Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 69% of modeled bridge. Strengths: Revenue per Bed. Risks: Commercial Payer %. Risk-adjusted uplift: $19.3M (vs $28.0M 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 | $292K | $10.5M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $1.6M | $4.8M | $6.5M | $20.4M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $340K | $340K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 28.8% 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 | $2.7M | $5.3M | $8.0M | $10.6M | $10.6M | $10.6M | $10.6M |
| Denial Rate Reduction | $0 | $2.6M | $5.3M | $7.9M | $10.5M | $10.5M | $10.5M | $10.5M |
| A/R Days Reduction | $0 | $2.2M | $4.3M | $6.5M | $6.5M | $6.5M | $6.5M | $6.5M |
| Clean Claim Rate | $0 | $170K | $340K | $340K | $340K | $340K | $340K | $340K |
| Cumulative | $0 | $7.6M | $15.2M | $22.7M | $28.0M | $28.0M | $28.0M | $28.0M |
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 $28.0M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 160% / 118.4x | 166% / 131.9x | 171% / 145.4x | 173% / 152.2x | 176% / 158.9x |
| 9.0x | 154% / 104.9x | 159% / 116.9x | 164% / 128.9x | 167% / 134.9x | 169% / 140.9x |
| 10.0x | 148% / 94.1x | 154% / 104.9x | 159% / 115.7x | 161% / 121.1x | 163% / 126.5x |
| 11.0x | 143% / 85.2x | 149% / 95.0x | 154% / 104.9x | 156% / 109.8x | 158% / 114.7x |
| 12.0x | 139% / 77.8x | 144% / 86.9x | 149% / 95.9x | 151% / 100.4x | 154% / 104.9x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 92% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 0.5x, adding 7.9 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 | $1.8M | — | $1.8M | 0.3% |
| Year 1 | $1.9M | +$18.6M | $20.5M | 3.9% |
| Year 2 | $1.9M | +$28.0M | $29.9M | 5.6% |
| Year 3 | $2.0M | +$28.0M | $29.9M | 5.6% |
| Year 4 | $2.0M | +$28.0M | $30.0M | 5.6% |
| Year 5 | $2.1M | +$28.0M | $30.1M | 5.7% |
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 | $8.0M | $10.6M | $12.8M |
| Denial Rate Reductio | $5.3M | $7.9M | $10.5M | $12.6M |
| A/R Days Reduction | $3.2M | $4.9M | $6.5M | $7.8M |
| Clean Claim Rate | $170K | $255K | $340K | $408K |
| Total | $14.0M | $21.0M | $28.0M | $33.6M |
Peer Context — Where This Hospital Sits
Key metrics vs 217 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 0.3% | -17.4% | -4.5% | 4.6% | P64 |
| Net-to-Gross | 28.7% | 17.7% | 22.1% | 28.8% | P75 |
| Occupancy | 53.1% | 47.1% | 60.9% | 73.6% | P34 |
| Rev/Bed | $2.9M | $847K | $1.4M | $2.3M | P87 |
| Exp/Bed | $2.9M | $937K | $1.6M | $2.4M | P85 |
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.