HENRY FORD ALLEGIANCE SPECIALTY HOSP
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: 67% of modeled bridge. Strengths: Bed Count. Risks: Revenue per Bed. Risk-adjusted uplift: $0.1M (vs $0.2M 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 | $54K | $8K | $62K | $0 | 12mo |
| Cost to Collect | 4.5% DEFAULT | 2.5% BENCHMARK | $0 | $56K | $56K | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $9K | $26K | $34K | $108K | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $10K | $10K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 54.1% 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 | $16K | $31K | $47K | $62K | $62K | $62K | $62K |
| Cost to Collect | $0 | $14K | $28K | $42K | $56K | $56K | $56K | $56K |
| A/R Days Reduction | $0 | $11K | $23K | $34K | $34K | $34K | $34K | $34K |
| Clean Claim Rate | $0 | $5K | $10K | $10K | $10K | $10K | $10K | $10K |
| Cumulative | $0 | $46K | $92K | $133K | $163K | $163K | $163K | $163K |
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 $163K is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 101% / 32.6x | 105% / 36.6x | 110% / 40.6x | 112% / 42.5x | 114% / 44.5x |
| 9.0x | 96% / 28.6x | 100% / 32.1x | 104% / 35.7x | 106% / 37.5x | 108% / 39.2x |
| 10.0x | 91% / 25.4x | 96% / 28.6x | 100% / 31.8x | 102% / 33.4x | 104% / 35.0x |
| 11.0x | 87% / 22.8x | 91% / 25.7x | 96% / 28.6x | 98% / 30.1x | 99% / 31.5x |
| 12.0x | 83% / 20.6x | 88% / 23.3x | 92% / 25.9x | 94% / 27.3x | 96% / 28.6x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 73% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 1.8x, adding 6.7 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 | $43K | — | $43K | 1.5% |
| Year 1 | $45K | +$108K | $153K | 5.4% |
| Year 2 | $46K | +$163K | $209K | 7.4% |
| Year 3 | $47K | +$163K | $210K | 7.5% |
| Year 4 | $49K | +$163K | $211K | 7.5% |
| Year 5 | $50K | +$163K | $213K | 7.6% |
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 | $31K | $47K | $62K | $75K |
| Cost to Collect | $28K | $42K | $56K | $68K |
| A/R Days Reduction | $17K | $26K | $34K | $41K |
| Clean Claim Rate | $5K | $7K | $10K | $12K |
| Total | $81K | $122K | $163K | $195K |
Peer Context — Where This Hospital Sits
Key metrics vs 53 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 1.5% | -11.1% | -1.3% | 9.2% | P58 |
| Net-to-Gross | 46.8% | 34.3% | 42.9% | 54.1% | P58 |
| Occupancy | 54.8% | 12.4% | 28.0% | 47.3% | P79 |
| Rev/Bed | $148K | $657K | $1.4M | $2.3M | P2 |
| Exp/Bed | $146K | $712K | $1.5M | $2.3M | P2 |
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.