ML Analysis — ENCOMPASS HEALTH REHABILITATION HOSP
CCN 393027 | Clustering + Distress + RCM Opportunity
🛡️ Public data only — no PHI permitted on this instance.
Investability Score
Speculative — only pursue if turnaround thesis is strong and entry multiple reflects risk.
42
/ 100 (D)
Financial Health4/25
RCM Upside17/25
Market Position9/20
Demand Defensibility8/15
Operational Efficiency4/15
Entry Multiple: 8.0x – 10.0x
Est. MOIC: 1.9x
Risk Factors:
- Negative operating margin
- Low occupancy (<30%) — demand risk
Catalysts:
- RCM optimization could add 3-5pp margin
- Strong commercial payer base protects revenue
- Volume growth opportunity from low occupancy
Margin Prediction (Trained Ridge Model)
-10.2%
R²=0.34 | n=4,907 | Grade B | Actual: -4.1%
Ridge regression trained on 4,907 HCRIS hospitals. 90% CI: [-38.5%, 18.1%]. P37 nationally.
| Driver | Value | Effect | Explanation | |
|---|---|---|---|---|
| Revenue/Bed | 135484.827 | -0.2015 | Lower Revenue/Bed decreases predicted margin | |
| Expense/Bed | 140981.883 | +0.1868 | Higher Expense/Bed increases predicted margin | |
| Reimbursement Quality | 0.333 | -0.0379 | Higher Reimbursement Quality decreases predicted m | |
| Net-to-Gross | 0.691 | +0.0362 | Higher Net-to-Gross increases predicted margin | |
| Bed Utilization Value | 31450.444 | -0.0279 | Lower Bed Utilization Value decreases predicted ma |
Turnaround: 33%Turnaround possible (33%) but uncertain. Margin improvement depends on improving Revenue/Bed.
Rural/Critical Access
Archetype
60.5%
Distress Risk
$8.8M
RCM Opportunity
A
Opportunity Grade
35.8%
Projected Margin
Cluster: Rural/Critical Access
Percentile within cluster: P49. Rural/small hospitals face structural headwinds. Evaluate CAH conversion, telehealth, and rural health funding.
Nearest Peers
| Hospital | State | Beds |
|---|---|---|
| BRECKINRIDGE HEALTH INC | KY | 25 |
| SHERIDAN MEMORIAL HOSPITAL | MT | 19 |
| DAYTON GENERAL HOSPITAL | WA | 25 |
| BLUE MOUNTAIN HOSPITAL DISTRICT | OR | 16 |
| COMMUNITY HOSPITAL | WY | 25 |
| CARLE EUREKA HOSPITAL | IL | 25 |
Distress Analysis
Risk: High
National distress rate: 49.3%
PA distress rate: 48.1%
Model AUC: 0.629
| Factor | Value | Contribution | Direction |
|---|---|---|---|
| Occupancy Rate | 0.232 | +0.272 | ▲ risk |
| Net To Gross Ratio | 0.691 | +0.144 | ▲ risk |
| Revenue Per Bed | 135484.827 | +0.085 | ▲ risk |
| Medicaid Day Pct | 0.006 | -0.083 | ▼ risk |
| Medicare Day Pct | 0.512 | +0.032 | ▲ risk |
| Beds | 162.000 | +0.002 | ▲ risk |
RCM Improvement Opportunity
Total (risk-adjusted): $8.8M
Current margin: -4.1%
Projected margin: 35.8%
Grade: A
Comps: 101
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 | 0.482 | 0.840 | 35.8% | $5.4M | 50% | 24mo |
| Occupancy Improvement | 0.232 | 0.746 | 51.4% | $3.4M | 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 | 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. |