Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 74% of modeled bridge. Strengths: Occupancy Rate, Revenue per Bed. Risk-adjusted uplift: $20.4M (vs $27.5M 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 | $10.5M | $10.5M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $10.1M | $288K | $10.4M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $1.6M | $4.8M | $6.4M | $20.1M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $335K | $335K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 32.7% 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 | $2.6M | $5.2M | $7.9M | $10.5M | $10.5M | $10.5M | $10.5M |
| Denial Rate Reduction | $0 | $2.6M | $5.2M | $7.8M | $10.4M | $10.4M | $10.4M | $10.4M |
| A/R Days Reduction | $0 | $2.1M | $4.2M | $6.4M | $6.4M | $6.4M | $6.4M | $6.4M |
| Clean Claim Rate | $0 | $167K | $335K | $335K | $335K | $335K | $335K | $335K |
| Cumulative | $0 | $7.5M | $15.0M | $22.3M | $27.5M | $27.5M | $27.5M | $27.5M |
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 $27.5M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 62% / 11.0x | 66% / 12.6x | 70% / 14.2x | 72% / 14.9x | 74% / 15.7x |
| 9.0x | 57% / 9.4x | 61% / 10.8x | 65% / 12.2x | 67% / 12.9x | 69% / 13.6x |
| 10.0x | 52% / 8.1x | 57% / 9.4x | 61% / 10.7x | 62% / 11.3x | 64% / 11.9x |
| 11.0x | 48% / 7.1x | 53% / 8.2x | 57% / 9.4x | 58% / 10.0x | 60% / 10.6x |
| 12.0x | 44% / 6.2x | 49% / 7.3x | 53% / 8.3x | 55% / 8.9x | 57% / 9.4x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 27% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 4.7x, adding 3.7 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 | $35.0M | — | $35.0M | 6.7% |
| Year 1 | $36.0M | +$18.4M | $54.4M | 10.4% |
| Year 2 | $37.1M | +$27.5M | $64.6M | 12.4% |
| Year 3 | $38.2M | +$27.5M | $65.8M | 12.6% |
| Year 4 | $39.4M | +$27.5M | $66.9M | 12.8% |
| Year 5 | $40.5M | +$27.5M | $68.1M | 13.0% |
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 | $5.2M | $7.9M | $10.5M | $12.6M |
| Denial Rate Reductio | $5.2M | $7.8M | $10.4M | $12.4M |
| A/R Days Reduction | $3.2M | $4.8M | $6.4M | $7.6M |
| Clean Claim Rate | $167K | $251K | $335K | $402K |
| Total | $13.8M | $20.6M | $27.5M | $33.0M |
Peer Context — Where This Hospital Sits
Key metrics vs 42 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 6.7% | -17.7% | -5.9% | 1.3% | P85 |
| Net-to-Gross | 31.4% | 19.1% | 25.0% | 32.7% | P71 |
| Occupancy | 68.4% | 43.7% | 57.2% | 70.7% | P69 |
| Rev/Bed | $2.8M | $434K | $1.0M | $1.5M | P98 |
| Exp/Bed | $2.6M | $467K | $1.1M | $1.6M | P93 |
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.