Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 72% of modeled bridge. Strengths: Occupancy Rate, Revenue per Bed. Risk-adjusted uplift: $10.4M (vs $14.6M 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 | $5.5M | $5.5M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $5.3M | $152K | $5.5M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $849K | $2.5M | $3.4M | $10.6M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $177K | $177K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 36.1% 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 | $1.4M | $2.8M | $4.1M | $5.5M | $5.5M | $5.5M | $5.5M |
| Denial Rate Reduction | $0 | $1.4M | $2.7M | $4.1M | $5.5M | $5.5M | $5.5M | $5.5M |
| A/R Days Reduction | $0 | $1.1M | $2.2M | $3.4M | $3.4M | $3.4M | $3.4M | $3.4M |
| Clean Claim Rate | $0 | $89K | $177K | $177K | $177K | $177K | $177K | $177K |
| Cumulative | $0 | $4.0M | $7.9M | $11.8M | $14.6M | $14.6M | $14.6M | $14.6M |
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 $14.6M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 48% / 7.0x | 52% / 8.1x | 56% / 9.3x | 58% / 9.8x | 60% / 10.4x |
| 9.0x | 42% / 5.9x | 47% / 6.9x | 51% / 7.9x | 53% / 8.4x | 55% / 8.9x |
| 10.0x | 38% / 5.0x | 42% / 5.9x | 47% / 6.8x | 49% / 7.2x | 50% / 7.7x |
| 11.0x | 33% / 4.2x | 38% / 5.0x | 42% / 5.9x | 44% / 6.3x | 46% / 6.7x |
| 12.0x | 29% / 3.6x | 34% / 4.3x | 39% / 5.1x | 41% / 5.5x | 42% / 5.9x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline -5% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 6.8x, adding 1.6 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 | $60.2M | — | $60.2M | 21.8% |
| Year 1 | $62.0M | +$9.7M | $71.7M | 25.9% |
| Year 2 | $63.8M | +$14.6M | $78.4M | 28.3% |
| Year 3 | $65.8M | +$14.6M | $80.3M | 29.0% |
| Year 4 | $67.7M | +$14.6M | $82.3M | 29.7% |
| Year 5 | $69.8M | +$14.6M | $84.3M | 30.5% |
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 | $2.8M | $4.1M | $5.5M | $6.6M |
| Denial Rate Reductio | $2.7M | $4.1M | $5.5M | $6.6M |
| A/R Days Reduction | $1.7M | $2.5M | $3.4M | $4.0M |
| Clean Claim Rate | $89K | $133K | $177K | $212K |
| Total | $7.3M | $10.9M | $14.6M | $17.5M |
Peer Context — Where This Hospital Sits
Key metrics vs 56 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 21.8% | -7.1% | -1.3% | 6.9% | P91 |
| Net-to-Gross | 30.3% | 24.4% | 28.8% | 36.1% | P62 |
| Occupancy | 68.6% | 47.5% | 58.1% | 73.5% | P64 |
| Rev/Bed | $2.0M | $738K | $1.3M | $1.7M | P87 |
| Exp/Bed | $1.6M | $738K | $1.3M | $1.6M | P73 |
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.