Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 66% of modeled bridge. Strengths: Occupancy Rate. Risks: Bed Count. Risk-adjusted uplift: $14.3M (vs $21.7M 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 | $8.3M | $8.3M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $8.0M | $227K | $8.2M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $1.3M | $3.8M | $5.0M | $15.8M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $264K | $264K | $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 | $2.1M | $4.1M | $6.2M | $8.3M | $8.3M | $8.3M | $8.3M |
| Denial Rate Reduction | $0 | $2.0M | $4.1M | $6.1M | $8.2M | $8.2M | $8.2M | $8.2M |
| A/R Days Reduction | $0 | $1.7M | $3.4M | $5.0M | $5.0M | $5.0M | $5.0M | $5.0M |
| Clean Claim Rate | $0 | $132K | $264K | $264K | $264K | $264K | $264K | $264K |
| Cumulative | $0 | $5.9M | $11.8M | $17.6M | $21.7M | $21.7M | $21.7M | $21.7M |
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 $21.7M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 53% / 8.5x | 58% / 9.8x | 62% / 11.1x | 64% / 11.8x | 65% / 12.4x |
| 9.0x | 48% / 7.2x | 53% / 8.3x | 57% / 9.5x | 59% / 10.1x | 61% / 10.7x |
| 10.0x | 44% / 6.1x | 48% / 7.2x | 52% / 8.2x | 54% / 8.8x | 56% / 9.3x |
| 11.0x | 40% / 5.3x | 44% / 6.2x | 48% / 7.2x | 50% / 7.7x | 52% / 8.1x |
| 12.0x | 36% / 4.6x | 40% / 5.5x | 45% / 6.3x | 47% / 6.8x | 48% / 7.2x |
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 5.9x, adding 2.6 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 | $48.7M | — | $48.7M | 11.8% |
| Year 1 | $50.2M | +$14.5M | $64.7M | 15.7% |
| Year 2 | $51.7M | +$21.7M | $73.4M | 17.8% |
| Year 3 | $53.2M | +$21.7M | $75.0M | 18.1% |
| Year 4 | $54.8M | +$21.7M | $76.6M | 18.5% |
| Year 5 | $56.5M | +$21.7M | $78.2M | 18.9% |
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 | $4.1M | $6.2M | $8.3M | $9.9M |
| Denial Rate Reductio | $4.1M | $6.1M | $8.2M | $9.8M |
| A/R Days Reduction | $2.5M | $3.8M | $5.0M | $6.0M |
| Clean Claim Rate | $132K | $198K | $264K | $317K |
| Total | $10.9M | $16.3M | $21.7M | $26.1M |
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 | 11.8% | -4.7% | 4.5% | 19.1% | P61 |
| Net-to-Gross | 23.3% | 10.0% | 14.2% | 20.4% | P86 |
| Occupancy | 56.9% | 57.4% | 65.7% | 75.3% | P24 |
| Rev/Bed | $1.1M | $903K | $1.2M | $1.4M | P43 |
| Exp/Bed | $972K | $823K | $1.0M | $1.3M | P46 |
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.