ML Analysis — HOUSTON HEALTHCARE MEDICAL CENTER
CCN 450659 | 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.
52
/ 100 (C)
Financial Health9/25
RCM Upside19/25
Market Position15/20
Demand Defensibility7/15
Operational Efficiency2/15
Entry Multiple: 8.0x – 10.0x
Est. MOIC: 1.9x
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)
-3.1%
R²=0.34 | n=4,907 | Grade B | Actual: -11.0%
Ridge regression trained on 4,907 HCRIS hospitals. 90% CI: [-31.4%, 25.2%]. P54 nationally.
| Driver | Value | Effect | Explanation | |
|---|---|---|---|---|
| Revenue/Bed | 1157588.551 | -0.0589 | Lower Revenue/Bed decreases predicted margin | |
| Expense/Bed | 1285200.102 | +0.0458 | Higher Expense/Bed increases predicted margin | |
| Reimbursement Quality | 0.072 | +0.0372 | Higher Reimbursement Quality increases predicted m | |
| Net-to-Gross | 0.089 | -0.0313 | Lower Net-to-Gross decreases predicted margin | |
| State Peer Margin | -0.006 | +0.0290 | Higher State Peer Margin increases predicted margi |
Turnaround: 44%Turnaround possible (44%) but uncertain. Margin improvement depends on improving Revenue/Bed.
Under-Performing / Distre
Archetype
45.5%
Distress Risk
$6.8M
RCM Opportunity
D
Opportunity Grade
-7.0%
Projected Margin
Cluster: Under-Performing / Distressed
Percentile within cluster: P42. 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%
TX distress rate: 42.8%
Model AUC: 0.629
| Factor | Value | Contribution | Direction |
|---|---|---|---|
| Net To Gross Ratio | 0.089 | -0.124 | ▼ risk |
| Medicaid Day Pct | 0.012 | -0.077 | ▼ risk |
| Occupancy Rate | 0.471 | +0.050 | ▲ risk |
| Medicare Day Pct | 0.178 | -0.026 | ▼ risk |
| Revenue Per Bed | 1157588.551 | +0.025 | ▲ risk |
| Beds | 147.000 | -0.000 | ▼ risk |
RCM Improvement Opportunity
Total (risk-adjusted): $6.8M
Current margin: -11.0%
Projected margin: -7.0%
Grade: D
Comps: 167
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 | 0.089 | 0.323 | 23.4% | $4.7M | 65% | 18mo |
| Occupancy Improvement | 0.471 | 0.745 | 27.3% | $1.8M | 55% | 24mo |
| Payer Mix Optimization | 0.809 | 0.831 | 2.2% | $328K | 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 | 27.7 | [25.0, 75.0] | P42 | 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. |