LITTLE FALLS 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: 69% of modeled bridge. Strengths: Bed Count, Occupancy Rate. Risk-adjusted uplift: $1.5M (vs $2.2M 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 |
|---|---|---|---|---|---|---|---|
| Cost to Collect | 4.5% DEFAULT | 2.5% BENCHMARK | $0 | $850K | $850K | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $818K | $23K | $842K | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $130K | $387K | $517K | $1.6M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $27K | $27K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 46.9% 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 | $213K | $425K | $638K | $850K | $850K | $850K | $850K |
| Denial Rate Reduction | $0 | $210K | $421K | $631K | $842K | $842K | $842K | $842K |
| A/R Days Reduction | $0 | $172K | $345K | $517K | $517K | $517K | $517K | $517K |
| Clean Claim Rate | $0 | $14K | $27K | $27K | $27K | $27K | $27K | $27K |
| Cumulative | $0 | $609K | $1.2M | $1.8M | $2.2M | $2.2M | $2.2M | $2.2M |
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 $2.2M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 60% / 10.3x | 64% / 11.8x | 68% / 13.3x | 70% / 14.1x | 72% / 14.8x |
| 9.0x | 55% / 8.8x | 59% / 10.2x | 63% / 11.5x | 65% / 12.2x | 67% / 12.8x |
| 10.0x | 50% / 7.6x | 55% / 8.8x | 59% / 10.0x | 60% / 10.6x | 62% / 11.2x |
| 11.0x | 46% / 6.6x | 50% / 7.7x | 55% / 8.8x | 56% / 9.4x | 58% / 9.9x |
| 12.0x | 42% / 5.8x | 47% / 6.8x | 51% / 7.8x | 53% / 8.3x | 55% / 8.8x |
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 3.5 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 | $3.2M | — | $3.2M | 7.5% |
| Year 1 | $3.3M | +$1.5M | $4.8M | 11.3% |
| Year 2 | $3.4M | +$2.2M | $5.6M | 13.3% |
| Year 3 | $3.5M | +$2.2M | $5.7M | 13.5% |
| Year 4 | $3.6M | +$2.2M | $5.8M | 13.8% |
| Year 5 | $3.7M | +$2.2M | $6.0M | 14.0% |
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 | $425K | $638K | $850K | $1.0M |
| Denial Rate Reductio | $421K | $631K | $842K | $1.0M |
| A/R Days Reduction | $259K | $388K | $517K | $621K |
| Clean Claim Rate | $14K | $20K | $27K | $33K |
| Total | $1.1M | $1.7M | $2.2M | $2.7M |
Peer Context — Where This Hospital Sits
Key metrics vs 31 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 7.5% | -27.8% | -17.7% | -9.7% | P87 |
| Net-to-Gross | 44.3% | 37.6% | 44.3% | 46.9% | P50 |
| Occupancy | 55.1% | 30.3% | 44.2% | 63.6% | P67 |
| Rev/Bed | $1.7M | $998K | $1.3M | $2.0M | P63 |
| Exp/Bed | $1.6M | $1.2M | $1.7M | $2.4M | P45 |
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.