ML Analysis — HOUSTON METHODIST ST. CATHERINE LTAC
CCN 452118 | 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.
43
/ 100 (D)
Financial Health4/25
RCM Upside19/25
Market Position9/20
Demand Defensibility10/15
Operational Efficiency0/15
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
Margin Prediction (Trained Ridge Model)
-8.0%
R²=0.34 | n=4,907 | Grade B | Actual: -50.0%
Ridge regression trained on 4,907 HCRIS hospitals. 90% CI: [-36.2%, 20.3%]. P42 nationally.
| Driver | Value | Effect | Explanation | |
|---|---|---|---|---|
| Revenue/Bed | 357284.786 | -0.1706 | Lower Revenue/Bed decreases predicted margin | |
| Expense/Bed | 704872.041 | +0.1173 | Higher Expense/Bed increases predicted margin | |
| State Peer Margin | -0.006 | +0.0290 | Higher State Peer Margin increases predicted margi | |
| Reimbursement Quality | 0.119 | +0.0236 | Higher Reimbursement Quality increases predicted m | |
| Net-to-Gross | 0.165 | -0.0228 | Lower Net-to-Gross decreases predicted margin |
Turnaround: 36%Turnaround possible (36%) but uncertain. Margin improvement depends on improving Revenue/Bed.
Under-Performing / Distre
Archetype
44.9%
Distress Risk
$3.6M
RCM Opportunity
C
Opportunity Grade
-43.1%
Projected Margin
Cluster: Under-Performing / Distressed
Percentile within cluster: P63. 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 | 0.165 | -0.091 | ▼ risk |
| Medicaid Day Pct | 0.014 | -0.075 | ▼ risk |
| Revenue Per Bed | 357284.786 | +0.072 | ▲ risk |
| Occupancy Rate | 0.602 | -0.071 | ▼ risk |
| Medicare Day Pct | 0.264 | -0.011 | ▼ risk |
| Beds | 145.000 | -0.000 | ▼ risk |
RCM Improvement Opportunity
Total (risk-adjusted): $3.6M
Current margin: -50.0%
Projected margin: -43.1%
Grade: C
Comps: 165
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 | 0.722 | 0.833 | 11.1% | $1.7M | 50% | 24mo |
| Occupancy Improvement | 0.602 | 0.749 | 14.7% | $968K | 55% | 24mo |
| Net-to-Gross Ratio Improvement | 0.165 | 0.324 | 15.8% | $958K | 65% | 18mo |
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 | 33.3 | [25.0, 75.0] | P74 | Average — predicted days in ar is near the median. |
| Clean Claim Rate | 98.0% | [80.0%, 98.0%] | P0 | Strong — predicted clean claim rate is in the top third. |
| Net Collection Rate | 99.2% | [90.0%, 99.5%] | P4 | Strong — predicted net collection rate is in the top third. |