ML Analysis — THE MEDICAL CTR OF SOUTHEAST TEXAS
CCN 450518 | 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.
46
/ 100 (C)
Financial Health9/25
RCM Upside17/25
Market Position11/20
Demand Defensibility8/15
Operational Efficiency0/15
Entry Multiple: 8.0x – 10.0x
Est. MOIC: 1.9x
Risk Factors:
- Negative operating margin
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)
-6.3%
R²=0.34 | n=4,907 | Grade B | Actual: -4.1%
Ridge regression trained on 4,907 HCRIS hospitals. 90% CI: [-34.6%, 22.0%]. P46 nationally.
| Driver | Value | Effect | Explanation | |
|---|---|---|---|---|
| Revenue/Bed | 669481.913 | -0.1270 | Lower Revenue/Bed decreases predicted margin | |
| Expense/Bed | 696687.709 | +0.1183 | Higher Expense/Bed increases predicted margin | |
| Reimbursement Quality | 0.095 | +0.0306 | Higher Reimbursement Quality increases predicted m | |
| State Peer Margin | -0.006 | +0.0290 | Higher State Peer Margin increases predicted margi | |
| Net-to-Gross | 0.137 | -0.0260 | Lower Net-to-Gross decreases predicted margin |
Turnaround: 39%Turnaround possible (39%) but uncertain. Margin improvement depends on improving Revenue/Bed.
Under-Performing / Distre
Archetype
52.2%
Distress Risk
$6.8M
RCM Opportunity
D
Opportunity Grade
1.1%
Projected Margin
Cluster: Under-Performing / Distressed
Percentile within cluster: P58. 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: High
National distress rate: 49.3%
TX distress rate: 42.8%
Model AUC: 0.629
| Factor | Value | Contribution | Direction |
|---|---|---|---|
| Occupancy Rate | 0.348 | +0.164 | ▲ risk |
| Net To Gross Ratio | 0.137 | -0.103 | ▼ risk |
| Revenue Per Bed | 669481.913 | +0.054 | ▲ risk |
| Medicare Day Pct | 0.205 | -0.021 | ▼ risk |
| Medicaid Day Pct | 0.102 | +0.013 | ▲ risk |
| Beds | 196.000 | +0.006 | ▲ risk |
RCM Improvement Opportunity
Total (risk-adjusted): $6.8M
Current margin: -4.1%
Projected margin: 1.1%
Grade: D
Comps: 149
Gap analysis vs P75 peers with 60% closure assumption. Confidence-weighted by lever implementation difficulty.
| Lever | Current | Benchmark | Gap | Impact | Confidence | Timeline |
|---|---|---|---|---|---|---|
| Occupancy Improvement | 0.348 | 0.749 | 40.1% | $2.6M | 55% | 24mo |
| Net-to-Gross Ratio Improvement | 0.137 | 0.285 | 14.8% | $2.3M | 65% | 18mo |
| Payer Mix Optimization | 0.693 | 0.819 | 12.6% | $1.9M | 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 | 26.7 | [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. |