Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 70% of modeled bridge. Strengths: Occupancy Rate, Revenue per Bed. Risks: Bed Count, Commercial Payer %. Risk-adjusted uplift: $48.6M (vs $69.8M 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 | $26.5M | $26.5M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $25.5M | $730K | $26.3M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $4.1M | $12.1M | $16.1M | $50.9M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $849K | $849K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 32.7% 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 | $6.6M | $13.3M | $19.9M | $26.5M | $26.5M | $26.5M | $26.5M |
| Denial Rate Reduction | $0 | $6.6M | $13.1M | $19.7M | $26.3M | $26.3M | $26.3M | $26.3M |
| A/R Days Reduction | $0 | $5.4M | $10.8M | $16.1M | $16.1M | $16.1M | $16.1M | $16.1M |
| Clean Claim Rate | $0 | $425K | $849K | $849K | $849K | $849K | $849K | $849K |
| Cumulative | $0 | $19.0M | $38.0M | $56.6M | $69.8M | $69.8M | $69.8M | $69.8M |
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 $69.8M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 113% / 43.5x | 118% / 48.7x | 122% / 53.9x | 124% / 56.5x | 126% / 59.1x |
| 9.0x | 107% / 38.3x | 112% / 42.9x | 116% / 47.5x | 119% / 49.8x | 121% / 52.1x |
| 10.0x | 103% / 34.1x | 107% / 38.3x | 112% / 42.5x | 114% / 44.5x | 116% / 46.6x |
| 11.0x | 98% / 30.8x | 103% / 34.5x | 107% / 38.3x | 109% / 40.2x | 111% / 42.1x |
| 12.0x | 95% / 27.9x | 99% / 31.4x | 103% / 34.8x | 105% / 36.6x | 107% / 38.3x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 79% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 1.4x, adding 7.1 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 | $13.3M | — | $13.3M | 1.0% |
| Year 1 | $13.7M | +$46.5M | $60.3M | 4.5% |
| Year 2 | $14.2M | +$69.8M | $84.0M | 6.3% |
| Year 3 | $14.6M | +$69.8M | $84.4M | 6.4% |
| Year 4 | $15.0M | +$69.8M | $84.8M | 6.4% |
| Year 5 | $15.5M | +$69.8M | $85.3M | 6.4% |
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 | $13.3M | $19.9M | $26.5M | $31.9M |
| Denial Rate Reductio | $13.1M | $19.7M | $26.3M | $31.5M |
| A/R Days Reduction | $8.1M | $12.1M | $16.1M | $19.4M |
| Clean Claim Rate | $425K | $637K | $849K | $1.0M |
| Total | $34.9M | $52.4M | $69.8M | $83.8M |
Peer Context — Where This Hospital Sits
Key metrics vs 25 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 1.0% | -5.3% | -1.1% | 7.8% | P58 |
| Net-to-Gross | 30.7% | 25.8% | 29.4% | 32.7% | P58 |
| Occupancy | 76.3% | 64.8% | 76.3% | 85.3% | P48 |
| Rev/Bed | $2.4M | $1.3M | $1.5M | $1.9M | P79 |
| Exp/Bed | $2.3M | $1.2M | $1.5M | $1.9M | P80 |
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.