ML Analysis — MEMORIAL HEALTHCARE
CCN 230121 | 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.
56
/ 100 (C)
Financial Health8/25
RCM Upside19/25
Market Position15/20
Demand Defensibility9/15
Operational Efficiency4/15
Entry Multiple: 9.5x – 11.5x
Est. MOIC: 2.3x
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
- Volume growth opportunity from low occupancy
Margin Prediction (Trained Ridge Model)
-7.5%
R²=0.34 | n=4,907 | Grade B | Actual: -13.4%
Ridge regression trained on 4,907 HCRIS hospitals. 90% CI: [-35.8%, 20.8%]. P43 nationally.
| Driver | Value | Effect | Explanation | |
|---|---|---|---|---|
| Expense/Bed | 2272482.850 | -0.0758 | Higher Expense/Bed decreases predicted margin | |
| Revenue/Bed | 2003393.478 | +0.0592 | Higher Revenue/Bed increases predicted margin | |
| Net-to-Gross | 0.237 | -0.0148 | Lower Net-to-Gross decreases predicted margin | |
| Medicaid % | 0.020 | +0.0083 | Higher Medicaid % increases predicted margin | |
| Log(Beds) | 4.727 | +0.0082 | Higher Log(Beds) increases predicted margin |
Turnaround: 37%Turnaround possible (37%) but uncertain. Margin improvement depends on improving Expense/Bed.
Under-Performing / Distre
Archetype
47.5%
Distress Risk
$6.5M
RCM Opportunity
D
Opportunity Grade
-10.5%
Projected Margin
Cluster: Under-Performing / Distressed
Percentile within cluster: P29. 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: Elevated
National distress rate: 49.3%
MI distress rate: 50.9%
Model AUC: 0.629
| Factor | Value | Contribution | Direction |
|---|---|---|---|
| Occupancy Rate | 0.417 | +0.100 | ▲ risk |
| Medicaid Day Pct | 0.020 | -0.069 | ▼ risk |
| Net To Gross Ratio | 0.237 | -0.059 | ▼ risk |
| Revenue Per Bed | 2003393.478 | -0.025 | ▼ risk |
| Medicare Day Pct | 0.246 | -0.014 | ▼ risk |
| Beds | 113.000 | -0.005 | ▼ risk |
RCM Improvement Opportunity
Total (risk-adjusted): $6.5M
Current margin: -13.4%
Projected margin: -10.5%
Grade: D
Comps: 46
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 | 0.237 | 0.387 | 15.0% | $4.0M | 65% | 18mo |
| Occupancy Improvement | 0.417 | 0.783 | 36.5% | $2.4M | 55% | 24mo |
| Payer Mix Optimization | 0.734 | 0.744 | 1.0% | $154K | 50% | 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 | 27.5 | [25.0, 75.0] | P41 | 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. |