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: $15.8M (vs $22.5M 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 | $8.6M | $8.6M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $8.2M | $236K | $8.5M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $1.3M | $3.9M | $5.2M | $16.4M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $274K | $274K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 49.6% 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 | $2.1M | $4.3M | $6.4M | $8.6M | $8.6M | $8.6M | $8.6M |
| Denial Rate Reduction | $0 | $2.1M | $4.2M | $6.4M | $8.5M | $8.5M | $8.5M | $8.5M |
| A/R Days Reduction | $0 | $1.7M | $3.5M | $5.2M | $5.2M | $5.2M | $5.2M | $5.2M |
| Clean Claim Rate | $0 | $137K | $274K | $274K | $274K | $274K | $274K | $274K |
| Cumulative | $0 | $6.1M | $12.3M | $18.3M | $22.5M | $22.5M | $22.5M | $22.5M |
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 $22.5M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 128% / 61.4x | 133% / 68.5x | 138% / 75.7x | 140% / 79.3x | 142% / 82.9x |
| 9.0x | 122% / 54.2x | 127% / 60.5x | 132% / 66.9x | 134% / 70.1x | 136% / 73.3x |
| 10.0x | 117% / 48.4x | 122% / 54.2x | 127% / 59.9x | 129% / 62.8x | 131% / 65.7x |
| 11.0x | 113% / 43.7x | 118% / 49.0x | 122% / 54.2x | 124% / 56.8x | 126% / 59.4x |
| 12.0x | 109% / 39.8x | 114% / 44.6x | 118% / 49.4x | 120% / 51.8x | 122% / 54.2x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 85% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 1.0x, adding 7.5 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 | $2.9M | — | $2.9M | 0.7% |
| Year 1 | $3.0M | +$15.0M | $18.1M | 4.2% |
| Year 2 | $3.1M | +$22.5M | $25.7M | 6.0% |
| Year 3 | $3.2M | +$22.5M | $25.8M | 6.0% |
| Year 4 | $3.3M | +$22.5M | $25.8M | 6.0% |
| Year 5 | $3.4M | +$22.5M | $25.9M | 6.1% |
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 | $4.3M | $6.4M | $8.6M | $10.3M |
| Denial Rate Reductio | $4.2M | $6.4M | $8.5M | $10.2M |
| A/R Days Reduction | $2.6M | $3.9M | $5.2M | $6.3M |
| Clean Claim Rate | $137K | $206K | $274K | $329K |
| Total | $11.3M | $16.9M | $22.5M | $27.1M |
Peer Context — Where This Hospital Sits
Key metrics vs 43 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 0.7% | -29.1% | -11.3% | -1.6% | P80 |
| Net-to-Gross | 53.0% | 34.6% | 42.9% | 49.6% | P83 |
| Occupancy | 69.0% | 61.1% | 71.9% | 83.9% | P37 |
| Rev/Bed | $1.8M | $1.1M | $1.7M | $1.9M | P59 |
| Exp/Bed | $1.7M | $1.1M | $1.7M | $2.1M | P49 |
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.