Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 65% of modeled bridge. Risks: Occupancy Rate, Bed Count. Risk-adjusted uplift: $16.4M (vs $25.4M 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 | $9.7M | $9.7M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $9.3M | $265K | $9.6M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $1.5M | $4.4M | $5.9M | $18.5M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $309K | $309K | $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 | $2.4M | $4.8M | $7.2M | $9.7M | $9.7M | $9.7M | $9.7M |
| Denial Rate Reduction | $0 | $2.4M | $4.8M | $7.2M | $9.6M | $9.6M | $9.6M | $9.6M |
| A/R Days Reduction | $0 | $2.0M | $3.9M | $5.9M | $5.9M | $5.9M | $5.9M | $5.9M |
| Clean Claim Rate | $0 | $154K | $309K | $309K | $309K | $309K | $309K | $309K |
| Cumulative | $0 | $6.9M | $13.8M | $20.6M | $25.4M | $25.4M | $25.4M | $25.4M |
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 $25.4M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 115% / 46.0x | 120% / 51.5x | 124% / 56.9x | 127% / 59.7x | 129% / 62.4x |
| 9.0x | 110% / 40.5x | 114% / 45.4x | 119% / 50.2x | 121% / 52.7x | 123% / 55.1x |
| 10.0x | 105% / 36.1x | 110% / 40.5x | 114% / 44.9x | 116% / 47.1x | 118% / 49.3x |
| 11.0x | 101% / 32.6x | 105% / 36.5x | 110% / 40.5x | 112% / 42.5x | 114% / 44.5x |
| 12.0x | 97% / 29.6x | 102% / 33.2x | 106% / 36.9x | 108% / 38.7x | 110% / 40.5x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 80% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 1.3x, adding 7.2 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 | $4.6M | — | $4.6M | 0.9% |
| Year 1 | $4.7M | +$16.9M | $21.6M | 4.5% |
| Year 2 | $4.8M | +$25.4M | $30.2M | 6.3% |
| Year 3 | $5.0M | +$25.4M | $30.4M | 6.3% |
| Year 4 | $5.1M | +$25.4M | $30.5M | 6.3% |
| Year 5 | $5.3M | +$25.4M | $30.7M | 6.4% |
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 | $4.8M | $7.2M | $9.7M | $11.6M |
| Denial Rate Reductio | $4.8M | $7.2M | $9.6M | $11.5M |
| A/R Days Reduction | $2.9M | $4.4M | $5.9M | $7.0M |
| Clean Claim Rate | $154K | $232K | $309K | $371K |
| Total | $12.7M | $19.0M | $25.4M | $30.5M |
Peer Context — Where This Hospital Sits
Key metrics vs 191 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 0.9% | -14.7% | -3.9% | 4.7% | P66 |
| Net-to-Gross | 25.8% | 17.1% | 22.3% | 28.9% | P64 |
| Occupancy | 42.2% | 53.7% | 65.4% | 75.9% | P9 |
| Rev/Bed | $1.8M | $1.2M | $1.7M | $2.5M | P54 |
| Exp/Bed | $1.8M | $1.3M | $1.8M | $2.6M | P50 |
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.