Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 68% of modeled bridge. Strengths: Revenue per Bed. Risks: Net-to-Gross Ratio, Bed Count. Risk-adjusted uplift: $49.8M (vs $73.1M modeled).
EBITDA Bridge — 7 RCM Levers
Each bar shows the annual EBITDA impact at full run-rate. Revenue levers increase top-line; cost levers reduce operating expense; cash acceleration releases working capital. Calibrated to published research bands (Denial 12%→5% = $8-15M on $400M NPR).
Lever Detail
Each value shows its data source. SELLER = seller data room, DEFAULT = model default, BENCHMARK = P75 peer benchmark.
| Lever | Current | Target | Revenue | Cost | EBITDA | WC | Ramp |
|---|---|---|---|---|---|---|---|
| Cost to Collect | 4.5% DEFAULT | 2.5% BENCHMARK | $0 | $27.8M | $27.8M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $26.7M | $764K | $27.5M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $4.3M | $12.6M | $16.9M | $53.3M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $889K | $889K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 27.1% BENCHMARK | $0 | $0 | $0 | $0 | 18mo |
| CDI / Case Mix Index | 135.0% DEFAULT | 142.0% BENCHMARK | $0 | $0 | $0 | $0 | 18mo |
Implementation Timing Curve
Linear ramp to full run-rate per lever. Month 0 = close date. Partners should expect 60-70% of total uplift realized by month 12.
| Lever | M0 | M3 | M6 | M9 | M12 | M18 | M24 | M36 |
|---|---|---|---|---|---|---|---|---|
| Cost to Collect | $0 | $6.9M | $13.9M | $20.8M | $27.8M | $27.8M | $27.8M | $27.8M |
| Denial Rate Reduction | $0 | $6.9M | $13.8M | $20.6M | $27.5M | $27.5M | $27.5M | $27.5M |
| A/R Days Reduction | $0 | $5.6M | $11.3M | $16.9M | $16.9M | $16.9M | $16.9M | $16.9M |
| Clean Claim Rate | $0 | $445K | $889K | $889K | $889K | $889K | $889K | $889K |
| Cumulative | $0 | $19.9M | $39.8M | $59.3M | $73.1M | $73.1M | $73.1M | $73.1M |
Returns Sensitivity (IRR / MOIC)
5-year hold, 5.5x leverage, 3% organic growth, 10%/yr debt paydown. Green = exceeds 20% IRR hurdle. Amber = 15-20%. Red = below hurdle or loss. RCM uplift of $73.1M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 42% / 5.7x | 46% / 6.7x | 50% / 7.7x | 52% / 8.2x | 54% / 8.7x |
| 9.0x | 36% / 4.7x | 41% / 5.6x | 45% / 6.5x | 47% / 6.9x | 49% / 7.4x |
| 10.0x | 31% / 3.9x | 36% / 4.7x | 41% / 5.5x | 43% / 5.9x | 45% / 6.3x |
| 11.0x | 27% / 3.3x | 32% / 4.0x | 36% / 4.7x | 38% / 5.1x | 40% / 5.4x |
| 12.0x | 22% / 2.7x | 28% / 3.4x | 32% / 4.1x | 34% / 4.4x | 36% / 4.7x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline -22% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 7.9x, adding 0.5 turns of cushion.
5-Year Value Creation Waterfall
EBITDA trajectory: 3% organic growth + RCM uplift ramp (full run-rate at month 18).
| Base EBITDA | RCM Uplift | Total | Margin | |
|---|---|---|---|---|
| Entry | $1.10B | — | $1.10B | 79.1% |
| Year 1 | $1.13B | +$48.7M | $1.18B | 84.9% |
| Year 2 | $1.17B | +$73.1M | $1.24B | 89.1% |
| Year 3 | $1.20B | +$73.1M | $1.27B | 91.7% |
| Year 4 | $1.24B | +$73.1M | $1.31B | 94.2% |
| Year 5 | $1.27B | +$73.1M | $1.35B | 96.9% |
Achievement Sensitivity
What if we only achieve a fraction of each lever? 50% = conservative, 75% = base management case, 100% = plan, 120% = stretch.
| Lever | 50% | 75% | 100% | 120% |
|---|---|---|---|---|
| Cost to Collect | $13.9M | $20.8M | $27.8M | $33.3M |
| Denial Rate Reductio | $13.8M | $20.6M | $27.5M | $33.0M |
| A/R Days Reduction | $8.5M | $12.7M | $16.9M | $20.3M |
| Clean Claim Rate | $445K | $667K | $889K | $1.1M |
| Total | $36.5M | $54.8M | $73.1M | $87.7M |
Peer Context — Where This Hospital Sits
Key metrics vs 30 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 79.1% | -3.5% | -0.3% | 6.3% | P93 |
| Net-to-Gross | 100.0% | 16.2% | 20.5% | 27.1% | P93 |
| Occupancy | 54.4% | 58.6% | 69.2% | 78.2% | P10 |
| Rev/Bed | $4.3M | $1.3M | $1.6M | $2.1M | P90 |
| Exp/Bed | $900K | $1.1M | $1.5M | $2.0M | P10 |
Bridge Methodology
Coefficients calibrated to published research bands: denial 12%→5% = $8-15M on $400M NPR. Current metrics estimated from HCRIS public data and ML predictions. Target metrics set at P75 peer benchmarks with 60% gap closure assumption. Revenue levers use NPR × delta × avoidable share. Cost levers use claims volume × cost per reworked claim. Working capital from AR reduction is one-time cash (not included in recurring EBITDA). Returns assume 5.5x leverage, 3% organic growth, 10%/yr debt paydown.