Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 76% of modeled bridge. Strengths: Occupancy Rate, Revenue per Bed. Risk-adjusted uplift: $27.4M (vs $35.9M 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 | $13.7M | $13.7M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $13.1M | $376K | $13.5M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $2.1M | $6.2M | $8.3M | $26.2M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $437K | $437K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 33.5% 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 | $3.4M | $6.8M | $10.2M | $13.7M | $13.7M | $13.7M | $13.7M |
| Denial Rate Reduction | $0 | $3.4M | $6.8M | $10.1M | $13.5M | $13.5M | $13.5M | $13.5M |
| A/R Days Reduction | $0 | $2.8M | $5.5M | $8.3M | $8.3M | $8.3M | $8.3M | $8.3M |
| Clean Claim Rate | $0 | $219K | $437K | $437K | $437K | $437K | $437K | $437K |
| Cumulative | $0 | $9.8M | $19.6M | $29.1M | $35.9M | $35.9M | $35.9M | $35.9M |
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 $35.9M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 73% / 15.7x | 78% / 17.8x | 82% / 19.9x | 84% / 20.9x | 85% / 21.9x |
| 9.0x | 68% / 13.6x | 73% / 15.4x | 77% / 17.3x | 79% / 18.2x | 80% / 19.1x |
| 10.0x | 64% / 11.9x | 68% / 13.6x | 72% / 15.2x | 74% / 16.1x | 76% / 16.9x |
| 11.0x | 60% / 10.5x | 64% / 12.0x | 68% / 13.6x | 70% / 14.3x | 72% / 15.1x |
| 12.0x | 56% / 9.3x | 61% / 10.8x | 65% / 12.2x | 67% / 12.8x | 68% / 13.6x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 46% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 3.5x, adding 5.0 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 | $25.2M | — | $25.2M | 3.7% |
| Year 1 | $26.0M | +$24.0M | $49.9M | 7.3% |
| Year 2 | $26.8M | +$35.9M | $62.7M | 9.2% |
| Year 3 | $27.6M | +$35.9M | $63.5M | 9.3% |
| Year 4 | $28.4M | +$35.9M | $64.3M | 9.4% |
| Year 5 | $29.2M | +$35.9M | $65.2M | 9.5% |
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 | $6.8M | $10.2M | $13.7M | $16.4M |
| Denial Rate Reductio | $6.8M | $10.1M | $13.5M | $16.2M |
| A/R Days Reduction | $4.2M | $6.2M | $8.3M | $10.0M |
| Clean Claim Rate | $219K | $328K | $437K | $525K |
| Total | $18.0M | $26.9M | $35.9M | $43.1M |
Peer Context — Where This Hospital Sits
Key metrics vs 51 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 3.7% | -7.4% | -1.2% | 8.4% | P58 |
| Net-to-Gross | 27.2% | 23.7% | 27.6% | 33.5% | P44 |
| Occupancy | 80.9% | 48.8% | 58.4% | 74.5% | P86 |
| Rev/Bed | $3.7M | $801K | $1.2M | $1.7M | P98 |
| Exp/Bed | $3.5M | $779K | $1.2M | $1.6M | P98 |
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.