Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 73% of modeled bridge. Strengths: Occupancy Rate, Net-to-Gross Ratio. Risk-adjusted uplift: $3.7M (vs $5.1M 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 | $1.9M | $1.9M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $1.9M | $53K | $1.9M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $298K | $884K | $1.2M | $3.7M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $62K | $62K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 37.3% 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 | $486K | $971K | $1.5M | $1.9M | $1.9M | $1.9M | $1.9M |
| Denial Rate Reduction | $0 | $481K | $962K | $1.4M | $1.9M | $1.9M | $1.9M | $1.9M |
| A/R Days Reduction | $0 | $394K | $788K | $1.2M | $1.2M | $1.2M | $1.2M | $1.2M |
| Clean Claim Rate | $0 | $31K | $62K | $62K | $62K | $62K | $62K | $62K |
| Cumulative | $0 | $1.4M | $2.8M | $4.1M | $5.1M | $5.1M | $5.1M | $5.1M |
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 $5.1M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 106% / 37.3x | 111% / 41.8x | 115% / 46.3x | 117% / 48.5x | 119% / 50.8x |
| 9.0x | 101% / 32.8x | 106% / 36.8x | 110% / 40.8x | 112% / 42.8x | 114% / 44.8x |
| 10.0x | 96% / 29.1x | 101% / 32.8x | 105% / 36.4x | 107% / 38.2x | 109% / 40.0x |
| 11.0x | 92% / 26.2x | 97% / 29.5x | 101% / 32.8x | 103% / 34.4x | 105% / 36.0x |
| 12.0x | 88% / 23.8x | 93% / 26.8x | 97% / 29.8x | 99% / 31.2x | 101% / 32.8x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 76% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 1.6x, adding 6.9 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 | $1.2M | — | $1.2M | 1.2% |
| Year 1 | $1.2M | +$3.4M | $4.6M | 4.7% |
| Year 2 | $1.2M | +$5.1M | $6.3M | 6.5% |
| Year 3 | $1.3M | +$5.1M | $6.4M | 6.6% |
| Year 4 | $1.3M | +$5.1M | $6.4M | 6.6% |
| Year 5 | $1.4M | +$5.1M | $6.5M | 6.7% |
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 | $971K | $1.5M | $1.9M | $2.3M |
| Denial Rate Reductio | $962K | $1.4M | $1.9M | $2.3M |
| A/R Days Reduction | $591K | $887K | $1.2M | $1.4M |
| Clean Claim Rate | $31K | $47K | $62K | $75K |
| Total | $2.6M | $3.8M | $5.1M | $6.1M |
Peer Context — Where This Hospital Sits
Key metrics vs 120 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 1.2% | -9.4% | 2.6% | 11.8% | P43 |
| Net-to-Gross | 13.3% | 13.9% | 20.6% | 37.3% | P22 |
| Occupancy | 76.1% | 48.7% | 62.6% | 77.2% | P72 |
| Rev/Bed | $1.2M | $305K | $573K | $1.1M | P76 |
| Exp/Bed | $1.1M | $343K | $625K | $1.1M | P74 |
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.