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, Commercial Payer %. Risk-adjusted uplift: $13.6M (vs $19.5M 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 | $7.4M | $7.4M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $7.2M | $204K | $7.4M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $1.1M | $3.4M | $4.5M | $14.3M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $238K | $238K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 20.5% 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 | $3.7M | $5.6M | $7.4M | $7.4M | $7.4M | $7.4M |
| Denial Rate Reduction | $0 | $1.8M | $3.7M | $5.5M | $7.4M | $7.4M | $7.4M | $7.4M |
| A/R Days Reduction | $0 | $1.5M | $3.0M | $4.5M | $4.5M | $4.5M | $4.5M | $4.5M |
| Clean Claim Rate | $0 | $119K | $238K | $238K | $238K | $238K | $238K | $238K |
| Cumulative | $0 | $5.3M | $10.6M | $15.9M | $19.5M | $19.5M | $19.5M | $19.5M |
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 $19.5M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 51% / 7.9x | 56% / 9.1x | 60% / 10.3x | 61% / 11.0x | 63% / 11.6x |
| 9.0x | 46% / 6.6x | 51% / 7.7x | 55% / 8.8x | 56% / 9.4x | 58% / 9.9x |
| 10.0x | 41% / 5.7x | 46% / 6.6x | 50% / 7.6x | 52% / 8.1x | 54% / 8.6x |
| 11.0x | 37% / 4.8x | 42% / 5.7x | 46% / 6.6x | 48% / 7.1x | 50% / 7.5x |
| 12.0x | 33% / 4.2x | 38% / 5.0x | 42% / 5.8x | 44% / 6.2x | 46% / 6.6x |
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 6.2x, adding 2.2 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 | $54.1M | — | $54.1M | 14.6% |
| Year 1 | $55.7M | +$13.0M | $68.7M | 18.5% |
| Year 2 | $57.4M | +$19.5M | $76.9M | 20.7% |
| Year 3 | $59.1M | +$19.5M | $78.6M | 21.2% |
| Year 4 | $60.9M | +$19.5M | $80.4M | 21.6% |
| Year 5 | $62.7M | +$19.5M | $82.2M | 22.1% |
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 | $3.7M | $5.6M | $7.4M | $8.9M |
| Denial Rate Reductio | $3.7M | $5.5M | $7.4M | $8.8M |
| A/R Days Reduction | $2.3M | $3.4M | $4.5M | $5.4M |
| Clean Claim Rate | $119K | $178K | $238K | $285K |
| Total | $9.8M | $14.7M | $19.5M | $23.5M |
Peer Context — Where This Hospital Sits
Key metrics vs 106 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 14.6% | -5.0% | 3.7% | 17.0% | P70 |
| Net-to-Gross | 9.6% | 10.1% | 14.4% | 20.5% | P18 |
| Occupancy | 67.4% | 54.0% | 65.4% | 75.4% | P56 |
| Rev/Bed | $1.3M | $850K | $1.2M | $1.4M | P68 |
| Exp/Bed | $1.1M | $784K | $988K | $1.3M | P61 |
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.