CALLAWAY DISTRICT HOSPITAL
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: 61% of modeled bridge. Strengths: Commercial Payer %, Bed Count. Risks: Occupancy Rate, Net-to-Gross Ratio. Risk-adjusted uplift: $0.4M (vs $0.6M 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 | $241K | $241K | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $232K | $8K | $240K | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $37K | $110K | $147K | $463K | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $10K | $10K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 80.3% 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 | $60K | $121K | $181K | $241K | $241K | $241K | $241K |
| Denial Rate Reduction | $0 | $60K | $120K | $180K | $240K | $240K | $240K | $240K |
| A/R Days Reduction | $0 | $49K | $98K | $147K | $147K | $147K | $147K | $147K |
| Clean Claim Rate | $0 | $5K | $10K | $10K | $10K | $10K | $10K | $10K |
| Cumulative | $0 | $174K | $348K | $517K | $638K | $638K | $638K | $638K |
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 $638K is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 65% / 12.2x | 69% / 13.9x | 73% / 15.6x | 75% / 16.4x | 77% / 17.3x |
| 9.0x | 60% / 10.4x | 64% / 12.0x | 68% / 13.5x | 70% / 14.3x | 72% / 15.0x |
| 10.0x | 55% / 9.1x | 60% / 10.4x | 64% / 11.8x | 66% / 12.5x | 68% / 13.2x |
| 11.0x | 51% / 8.0x | 56% / 9.2x | 60% / 10.4x | 62% / 11.1x | 64% / 11.7x |
| 12.0x | 48% / 7.0x | 52% / 8.2x | 56% / 9.3x | 58% / 9.9x | 60% / 10.4x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 33% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 4.3x, adding 4.1 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 | $673K | — | $673K | 5.6% |
| Year 1 | $693K | +$425K | $1.1M | 9.3% |
| Year 2 | $714K | +$638K | $1.4M | 11.2% |
| Year 3 | $735K | +$638K | $1.4M | 11.4% |
| Year 4 | $757K | +$638K | $1.4M | 11.6% |
| Year 5 | $780K | +$638K | $1.4M | 11.8% |
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 | $121K | $181K | $241K | $289K |
| Denial Rate Reductio | $120K | $180K | $240K | $288K |
| A/R Days Reduction | $73K | $110K | $147K | $176K |
| Clean Claim Rate | $5K | $7K | $10K | $12K |
| Total | $319K | $478K | $638K | $765K |
Peer Context — Where This Hospital Sits
Key metrics vs 54 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 5.6% | -13.4% | -7.4% | -0.3% | P87 |
| Net-to-Gross | 80.3% | 67.3% | 72.5% | 80.3% | P72 |
| Occupancy | 17.3% | 9.6% | 16.1% | 21.9% | P54 |
| Rev/Bed | $1.0M | $728K | $1.2M | $1.7M | P39 |
| Exp/Bed | $949K | $729K | $1.3M | $1.7M | P30 |
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.