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: $16.6M (vs $23.7M 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 | $9.0M | $9.0M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $8.7M | $248K | $8.9M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $1.4M | $4.1M | $5.5M | $17.3M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $289K | $289K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 36.0% 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 | $2.3M | $4.5M | $6.8M | $9.0M | $9.0M | $9.0M | $9.0M |
| Denial Rate Reduction | $0 | $2.2M | $4.5M | $6.7M | $8.9M | $8.9M | $8.9M | $8.9M |
| A/R Days Reduction | $0 | $1.8M | $3.7M | $5.5M | $5.5M | $5.5M | $5.5M | $5.5M |
| Clean Claim Rate | $0 | $144K | $289K | $289K | $289K | $289K | $289K | $289K |
| Cumulative | $0 | $6.5M | $12.9M | $19.2M | $23.7M | $23.7M | $23.7M | $23.7M |
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 $23.7M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 71% / 14.4x | 75% / 16.4x | 79% / 18.4x | 81% / 19.4x | 83% / 20.4x |
| 9.0x | 66% / 12.5x | 70% / 14.2x | 74% / 16.0x | 76% / 16.9x | 78% / 17.7x |
| 10.0x | 61% / 10.9x | 66% / 12.5x | 70% / 14.1x | 72% / 14.8x | 73% / 15.6x |
| 11.0x | 57% / 9.6x | 62% / 11.1x | 66% / 12.5x | 68% / 13.2x | 69% / 13.9x |
| 12.0x | 54% / 8.6x | 58% / 9.9x | 62% / 11.2x | 64% / 11.8x | 66% / 12.5x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 42% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 3.7x, adding 4.7 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 | $18.8M | — | $18.8M | 4.2% |
| Year 1 | $19.4M | +$15.8M | $35.2M | 7.8% |
| Year 2 | $20.0M | +$23.7M | $43.7M | 9.7% |
| Year 3 | $20.6M | +$23.7M | $44.3M | 9.8% |
| Year 4 | $21.2M | +$23.7M | $44.9M | 10.0% |
| Year 5 | $21.8M | +$23.7M | $45.5M | 10.1% |
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 | $4.5M | $6.8M | $9.0M | $10.8M |
| Denial Rate Reductio | $4.5M | $6.7M | $8.9M | $10.7M |
| A/R Days Reduction | $2.7M | $4.1M | $5.5M | $6.6M |
| Clean Claim Rate | $144K | $216K | $289K | $346K |
| Total | $11.9M | $17.8M | $23.7M | $28.5M |
Peer Context — Where This Hospital Sits
Key metrics vs 19 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 4.2% | -15.2% | -1.5% | 3.5% | P74 |
| Net-to-Gross | 30.7% | 16.7% | 24.5% | 36.0% | P58 |
| Occupancy | 73.0% | 59.3% | 65.0% | 72.5% | P74 |
| Rev/Bed | $1.5M | $1.3M | $1.5M | $1.8M | P37 |
| Exp/Bed | $1.4M | $1.4M | $1.5M | $1.9M | P21 |
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.