Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 71% of modeled bridge. Strengths: Occupancy Rate, Revenue per Bed. Risks: Commercial Payer %, Bed Count. Risk-adjusted uplift: $28.7M (vs $40.5M 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 | $15.4M | $15.4M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $14.8M | $423K | $15.2M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $2.4M | $7.0M | $9.4M | $29.5M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $492K | $492K | $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 | $3.8M | $7.7M | $11.5M | $15.4M | $15.4M | $15.4M | $15.4M |
| Denial Rate Reduction | $0 | $3.8M | $7.6M | $11.4M | $15.2M | $15.2M | $15.2M | $15.2M |
| A/R Days Reduction | $0 | $3.1M | $6.2M | $9.4M | $9.4M | $9.4M | $9.4M | $9.4M |
| Clean Claim Rate | $0 | $246K | $492K | $492K | $492K | $492K | $492K | $492K |
| Cumulative | $0 | $11.0M | $22.0M | $32.8M | $40.5M | $40.5M | $40.5M | $40.5M |
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 $40.5M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 65% / 12.2x | 69% / 13.9x | 73% / 15.7x | 75% / 16.5x | 77% / 17.4x |
| 9.0x | 60% / 10.5x | 64% / 12.0x | 68% / 13.6x | 70% / 14.3x | 72% / 15.1x |
| 10.0x | 56% / 9.1x | 60% / 10.5x | 64% / 11.9x | 66% / 12.6x | 68% / 13.2x |
| 11.0x | 52% / 8.0x | 56% / 9.2x | 60% / 10.5x | 62% / 11.1x | 64% / 11.8x |
| 12.0x | 48% / 7.1x | 52% / 8.2x | 56% / 9.3x | 58% / 9.9x | 60% / 10.5x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 33% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 4.3x, adding 4.1 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 | $42.4M | — | $42.4M | 5.5% |
| Year 1 | $43.6M | +$27.0M | $70.6M | 9.2% |
| Year 2 | $45.0M | +$40.5M | $85.4M | 11.1% |
| Year 3 | $46.3M | +$40.5M | $86.8M | 11.3% |
| Year 4 | $47.7M | +$40.5M | $88.2M | 11.5% |
| Year 5 | $49.1M | +$40.5M | $89.6M | 11.6% |
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 | $7.7M | $11.5M | $15.4M | $18.5M |
| Denial Rate Reductio | $7.6M | $11.4M | $15.2M | $18.3M |
| A/R Days Reduction | $4.7M | $7.0M | $9.4M | $11.2M |
| Clean Claim Rate | $246K | $369K | $492K | $591K |
| Total | $20.2M | $30.4M | $40.5M | $48.6M |
Peer Context — Where This Hospital Sits
Key metrics vs 110 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 5.5% | -5.1% | 2.8% | 17.1% | P55 |
| Net-to-Gross | 32.2% | 10.0% | 14.2% | 20.5% | P94 |
| Occupancy | 64.4% | 52.6% | 64.4% | 75.3% | P50 |
| Rev/Bed | $3.0M | $828K | $1.2M | $1.4M | P97 |
| Exp/Bed | $2.8M | $753K | $971K | $1.3M | P97 |
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.