Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 73% of modeled bridge. Strengths: Occupancy Rate, Net-to-Gross Ratio. Risks: Bed Count. Risk-adjusted uplift: $25.9M (vs $35.4M 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 | $13.5M | $13.5M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $13.0M | $370K | $13.3M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $2.1M | $6.1M | $8.2M | $25.8M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $431K | $431K | $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 | $3.4M | $6.7M | $10.1M | $13.5M | $13.5M | $13.5M | $13.5M |
| Denial Rate Reduction | $0 | $3.3M | $6.7M | $10.0M | $13.3M | $13.3M | $13.3M | $13.3M |
| A/R Days Reduction | $0 | $2.7M | $5.5M | $8.2M | $8.2M | $8.2M | $8.2M | $8.2M |
| Clean Claim Rate | $0 | $215K | $431K | $431K | $431K | $431K | $431K | $431K |
| Cumulative | $0 | $9.6M | $19.3M | $28.7M | $35.4M | $35.4M | $35.4M | $35.4M |
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 $35.4M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 84% / 21.2x | 89% / 23.9x | 93% / 26.7x | 95% / 28.0x | 97% / 29.4x |
| 9.0x | 79% / 18.5x | 84% / 20.9x | 88% / 23.3x | 90% / 24.6x | 92% / 25.8x |
| 10.0x | 75% / 16.3x | 79% / 18.5x | 83% / 20.7x | 85% / 21.8x | 87% / 22.9x |
| 11.0x | 71% / 14.6x | 75% / 16.5x | 79% / 18.5x | 81% / 19.5x | 83% / 20.5x |
| 12.0x | 67% / 13.1x | 72% / 14.9x | 76% / 16.7x | 77% / 17.6x | 79% / 18.5x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 59% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 2.7x, adding 5.8 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 | $16.2M | — | $16.2M | 2.4% |
| Year 1 | $16.7M | +$23.6M | $40.3M | 6.0% |
| Year 2 | $17.2M | +$35.4M | $52.6M | 7.8% |
| Year 3 | $17.7M | +$35.4M | $53.1M | 7.9% |
| Year 4 | $18.2M | +$35.4M | $53.6M | 8.0% |
| Year 5 | $18.8M | +$35.4M | $54.1M | 8.0% |
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 | $6.7M | $10.1M | $13.5M | $16.1M |
| Denial Rate Reductio | $6.7M | $10.0M | $13.3M | $16.0M |
| A/R Days Reduction | $4.1M | $6.1M | $8.2M | $9.8M |
| Clean Claim Rate | $215K | $323K | $431K | $517K |
| Total | $17.7M | $26.5M | $35.4M | $42.5M |
Peer Context — Where This Hospital Sits
Key metrics vs 148 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 2.4% | -15.8% | -4.4% | 3.8% | P70 |
| Net-to-Gross | 8.3% | 17.8% | 23.1% | 28.9% | P1 |
| Occupancy | 85.5% | 54.8% | 65.7% | 75.3% | P91 |
| Rev/Bed | $1.8M | $1.3M | $1.9M | $2.7M | P45 |
| Exp/Bed | $1.7M | $1.5M | $2.0M | $2.8M | P39 |
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.