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: $5.7M (vs $7.8M 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 | $3.0M | $3.0M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $2.9M | $82K | $2.9M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $456K | $1.4M | $1.8M | $5.7M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $95K | $95K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 35.3% 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 | $743K | $1.5M | $2.2M | $3.0M | $3.0M | $3.0M | $3.0M |
| Denial Rate Reduction | $0 | $735K | $1.5M | $2.2M | $2.9M | $2.9M | $2.9M | $2.9M |
| A/R Days Reduction | $0 | $602K | $1.2M | $1.8M | $1.8M | $1.8M | $1.8M | $1.8M |
| Clean Claim Rate | $0 | $48K | $95K | $95K | $95K | $95K | $95K | $95K |
| Cumulative | $0 | $2.1M | $4.3M | $6.3M | $7.8M | $7.8M | $7.8M | $7.8M |
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 $7.8M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 68% / 13.2x | 72% / 15.1x | 76% / 16.9x | 78% / 17.8x | 80% / 18.7x |
| 9.0x | 63% / 11.4x | 67% / 13.0x | 71% / 14.7x | 73% / 15.5x | 75% / 16.3x |
| 10.0x | 58% / 9.9x | 63% / 11.4x | 67% / 12.9x | 69% / 13.6x | 70% / 14.3x |
| 11.0x | 54% / 8.8x | 59% / 10.1x | 63% / 11.4x | 65% / 12.1x | 66% / 12.8x |
| 12.0x | 51% / 7.8x | 55% / 9.0x | 59% / 10.2x | 61% / 10.8x | 63% / 11.4x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 38% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 4.0x, adding 4.4 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 | $7.1M | — | $7.1M | 4.8% |
| Year 1 | $7.3M | +$5.2M | $12.6M | 8.5% |
| Year 2 | $7.6M | +$7.8M | $15.4M | 10.4% |
| Year 3 | $7.8M | +$7.8M | $15.6M | 10.5% |
| Year 4 | $8.0M | +$7.8M | $15.8M | 10.7% |
| Year 5 | $8.3M | +$7.8M | $16.1M | 10.8% |
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 | $1.5M | $2.2M | $3.0M | $3.6M |
| Denial Rate Reductio | $1.5M | $2.2M | $2.9M | $3.5M |
| A/R Days Reduction | $904K | $1.4M | $1.8M | $2.2M |
| Clean Claim Rate | $48K | $71K | $95K | $114K |
| Total | $3.9M | $5.9M | $7.8M | $9.4M |
Peer Context — Where This Hospital Sits
Key metrics vs 68 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 4.8% | -12.6% | -1.0% | 8.8% | P66 |
| Net-to-Gross | 15.7% | 18.1% | 26.4% | 35.3% | P14 |
| Occupancy | 73.9% | 50.3% | 70.1% | 81.7% | P53 |
| Rev/Bed | $1.6M | $489K | $909K | $1.7M | P68 |
| Exp/Bed | $1.5M | $453K | $951K | $1.7M | P69 |
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.