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. Risk-adjusted uplift: $14.2M (vs $19.9M 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 | $7.6M | $7.6M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $7.3M | $208K | $7.5M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $1.2M | $3.4M | $4.6M | $14.5M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $242K | $242K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 31.4% 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 | $3.8M | $5.7M | $7.6M | $7.6M | $7.6M | $7.6M |
| Denial Rate Reduction | $0 | $1.9M | $3.7M | $5.6M | $7.5M | $7.5M | $7.5M | $7.5M |
| A/R Days Reduction | $0 | $1.5M | $3.1M | $4.6M | $4.6M | $4.6M | $4.6M | $4.6M |
| Clean Claim Rate | $0 | $121K | $242K | $242K | $242K | $242K | $242K | $242K |
| Cumulative | $0 | $5.4M | $10.8M | $16.1M | $19.9M | $19.9M | $19.9M | $19.9M |
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 $19.9M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 81% / 19.5x | 86% / 22.0x | 90% / 24.6x | 92% / 25.8x | 93% / 27.1x |
| 9.0x | 76% / 17.0x | 81% / 19.2x | 85% / 21.5x | 87% / 22.6x | 88% / 23.7x |
| 10.0x | 72% / 14.9x | 76% / 17.0x | 80% / 19.0x | 82% / 20.0x | 84% / 21.0x |
| 11.0x | 68% / 13.3x | 72% / 15.1x | 76% / 17.0x | 78% / 17.9x | 80% / 18.8x |
| 12.0x | 64% / 11.9x | 69% / 13.6x | 73% / 15.3x | 74% / 16.1x | 76% / 17.0x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 56% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 2.9x, adding 5.6 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 | $10.2M | — | $10.2M | 2.7% |
| Year 1 | $10.5M | +$13.2M | $23.7M | 6.3% |
| Year 2 | $10.8M | +$19.9M | $30.7M | 8.1% |
| Year 3 | $11.1M | +$19.9M | $31.0M | 8.2% |
| Year 4 | $11.5M | +$19.9M | $31.3M | 8.3% |
| Year 5 | $11.8M | +$19.9M | $31.7M | 8.4% |
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 | $3.8M | $5.7M | $7.6M | $9.1M |
| Denial Rate Reductio | $3.7M | $5.6M | $7.5M | $9.0M |
| A/R Days Reduction | $2.3M | $3.4M | $4.6M | $5.5M |
| Clean Claim Rate | $121K | $181K | $242K | $290K |
| Total | $9.9M | $14.9M | $19.9M | $23.8M |
Peer Context — Where This Hospital Sits
Key metrics vs 48 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 2.7% | -11.7% | 4.1% | 14.2% | P44 |
| Net-to-Gross | 23.2% | 22.9% | 27.1% | 31.4% | P27 |
| Occupancy | 66.4% | 47.8% | 60.7% | 68.6% | P65 |
| Rev/Bed | $2.1M | $1.3M | $1.7M | $2.0M | P75 |
| Exp/Bed | $2.1M | $1.3M | $1.6M | $1.9M | P81 |
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.