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: Occupancy Rate. Risks: Bed Count. Risk-adjusted uplift: $44.5M (vs $72.5M 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 | $27.6M | $27.6M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $26.5M | $758K | $27.3M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $4.2M | $12.5M | $16.8M | $52.9M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $882K | $882K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 31.2% 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 | $6.9M | $13.8M | $20.7M | $27.6M | $27.6M | $27.6M | $27.6M |
| Denial Rate Reduction | $0 | $6.8M | $13.6M | $20.5M | $27.3M | $27.3M | $27.3M | $27.3M |
| A/R Days Reduction | $0 | $5.6M | $11.2M | $16.8M | $16.8M | $16.8M | $16.8M | $16.8M |
| Clean Claim Rate | $0 | $441K | $882K | $882K | $882K | $882K | $882K | $882K |
| Cumulative | $0 | $19.7M | $39.5M | $58.8M | $72.5M | $72.5M | $72.5M | $72.5M |
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 $72.5M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x |
| 9.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x |
| 10.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x |
| 11.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x |
| 12.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x | -100% / 0.0x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 272% before the 6.5x covenant trips. RCM uplift reduces leverage from 99.0x to -11.2x, adding 110.2 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 | $-41.2M | — | $-41.2M | -3.0% |
| Year 1 | $-42.5M | +$48.3M | $5.9M | 0.4% |
| Year 2 | $-43.8M | +$72.5M | $28.8M | 2.1% |
| Year 3 | $-45.1M | +$72.5M | $27.5M | 2.0% |
| Year 4 | $-46.4M | +$72.5M | $26.1M | 1.9% |
| Year 5 | $-47.8M | +$72.5M | $24.7M | 1.8% |
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 | $13.8M | $20.7M | $27.6M | $33.1M |
| Denial Rate Reductio | $13.6M | $20.5M | $27.3M | $32.8M |
| A/R Days Reduction | $8.4M | $12.6M | $16.8M | $20.1M |
| Clean Claim Rate | $441K | $662K | $882K | $1.1M |
| Total | $36.3M | $54.4M | $72.5M | $87.0M |
Peer Context — Where This Hospital Sits
Key metrics vs 12 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | -3.0% | -5.9% | -4.4% | -0.8% | P58 |
| Net-to-Gross | 39.7% | 26.9% | 30.3% | 31.2% | P83 |
| Occupancy | 64.8% | 75.9% | 79.2% | 88.7% | P0 |
| Rev/Bed | $1.4M | $1.6M | $1.8M | $2.7M | P0 |
| Exp/Bed | $1.4M | $1.6M | $2.0M | $2.8M | P0 |
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.