Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 66% of modeled bridge. Risks: Bed Count. Risk-adjusted uplift: $17.2M (vs $26.0M 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 | $9.9M | $9.9M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $9.5M | $271K | $9.8M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $1.5M | $4.5M | $6.0M | $18.9M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $316K | $316K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 25.3% 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 | $2.5M | $4.9M | $7.4M | $9.9M | $9.9M | $9.9M | $9.9M |
| Denial Rate Reduction | $0 | $2.4M | $4.9M | $7.3M | $9.8M | $9.8M | $9.8M | $9.8M |
| A/R Days Reduction | $0 | $2.0M | $4.0M | $6.0M | $6.0M | $6.0M | $6.0M | $6.0M |
| Clean Claim Rate | $0 | $158K | $316K | $316K | $316K | $316K | $316K | $316K |
| Cumulative | $0 | $7.1M | $14.1M | $21.0M | $26.0M | $26.0M | $26.0M | $26.0M |
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 $26.0M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 58% / 10.0x | 63% / 11.4x | 67% / 12.9x | 69% / 13.7x | 70% / 14.4x |
| 9.0x | 53% / 8.5x | 58% / 9.8x | 62% / 11.1x | 64% / 11.8x | 66% / 12.4x |
| 10.0x | 49% / 7.3x | 53% / 8.5x | 57% / 9.7x | 59% / 10.3x | 61% / 10.9x |
| 11.0x | 45% / 6.4x | 49% / 7.4x | 53% / 8.5x | 55% / 9.1x | 57% / 9.6x |
| 12.0x | 41% / 5.6x | 46% / 6.5x | 50% / 7.5x | 52% / 8.0x | 53% / 8.5x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 21% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 5.1x, adding 3.3 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 | $39.9M | — | $39.9M | 8.1% |
| Year 1 | $41.1M | +$17.3M | $58.4M | 11.8% |
| Year 2 | $42.3M | +$26.0M | $68.3M | 13.8% |
| Year 3 | $43.6M | +$26.0M | $69.6M | 14.1% |
| Year 4 | $44.9M | +$26.0M | $70.9M | 14.4% |
| Year 5 | $46.3M | +$26.0M | $72.2M | 14.6% |
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% |
|---|---|---|---|---|
| Cost to Collect | $4.9M | $7.4M | $9.9M | $11.8M |
| Denial Rate Reductio | $4.9M | $7.3M | $9.8M | $11.7M |
| A/R Days Reduction | $3.0M | $4.5M | $6.0M | $7.2M |
| Clean Claim Rate | $158K | $237K | $316K | $379K |
| Total | $13.0M | $19.5M | $26.0M | $31.1M |
Peer Context — Where This Hospital Sits
Key metrics vs 50 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 8.1% | -14.5% | -5.0% | 2.3% | P86 |
| Net-to-Gross | 27.8% | 18.0% | 21.3% | 25.3% | P78 |
| Occupancy | 51.5% | 55.6% | 62.2% | 75.8% | P14 |
| Rev/Bed | $1.7M | $1.0M | $1.3M | $1.7M | P74 |
| Exp/Bed | $1.6M | $1.0M | $1.4M | $1.8M | P66 |
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.