Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 77% of modeled bridge. Strengths: Occupancy Rate, Revenue per Bed. Risk-adjusted uplift: $14.1M (vs $18.4M 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 | $7.0M | $7.0M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $6.7M | $192K | $6.9M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $1.1M | $3.2M | $4.2M | $13.4M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $223K | $223K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 53.1% 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 |
|---|---|---|---|---|---|---|---|---|
| Cost to Collect | $0 | $1.7M | $3.5M | $5.2M | $7.0M | $7.0M | $7.0M | $7.0M |
| Denial Rate Reduction | $0 | $1.7M | $3.5M | $5.2M | $6.9M | $6.9M | $6.9M | $6.9M |
| A/R Days Reduction | $0 | $1.4M | $2.8M | $4.2M | $4.2M | $4.2M | $4.2M | $4.2M |
| Clean Claim Rate | $0 | $112K | $223K | $223K | $223K | $223K | $223K | $223K |
| Cumulative | $0 | $5.0M | $10.0M | $14.9M | $18.4M | $18.4M | $18.4M | $18.4M |
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 $18.4M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 83% / 20.3x | 87% / 22.9x | 91% / 25.5x | 93% / 26.8x | 95% / 28.1x |
| 9.0x | 78% / 17.7x | 82% / 20.0x | 86% / 22.3x | 88% / 23.5x | 90% / 24.6x |
| 10.0x | 73% / 15.6x | 78% / 17.7x | 82% / 19.8x | 84% / 20.8x | 85% / 21.9x |
| 11.0x | 69% / 13.9x | 74% / 15.8x | 78% / 17.7x | 79% / 18.6x | 81% / 19.6x |
| 12.0x | 66% / 12.4x | 70% / 14.2x | 74% / 15.9x | 76% / 16.8x | 78% / 17.7x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 57% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 2.8x, adding 5.7 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 | $8.9M | — | $8.9M | 2.6% |
| Year 1 | $9.2M | +$12.2M | $21.4M | 6.1% |
| Year 2 | $9.5M | +$18.4M | $27.8M | 8.0% |
| Year 3 | $9.8M | +$18.4M | $28.1M | 8.1% |
| Year 4 | $10.0M | +$18.4M | $28.4M | 8.1% |
| Year 5 | $10.3M | +$18.4M | $28.7M | 8.2% |
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 | $3.5M | $5.2M | $7.0M | $8.4M |
| Denial Rate Reductio | $3.5M | $5.2M | $6.9M | $8.3M |
| A/R Days Reduction | $2.1M | $3.2M | $4.2M | $5.1M |
| Clean Claim Rate | $112K | $168K | $223K | $268K |
| Total | $9.2M | $13.8M | $18.4M | $22.0M |
Peer Context — Where This Hospital Sits
Key metrics vs 58 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 2.6% | -18.4% | -10.7% | -0.9% | P80 |
| Net-to-Gross | 42.9% | 35.6% | 43.2% | 53.1% | P46 |
| Occupancy | 91.0% | 59.5% | 67.5% | 80.3% | P91 |
| Rev/Bed | $2.3M | $383K | $1.2M | $1.8M | P91 |
| Exp/Bed | $2.3M | $341K | $1.3M | $2.0M | P86 |
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.