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. Risk-adjusted uplift: $23.9M (vs $33.2M 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 | $12.6M | $12.6M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $12.1M | $347K | $12.5M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $1.9M | $5.7M | $7.7M | $24.2M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $404K | $404K | $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 | $3.2M | $6.3M | $9.5M | $12.6M | $12.6M | $12.6M | $12.6M |
| Denial Rate Reduction | $0 | $3.1M | $6.2M | $9.4M | $12.5M | $12.5M | $12.5M | $12.5M |
| A/R Days Reduction | $0 | $2.6M | $5.1M | $7.7M | $7.7M | $7.7M | $7.7M | $7.7M |
| Clean Claim Rate | $0 | $202K | $404K | $404K | $404K | $404K | $404K | $404K |
| Cumulative | $0 | $9.0M | $18.1M | $26.9M | $33.2M | $33.2M | $33.2M | $33.2M |
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 $33.2M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 46% / 6.6x | 50% / 7.7x | 54% / 8.7x | 56% / 9.3x | 58% / 9.8x |
| 9.0x | 40% / 5.5x | 45% / 6.4x | 49% / 7.4x | 51% / 7.9x | 53% / 8.4x |
| 10.0x | 36% / 4.6x | 40% / 5.5x | 45% / 6.3x | 47% / 6.8x | 48% / 7.2x |
| 11.0x | 31% / 3.9x | 36% / 4.7x | 40% / 5.5x | 42% / 5.9x | 44% / 6.3x |
| 12.0x | 27% / 3.3x | 32% / 4.0x | 37% / 4.7x | 39% / 5.1x | 40% / 5.5x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline -10% 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 | $182.5M | — | $182.5M | 28.9% |
| Year 1 | $187.9M | +$22.1M | $210.1M | 33.3% |
| Year 2 | $193.6M | +$33.2M | $226.8M | 36.0% |
| Year 3 | $199.4M | +$33.2M | $232.6M | 36.9% |
| Year 4 | $205.4M | +$33.2M | $238.6M | 37.8% |
| Year 5 | $211.5M | +$33.2M | $244.7M | 38.8% |
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 | $6.3M | $9.5M | $12.6M | $15.1M |
| Denial Rate Reductio | $6.2M | $9.4M | $12.5M | $15.0M |
| A/R Days Reduction | $3.8M | $5.8M | $7.7M | $9.2M |
| Clean Claim Rate | $202K | $303K | $404K | $484K |
| Total | $16.6M | $24.9M | $33.2M | $39.8M |
Peer Context — Where This Hospital Sits
Key metrics vs 82 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 28.9% | -5.4% | 4.2% | 18.8% | P85 |
| Net-to-Gross | 9.1% | 10.1% | 14.5% | 20.4% | P10 |
| Occupancy | 86.5% | 59.7% | 66.7% | 75.8% | P94 |
| Rev/Bed | $1.4M | $932K | $1.2M | $1.5M | P65 |
| Exp/Bed | $970K | $836K | $1.1M | $1.3M | 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.