Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 62% of modeled bridge. Risks: Occupancy Rate, Bed Count. Risk-adjusted uplift: $17.2M (vs $27.9M 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 | $10.6M | $10.6M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $10.2M | $291K | $10.5M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $1.6M | $4.8M | $6.4M | $20.3M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $339K | $339K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 29.1% 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 | $2.6M | $5.3M | $7.9M | $10.6M | $10.6M | $10.6M | $10.6M |
| Denial Rate Reduction | $0 | $2.6M | $5.2M | $7.9M | $10.5M | $10.5M | $10.5M | $10.5M |
| A/R Days Reduction | $0 | $2.1M | $4.3M | $6.4M | $6.4M | $6.4M | $6.4M | $6.4M |
| Clean Claim Rate | $0 | $170K | $339K | $339K | $339K | $339K | $339K | $339K |
| Cumulative | $0 | $7.6M | $15.2M | $22.6M | $27.9M | $27.9M | $27.9M | $27.9M |
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 $27.9M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 65% / 12.2x | 69% / 13.9x | 73% / 15.6x | 75% / 16.4x | 77% / 17.3x |
| 9.0x | 60% / 10.4x | 64% / 12.0x | 68% / 13.5x | 70% / 14.3x | 72% / 15.0x |
| 10.0x | 55% / 9.1x | 60% / 10.4x | 64% / 11.8x | 66% / 12.5x | 68% / 13.2x |
| 11.0x | 51% / 8.0x | 56% / 9.2x | 60% / 10.4x | 62% / 11.1x | 64% / 11.7x |
| 12.0x | 48% / 7.0x | 52% / 8.2x | 56% / 9.3x | 58% / 9.9x | 60% / 10.4x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 33% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 4.3x, adding 4.1 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 | $29.4M | — | $29.4M | 5.5% |
| Year 1 | $30.3M | +$18.6M | $48.8M | 9.2% |
| Year 2 | $31.2M | +$27.9M | $59.0M | 11.1% |
| Year 3 | $32.1M | +$27.9M | $60.0M | 11.3% |
| Year 4 | $33.1M | +$27.9M | $60.9M | 11.5% |
| Year 5 | $34.1M | +$27.9M | $61.9M | 11.7% |
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 | $5.3M | $7.9M | $10.6M | $12.7M |
| Denial Rate Reductio | $5.2M | $7.9M | $10.5M | $12.6M |
| A/R Days Reduction | $3.2M | $4.8M | $6.4M | $7.7M |
| Clean Claim Rate | $170K | $254K | $339K | $407K |
| Total | $13.9M | $20.9M | $27.9M | $33.4M |
Peer Context — Where This Hospital Sits
Key metrics vs 147 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 5.5% | -15.9% | -4.5% | 3.7% | P80 |
| Net-to-Gross | 28.8% | 18.1% | 23.7% | 29.1% | P73 |
| Occupancy | 36.9% | 54.9% | 65.8% | 75.3% | P3 |
| Rev/Bed | $1.3M | $1.4M | $1.9M | $2.7M | P22 |
| Exp/Bed | $1.2M | $1.5M | $2.0M | $2.8M | P16 |
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.