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: Occupancy Rate. Risks: Bed Count. Risk-adjusted uplift: $21.0M (vs $31.6M 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 | $12.0M | $12.0M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $11.6M | $331K | $11.9M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $1.8M | $5.5M | $7.3M | $23.1M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $385K | $385K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 29.5% 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 | $3.0M | $6.0M | $9.0M | $12.0M | $12.0M | $12.0M | $12.0M |
| Denial Rate Reduction | $0 | $3.0M | $6.0M | $8.9M | $11.9M | $11.9M | $11.9M | $11.9M |
| A/R Days Reduction | $0 | $2.4M | $4.9M | $7.3M | $7.3M | $7.3M | $7.3M | $7.3M |
| Clean Claim Rate | $0 | $192K | $385K | $385K | $385K | $385K | $385K | $385K |
| Cumulative | $0 | $8.6M | $17.2M | $25.7M | $31.6M | $31.6M | $31.6M | $31.6M |
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 $31.6M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 59% / 10.2x | 64% / 11.7x | 68% / 13.2x | 69% / 13.9x | 71% / 14.7x |
| 9.0x | 54% / 8.7x | 59% / 10.0x | 63% / 11.4x | 64% / 12.0x | 66% / 12.7x |
| 10.0x | 50% / 7.5x | 54% / 8.7x | 58% / 9.9x | 60% / 10.5x | 62% / 11.1x |
| 11.0x | 46% / 6.5x | 50% / 7.6x | 54% / 8.7x | 56% / 9.2x | 58% / 9.8x |
| 12.0x | 42% / 5.7x | 46% / 6.7x | 50% / 7.7x | 52% / 8.2x | 54% / 8.7x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 23% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 5.0x, adding 3.4 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 | $46.5M | — | $46.5M | 7.7% |
| Year 1 | $47.9M | +$21.1M | $69.0M | 11.5% |
| Year 2 | $49.3M | +$31.6M | $81.0M | 13.5% |
| Year 3 | $50.8M | +$31.6M | $82.5M | 13.7% |
| Year 4 | $52.4M | +$31.6M | $84.0M | 14.0% |
| Year 5 | $53.9M | +$31.6M | $85.6M | 14.2% |
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 | $6.0M | $9.0M | $12.0M | $14.4M |
| Denial Rate Reductio | $6.0M | $8.9M | $11.9M | $14.3M |
| A/R Days Reduction | $3.7M | $5.5M | $7.3M | $8.8M |
| Clean Claim Rate | $192K | $289K | $385K | $462K |
| Total | $15.8M | $23.7M | $31.6M | $38.0M |
Peer Context — Where This Hospital Sits
Key metrics vs 30 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 7.7% | -12.2% | -2.6% | 4.7% | P83 |
| Net-to-Gross | 24.3% | 22.7% | 26.9% | 29.5% | P37 |
| Occupancy | 57.0% | 52.1% | 66.1% | 75.5% | P37 |
| Rev/Bed | $1.6M | $1.1M | $1.5M | $1.9M | P57 |
| Exp/Bed | $1.4M | $1.1M | $1.5M | $1.8M | P40 |
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.