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: Occupancy Rate, Revenue per Bed. Risk-adjusted uplift: $16.4M (vs $23.8M 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 | $9.0M | $9.0M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $8.7M | $249K | $8.9M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $1.4M | $4.1M | $5.5M | $17.3M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $289K | $289K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 33.6% 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 | $2.3M | $4.5M | $6.8M | $9.0M | $9.0M | $9.0M | $9.0M |
| Denial Rate Reduction | $0 | $2.2M | $4.5M | $6.7M | $8.9M | $8.9M | $8.9M | $8.9M |
| A/R Days Reduction | $0 | $1.8M | $3.7M | $5.5M | $5.5M | $5.5M | $5.5M | $5.5M |
| Clean Claim Rate | $0 | $145K | $289K | $289K | $289K | $289K | $289K | $289K |
| Cumulative | $0 | $6.5M | $12.9M | $19.3M | $23.8M | $23.8M | $23.8M | $23.8M |
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 $23.8M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 64% / 11.8x | 68% / 13.4x | 72% / 15.1x | 74% / 15.9x | 76% / 16.8x |
| 9.0x | 59% / 10.1x | 63% / 11.6x | 67% / 13.0x | 69% / 13.8x | 71% / 14.5x |
| 10.0x | 54% / 8.8x | 59% / 10.1x | 63% / 11.4x | 65% / 12.1x | 66% / 12.8x |
| 11.0x | 50% / 7.7x | 55% / 8.9x | 59% / 10.1x | 61% / 10.7x | 62% / 11.3x |
| 12.0x | 46% / 6.8x | 51% / 7.9x | 55% / 9.0x | 57% / 9.5x | 59% / 10.1x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 31% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 4.5x, adding 4.0 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 | $26.7M | — | $26.7M | 5.9% |
| Year 1 | $27.5M | +$15.9M | $43.3M | 9.6% |
| Year 2 | $28.3M | +$23.8M | $52.1M | 11.5% |
| Year 3 | $29.1M | +$23.8M | $52.9M | 11.7% |
| Year 4 | $30.0M | +$23.8M | $53.8M | 11.9% |
| Year 5 | $30.9M | +$23.8M | $54.7M | 12.1% |
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 | $4.5M | $6.8M | $9.0M | $10.8M |
| Denial Rate Reductio | $4.5M | $6.7M | $8.9M | $10.7M |
| A/R Days Reduction | $2.7M | $4.1M | $5.5M | $6.6M |
| Clean Claim Rate | $145K | $217K | $289K | $347K |
| Total | $11.9M | $17.8M | $23.8M | $28.5M |
Peer Context — Where This Hospital Sits
Key metrics vs 48 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 5.9% | -8.4% | -1.9% | 7.9% | P70 |
| Net-to-Gross | 31.0% | 23.9% | 27.5% | 33.6% | P66 |
| Occupancy | 58.2% | 44.2% | 58.7% | 75.0% | P46 |
| Rev/Bed | $2.3M | $692K | $1.2M | $1.6M | P94 |
| Exp/Bed | $2.1M | $713K | $1.2M | $1.5M | P94 |
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.