Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 65% of modeled bridge. Strengths: Occupancy Rate, Revenue per Bed. Risks: Bed Count, Commercial Payer %. Risk-adjusted uplift: $50.0M (vs $77.1M 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 | $29.3M | $29.3M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $28.2M | $806K | $29.0M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $4.5M | $13.3M | $17.8M | $56.2M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $938K | $938K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 30.4% 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 | $7.3M | $14.7M | $22.0M | $29.3M | $29.3M | $29.3M | $29.3M |
| Denial Rate Reduction | $0 | $7.3M | $14.5M | $21.8M | $29.0M | $29.0M | $29.0M | $29.0M |
| A/R Days Reduction | $0 | $5.9M | $11.9M | $17.8M | $17.8M | $17.8M | $17.8M | $17.8M |
| Clean Claim Rate | $0 | $469K | $938K | $938K | $938K | $938K | $938K | $938K |
| Cumulative | $0 | $21.0M | $42.0M | $62.6M | $77.1M | $77.1M | $77.1M | $77.1M |
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 $77.1M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 62% / 11.1x | 66% / 12.7x | 70% / 14.3x | 72% / 15.1x | 74% / 15.9x |
| 9.0x | 57% / 9.5x | 61% / 10.9x | 65% / 12.4x | 67% / 13.1x | 69% / 13.8x |
| 10.0x | 52% / 8.2x | 57% / 9.5x | 61% / 10.8x | 63% / 11.4x | 65% / 12.1x |
| 11.0x | 48% / 7.2x | 53% / 8.4x | 57% / 9.5x | 59% / 10.1x | 61% / 10.7x |
| 12.0x | 45% / 6.3x | 49% / 7.4x | 53% / 8.5x | 55% / 9.0x | 57% / 9.5x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 28% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 4.7x, adding 3.8 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 | $95.8M | — | $95.8M | 6.5% |
| Year 1 | $98.7M | +$51.4M | $150.1M | 10.2% |
| Year 2 | $101.7M | +$77.1M | $178.8M | 12.2% |
| Year 3 | $104.7M | +$77.1M | $181.8M | 12.4% |
| Year 4 | $107.8M | +$77.1M | $185.0M | 12.6% |
| Year 5 | $111.1M | +$77.1M | $188.2M | 12.8% |
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 | $14.7M | $22.0M | $29.3M | $35.2M |
| Denial Rate Reductio | $14.5M | $21.8M | $29.0M | $34.8M |
| A/R Days Reduction | $8.9M | $13.4M | $17.8M | $21.4M |
| Clean Claim Rate | $469K | $704K | $938K | $1.1M |
| Total | $38.6M | $57.9M | $77.1M | $92.6M |
Peer Context — Where This Hospital Sits
Key metrics vs 68 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 6.5% | -11.9% | -4.5% | 4.2% | P81 |
| Net-to-Gross | 31.1% | 18.7% | 24.5% | 30.4% | P82 |
| Occupancy | 58.7% | 58.7% | 70.4% | 80.6% | P24 |
| Rev/Bed | $2.2M | $1.5M | $2.0M | $3.0M | P61 |
| Exp/Bed | $2.1M | $1.7M | $2.1M | $3.1M | P54 |
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.