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: Occupancy Rate, Net-to-Gross Ratio. Risks: Bed Count. Risk-adjusted uplift: $22.5M (vs $32.5M 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 | $12.4M | $12.4M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $11.9M | $340K | $12.2M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $1.9M | $5.6M | $7.5M | $23.7M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $396K | $396K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 28.9% 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 | $3.1M | $6.2M | $9.3M | $12.4M | $12.4M | $12.4M | $12.4M |
| Denial Rate Reduction | $0 | $3.1M | $6.1M | $9.2M | $12.2M | $12.2M | $12.2M | $12.2M |
| A/R Days Reduction | $0 | $2.5M | $5.0M | $7.5M | $7.5M | $7.5M | $7.5M | $7.5M |
| Clean Claim Rate | $0 | $198K | $396K | $396K | $396K | $396K | $396K | $396K |
| Cumulative | $0 | $8.9M | $17.7M | $26.4M | $32.5M | $32.5M | $32.5M | $32.5M |
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 $32.5M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 48% / 7.1x | 52% / 8.2x | 56% / 9.4x | 58% / 9.9x | 60% / 10.5x |
| 9.0x | 43% / 5.9x | 47% / 7.0x | 51% / 8.0x | 53% / 8.5x | 55% / 9.0x |
| 10.0x | 38% / 5.0x | 43% / 5.9x | 47% / 6.8x | 49% / 7.3x | 51% / 7.8x |
| 11.0x | 34% / 4.3x | 38% / 5.1x | 43% / 5.9x | 45% / 6.3x | 47% / 6.8x |
| 12.0x | 29% / 3.6x | 34% / 4.4x | 39% / 5.2x | 41% / 5.5x | 43% / 5.9x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline -4% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 6.8x, adding 1.7 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 | $128.9M | — | $128.9M | 20.8% |
| Year 1 | $132.7M | +$21.7M | $154.4M | 25.0% |
| Year 2 | $136.7M | +$32.5M | $169.2M | 27.4% |
| Year 3 | $140.8M | +$32.5M | $173.3M | 28.0% |
| Year 4 | $145.0M | +$32.5M | $177.6M | 28.7% |
| Year 5 | $149.4M | +$32.5M | $181.9M | 29.4% |
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 | $6.2M | $9.3M | $12.4M | $14.8M |
| Denial Rate Reductio | $6.1M | $9.2M | $12.2M | $14.7M |
| A/R Days Reduction | $3.8M | $5.6M | $7.5M | $9.0M |
| Clean Claim Rate | $198K | $297K | $396K | $475K |
| Total | $16.3M | $24.4M | $32.5M | $39.0M |
Peer Context — Where This Hospital Sits
Key metrics vs 167 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 20.8% | -15.0% | -3.6% | 4.5% | P96 |
| Net-to-Gross | 10.7% | 17.3% | 22.6% | 28.9% | P6 |
| Occupancy | 62.4% | 53.7% | 65.4% | 75.3% | P44 |
| Rev/Bed | $1.9M | $1.3M | $1.7M | $2.5M | P56 |
| Exp/Bed | $1.5M | $1.3M | $1.9M | $2.6M | P32 |
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.