ML Analysis — MERIT HEALTH WESLEY
CCN 250094 | 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.
57
/ 100 (C)
Financial Health11/25
RCM Upside15/25
Market Position15/20
Demand Defensibility13/15
Operational Efficiency3/15
Entry Multiple: 9.5x – 11.5x
Est. MOIC: 2.3x
Risk Factors:
Catalysts:
- RCM optimization could add 3-5pp margin
- Strong commercial payer base protects revenue
- Limited competition supports pricing power
Margin Prediction (Trained Ridge Model)
-9.1%
R²=0.34 | n=4,907 | Grade B | Actual: 1.3%
Ridge regression trained on 4,907 HCRIS hospitals. 90% CI: [-37.4%, 19.2%]. P39 nationally.
| Driver | Value | Effect | Explanation | |
|---|---|---|---|---|
| Expense/Bed | 1149622.223 | +0.0625 | Higher Expense/Bed increases predicted margin | |
| State Peer Margin | -0.125 | -0.0591 | Lower State Peer Margin decreases predicted margin | |
| Revenue/Bed | 1164783.298 | -0.0579 | Lower Revenue/Bed decreases predicted margin | |
| Reimbursement Quality | 0.049 | +0.0438 | Higher Reimbursement Quality increases predicted m | |
| Net-to-Gross | 0.095 | -0.0306 | Lower Net-to-Gross decreases predicted margin |
Suburban Community Hospit
Archetype
42.0%
Distress Risk
$3.8M
RCM Opportunity
D
Opportunity Grade
4.0%
Projected Margin
Cluster: Suburban Community Hospital
Percentile within cluster: P51. Community hospitals — the largest PE deal category. Focus on RCM improvement and cost optimization at 9-11x.
Nearest Peers
| Hospital | State | Beds |
|---|---|---|
| CLARA MAASS MEDICAL CENTER | NJ | 259 |
| PRESENCE SAINTS MARY & ELIZABETH MED | IL | 266 |
| ADVENTIST HEALTH BAKERSFIELD | CA | 254 |
| BRISTOL REGIONAL MEDICAL CENTER | TN | 244 |
| HOLSTON VALLEY HOSP & MED CTR | TN | 286 |
| SPRINGFIELD REGIONAL MEDICAL CENTER | OH | 230 |
Distress Analysis
Risk: Elevated
National distress rate: 49.3%
MS distress rate: 68.2%
Model AUC: 0.629
| Factor | Value | Contribution | Direction |
|---|---|---|---|
| Occupancy Rate | 0.823 | -0.277 | ▼ risk |
| Net To Gross Ratio | 0.095 | -0.122 | ▼ risk |
| Medicaid Day Pct | 0.173 | +0.084 | ▲ risk |
| Revenue Per Bed | 1164783.298 | +0.024 | ▲ risk |
| Beds | 121.000 | -0.004 | ▼ risk |
| Medicare Day Pct | 0.310 | -0.003 | ▼ risk |
RCM Improvement Opportunity
Total (risk-adjusted): $3.8M
Current margin: 1.3%
Projected margin: 4.0%
Grade: D
Comps: 26
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 | 0.095 | 0.305 | 21.0% | $3.5M | 65% | 18mo |
| Payer Mix Optimization | 0.517 | 0.537 | 2.0% | $304K | 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 | 26.5 | [25.0, 75.0] | P37 | 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. |