RCM Improvement Opportunity
Total (risk-adjusted): $2.5M
Current margin: 5.3%
Projected margin: 7.6%
Grade: D
Comps: 73
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 | 0.630 | 0.691 | 6.1% | $911K | 50% | 24mo |
| Net-to-Gross Ratio Improvement | 0.397 | 0.466 | 6.9% | $888K | 65% | 18mo |
| Occupancy Improvement | 0.452 | 0.558 | 10.5% | $694K | 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 | 27.2 | [25.0, 75.0] | P40 | 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. |