Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 70% of modeled bridge. Strengths: Occupancy Rate, Payer Diversity. Risks: Commercial Payer %, Bed Count. Risk-adjusted uplift: $16.2M (vs $23.0M 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 | $8.7M | $8.7M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $8.4M | $241K | $8.7M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $1.3M | $4.0M | $5.3M | $16.8M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $280K | $280K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 33.9% 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 | $2.2M | $4.4M | $6.6M | $8.7M | $8.7M | $8.7M | $8.7M |
| Denial Rate Reduction | $0 | $2.2M | $4.3M | $6.5M | $8.7M | $8.7M | $8.7M | $8.7M |
| A/R Days Reduction | $0 | $1.8M | $3.5M | $5.3M | $5.3M | $5.3M | $5.3M | $5.3M |
| Clean Claim Rate | $0 | $140K | $280K | $280K | $280K | $280K | $280K | $280K |
| Cumulative | $0 | $6.3M | $12.5M | $18.7M | $23.0M | $23.0M | $23.0M | $23.0M |
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 $23.0M 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% / 11.7x | 65% / 12.4x |
| 9.0x | 48% / 7.2x | 53% / 8.3x | 57% / 9.5x | 59% / 10.1x | 60% / 10.6x |
| 10.0x | 44% / 6.1x | 48% / 7.2x | 52% / 8.2x | 54% / 8.7x | 56% / 9.2x |
| 11.0x | 39% / 5.3x | 44% / 6.2x | 48% / 7.2x | 50% / 7.6x | 52% / 8.1x |
| 12.0x | 35% / 4.6x | 40% / 5.4x | 44% / 6.3x | 46% / 6.7x | 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 | $51.9M | — | $51.9M | 11.9% |
| Year 1 | $53.5M | +$15.3M | $68.8M | 15.7% |
| Year 2 | $55.1M | +$23.0M | $78.1M | 17.9% |
| Year 3 | $56.7M | +$23.0M | $79.7M | 18.2% |
| Year 4 | $58.4M | +$23.0M | $81.4M | 18.6% |
| Year 5 | $60.2M | +$23.0M | $83.2M | 19.0% |
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 | $4.4M | $6.6M | $8.7M | $10.5M |
| Denial Rate Reductio | $4.3M | $6.5M | $8.7M | $10.4M |
| A/R Days Reduction | $2.7M | $4.0M | $5.3M | $6.4M |
| Clean Claim Rate | $140K | $210K | $280K | $336K |
| Total | $11.5M | $17.3M | $23.0M | $27.6M |
Peer Context — Where This Hospital Sits
Key metrics vs 1655 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 11.9% | -13.6% | -3.9% | 5.6% | P85 |
| Net-to-Gross | 44.2% | 18.4% | 25.5% | 33.9% | P88 |
| Occupancy | 72.0% | 54.1% | 66.7% | 77.0% | P62 |
| Rev/Bed | $1.7M | $935K | $1.4M | $1.9M | P68 |
| Exp/Bed | $1.5M | $916K | $1.4M | $2.0M | P57 |
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.