Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 72% of modeled bridge. Strengths: Occupancy Rate, Net-to-Gross Ratio. Risks: Bed Count, Commercial Payer %. Risk-adjusted uplift: $17.2M (vs $23.8M 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 | $9.1M | $9.1M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $8.7M | $249K | $9.0M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $1.4M | $4.1M | $5.5M | $17.4M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $290K | $290K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 20.4% 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 | $2.3M | $4.5M | $6.8M | $9.1M | $9.1M | $9.1M | $9.1M |
| Denial Rate Reduction | $0 | $2.2M | $4.5M | $6.7M | $9.0M | $9.0M | $9.0M | $9.0M |
| A/R Days Reduction | $0 | $1.8M | $3.7M | $5.5M | $5.5M | $5.5M | $5.5M | $5.5M |
| Clean Claim Rate | $0 | $145K | $290K | $290K | $290K | $290K | $290K | $290K |
| Cumulative | $0 | $6.5M | $13.0M | $19.3M | $23.8M | $23.8M | $23.8M | $23.8M |
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 $23.8M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 45% / 6.5x | 50% / 7.6x | 54% / 8.7x | 56% / 9.2x | 58% / 9.8x |
| 9.0x | 40% / 5.4x | 45% / 6.4x | 49% / 7.3x | 51% / 7.8x | 53% / 8.3x |
| 10.0x | 35% / 4.5x | 40% / 5.4x | 44% / 6.3x | 46% / 6.7x | 48% / 7.2x |
| 11.0x | 31% / 3.8x | 36% / 4.6x | 40% / 5.4x | 42% / 5.8x | 44% / 6.2x |
| 12.0x | 27% / 3.2x | 32% / 4.0x | 36% / 4.7x | 38% / 5.1x | 40% / 5.4x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline -11% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 7.2x, adding 1.3 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 | $137.2M | — | $137.2M | 30.3% |
| Year 1 | $141.3M | +$15.9M | $157.2M | 34.7% |
| Year 2 | $145.6M | +$23.8M | $169.4M | 37.4% |
| Year 3 | $150.0M | +$23.8M | $173.8M | 38.3% |
| Year 4 | $154.5M | +$23.8M | $178.3M | 39.3% |
| Year 5 | $159.1M | +$23.8M | $182.9M | 40.4% |
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 | $4.5M | $6.8M | $9.1M | $10.9M |
| Denial Rate Reductio | $4.5M | $6.7M | $9.0M | $10.8M |
| A/R Days Reduction | $2.8M | $4.1M | $5.5M | $6.6M |
| Clean Claim Rate | $145K | $218K | $290K | $348K |
| Total | $11.9M | $17.9M | $23.8M | $28.6M |
Peer Context — Where This Hospital Sits
Key metrics vs 97 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 30.3% | -4.7% | 5.1% | 19.1% | P90 |
| Net-to-Gross | 9.5% | 10.0% | 14.3% | 20.4% | P17 |
| Occupancy | 83.6% | 57.4% | 66.5% | 75.3% | P91 |
| Rev/Bed | $1.3M | $903K | $1.2M | $1.4M | P70 |
| Exp/Bed | $900K | $823K | $1.0M | $1.3M | P36 |
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.