N. OAKS REHABILITATION HOSPITAL
value-creation walk.
7-lever RCM bridge from current EBITDA to pro-forma — denial / underpay / DAR / coding / contract / cost discipline / cash acceleration. Each lever shows current vs benchmark target with data provenance.
Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 68% of modeled bridge. Strengths: Bed Count, Occupancy Rate. Risks: Revenue per Bed. Risk-adjusted uplift: $0.4M (vs $0.5M 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 |
|---|---|---|---|---|---|---|---|
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $189K | $8K | $198K | $0 | 12mo |
| Cost to Collect | 4.5% DEFAULT | 2.5% BENCHMARK | $0 | $197K | $197K | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $30K | $89K | $120K | $377K | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $10K | $10K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 58.1% 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 |
|---|---|---|---|---|---|---|---|---|
| Denial Rate Reduction | $0 | $49K | $99K | $148K | $198K | $198K | $198K | $198K |
| Cost to Collect | $0 | $49K | $98K | $148K | $197K | $197K | $197K | $197K |
| A/R Days Reduction | $0 | $40K | $80K | $120K | $120K | $120K | $120K | $120K |
| Clean Claim Rate | $0 | $5K | $10K | $10K | $10K | $10K | $10K | $10K |
| Cumulative | $0 | $143K | $286K | $425K | $523K | $523K | $523K | $523K |
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 $523K is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 43% / 5.9x | 47% / 6.9x | 51% / 7.9x | 53% / 8.4x | 55% / 8.9x |
| 9.0x | 37% / 4.9x | 42% / 5.8x | 46% / 6.7x | 48% / 7.1x | 50% / 7.6x |
| 10.0x | 32% / 4.1x | 37% / 4.9x | 42% / 5.7x | 44% / 6.1x | 45% / 6.5x |
| 11.0x | 28% / 3.4x | 33% / 4.1x | 37% / 4.9x | 39% / 5.2x | 41% / 5.6x |
| 12.0x | 23% / 2.9x | 29% / 3.5x | 33% / 4.2x | 35% / 4.5x | 37% / 4.9x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline -19% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 7.8x, adding 0.7 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 | $5.7M | — | $5.7M | 58.5% |
| Year 1 | $5.9M | +$349K | $6.3M | 63.8% |
| Year 2 | $6.1M | +$523K | $6.6M | 67.3% |
| Year 3 | $6.3M | +$523K | $6.8M | 69.2% |
| Year 4 | $6.5M | +$523K | $7.0M | 71.1% |
| Year 5 | $6.7M | +$523K | $7.2M | 73.1% |
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% |
|---|---|---|---|---|
| Denial Rate Reductio | $99K | $148K | $198K | $237K |
| Cost to Collect | $98K | $148K | $197K | $236K |
| A/R Days Reduction | $60K | $90K | $120K | $144K |
| Clean Claim Rate | $5K | $7K | $10K | $12K |
| Total | $262K | $393K | $523K | $628K |
Peer Context — Where This Hospital Sits
Key metrics vs 135 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 58.5% | -17.2% | -3.1% | 5.9% | P98 |
| Net-to-Gross | 26.3% | 32.2% | 44.2% | 58.1% | P15 |
| Occupancy | 55.8% | 21.1% | 46.3% | 68.5% | P60 |
| Rev/Bed | $364K | $288K | $468K | $882K | P36 |
| Exp/Bed | $151K | $276K | $468K | $963K | P4 |
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.