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. Risks: Bed Count. Risk-adjusted uplift: $13.6M (vs $19.5M 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 | $7.4M | $7.4M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $7.1M | $204K | $7.3M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $1.1M | $3.4M | $4.5M | $14.2M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $237K | $237K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 34.2% 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 | $1.9M | $3.7M | $5.6M | $7.4M | $7.4M | $7.4M | $7.4M |
| Denial Rate Reduction | $0 | $1.8M | $3.7M | $5.5M | $7.3M | $7.3M | $7.3M | $7.3M |
| A/R Days Reduction | $0 | $1.5M | $3.0M | $4.5M | $4.5M | $4.5M | $4.5M | $4.5M |
| Clean Claim Rate | $0 | $119K | $237K | $237K | $237K | $237K | $237K | $237K |
| Cumulative | $0 | $5.3M | $10.6M | $15.8M | $19.5M | $19.5M | $19.5M | $19.5M |
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 $19.5M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 44% / 6.2x | 48% / 7.2x | 52% / 8.2x | 54% / 8.8x | 56% / 9.3x |
| 9.0x | 39% / 5.1x | 43% / 6.0x | 47% / 7.0x | 49% / 7.4x | 51% / 7.9x |
| 10.0x | 34% / 4.3x | 39% / 5.1x | 43% / 5.9x | 45% / 6.3x | 47% / 6.8x |
| 11.0x | 29% / 3.6x | 34% / 4.3x | 39% / 5.1x | 41% / 5.5x | 42% / 5.9x |
| 12.0x | 25% / 3.0x | 30% / 3.7x | 35% / 4.4x | 37% / 4.8x | 39% / 5.1x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline -16% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 7.5x, adding 0.9 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 | $155.6M | — | $155.6M | 42.0% |
| Year 1 | $160.2M | +$13.0M | $173.2M | 46.8% |
| Year 2 | $165.0M | +$19.5M | $184.5M | 49.8% |
| Year 3 | $170.0M | +$19.5M | $189.5M | 51.1% |
| Year 4 | $175.1M | +$19.5M | $194.6M | 52.5% |
| Year 5 | $180.3M | +$19.5M | $199.8M | 53.9% |
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 | $3.7M | $5.6M | $7.4M | $8.9M |
| Denial Rate Reductio | $3.7M | $5.5M | $7.3M | $8.8M |
| A/R Days Reduction | $2.3M | $3.4M | $4.5M | $5.4M |
| Clean Claim Rate | $119K | $178K | $237K | $285K |
| Total | $9.7M | $14.6M | $19.5M | $23.4M |
Peer Context — Where This Hospital Sits
Key metrics vs 1771 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 42.0% | -13.7% | -3.8% | 5.9% | P99 |
| Net-to-Gross | 21.6% | 18.5% | 25.8% | 34.2% | P35 |
| Occupancy | 63.3% | 53.2% | 65.8% | 76.8% | P45 |
| Rev/Bed | $1.6M | $878K | $1.4M | $1.9M | P63 |
| Exp/Bed | $923K | $866K | $1.4M | $1.9M | P27 |
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.