Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 79% of modeled bridge. Strengths: Occupancy Rate, Revenue per Bed. Risk-adjusted uplift: $16.1M (vs $20.5M 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 | $7.8M | $7.8M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $7.5M | $214K | $7.7M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $1.2M | $3.5M | $4.7M | $15.0M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $249K | $249K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 30.0% 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 | $1.9M | $3.9M | $5.8M | $7.8M | $7.8M | $7.8M | $7.8M |
| Denial Rate Reduction | $0 | $1.9M | $3.9M | $5.8M | $7.7M | $7.7M | $7.7M | $7.7M |
| A/R Days Reduction | $0 | $1.6M | $3.2M | $4.7M | $4.7M | $4.7M | $4.7M | $4.7M |
| Clean Claim Rate | $0 | $125K | $249K | $249K | $249K | $249K | $249K | $249K |
| Cumulative | $0 | $5.6M | $11.2M | $16.6M | $20.5M | $20.5M | $20.5M | $20.5M |
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 $20.5M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 81% / 19.6x | 86% / 22.1x | 90% / 24.6x | 92% / 25.9x | 94% / 27.2x |
| 9.0x | 76% / 17.0x | 81% / 19.3x | 85% / 21.5x | 87% / 22.7x | 88% / 23.8x |
| 10.0x | 72% / 15.0x | 76% / 17.0x | 80% / 19.1x | 82% / 20.1x | 84% / 21.1x |
| 11.0x | 68% / 13.3x | 72% / 15.2x | 76% / 17.0x | 78% / 17.9x | 80% / 18.9x |
| 12.0x | 64% / 12.0x | 69% / 13.7x | 73% / 15.3x | 74% / 16.2x | 76% / 17.0x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 56% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 2.9x, adding 5.6 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 | $10.5M | — | $10.5M | 2.7% |
| Year 1 | $10.8M | +$13.7M | $24.4M | 6.3% |
| Year 2 | $11.1M | +$20.5M | $31.6M | 8.1% |
| Year 3 | $11.4M | +$20.5M | $31.9M | 8.2% |
| Year 4 | $11.8M | +$20.5M | $32.3M | 8.3% |
| Year 5 | $12.1M | +$20.5M | $32.6M | 8.4% |
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 | $3.9M | $5.8M | $7.8M | $9.4M |
| Denial Rate Reductio | $3.9M | $5.8M | $7.7M | $9.3M |
| A/R Days Reduction | $2.4M | $3.6M | $4.7M | $5.7M |
| Clean Claim Rate | $125K | $187K | $249K | $299K |
| Total | $10.3M | $15.4M | $20.5M | $24.6M |
Peer Context — Where This Hospital Sits
Key metrics vs 193 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 2.7% | -20.2% | -4.3% | 4.8% | P69 |
| Net-to-Gross | 29.2% | 17.9% | 22.7% | 30.0% | P72 |
| Occupancy | 95.6% | 44.8% | 57.9% | 72.2% | P98 |
| Rev/Bed | $3.1M | $617K | $1.1M | $2.1M | P94 |
| Exp/Bed | $3.0M | $676K | $1.3M | $2.4M | P91 |
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.