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: $11.2M (vs $16.3M 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 | $6.2M | $6.2M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $6.0M | $171K | $6.1M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $951K | $2.8M | $3.8M | $11.9M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $198K | $198K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 32.4% 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 | $1.6M | $3.1M | $4.7M | $6.2M | $6.2M | $6.2M | $6.2M |
| Denial Rate Reduction | $0 | $1.5M | $3.1M | $4.6M | $6.1M | $6.1M | $6.1M | $6.1M |
| A/R Days Reduction | $0 | $1.3M | $2.5M | $3.8M | $3.8M | $3.8M | $3.8M | $3.8M |
| Clean Claim Rate | $0 | $99K | $198K | $198K | $198K | $198K | $198K | $198K |
| Cumulative | $0 | $4.4M | $8.9M | $13.2M | $16.3M | $16.3M | $16.3M | $16.3M |
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 $16.3M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 47% / 6.9x | 52% / 8.0x | 56% / 9.2x | 58% / 9.7x | 59% / 10.3x |
| 9.0x | 42% / 5.8x | 47% / 6.8x | 51% / 7.8x | 53% / 8.3x | 54% / 8.8x |
| 10.0x | 37% / 4.9x | 42% / 5.8x | 46% / 6.7x | 48% / 7.1x | 50% / 7.6x |
| 11.0x | 33% / 4.1x | 38% / 5.0x | 42% / 5.8x | 44% / 6.2x | 46% / 6.6x |
| 12.0x | 29% / 3.5x | 34% / 4.3x | 38% / 5.0x | 40% / 5.4x | 42% / 5.8x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline -6% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 6.9x, 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 | $70.8M | — | $70.8M | 22.8% |
| Year 1 | $72.9M | +$10.9M | $83.8M | 27.0% |
| Year 2 | $75.1M | +$16.3M | $91.4M | 29.5% |
| Year 3 | $77.3M | +$16.3M | $93.6M | 30.2% |
| Year 4 | $79.6M | +$16.3M | $96.0M | 30.9% |
| Year 5 | $82.0M | +$16.3M | $98.4M | 31.7% |
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 | $3.1M | $4.7M | $6.2M | $7.4M |
| Denial Rate Reductio | $3.1M | $4.6M | $6.1M | $7.4M |
| A/R Days Reduction | $1.9M | $2.8M | $3.8M | $4.5M |
| Clean Claim Rate | $99K | $149K | $198K | $238K |
| Total | $8.2M | $12.2M | $16.3M | $19.6M |
Peer Context — Where This Hospital Sits
Key metrics vs 89 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 22.8% | -9.7% | 0.6% | 7.5% | P94 |
| Net-to-Gross | 48.4% | 21.4% | 27.0% | 32.4% | P95 |
| Occupancy | 57.1% | 45.3% | 55.8% | 69.5% | P54 |
| Rev/Bed | $2.0M | $676K | $1.3M | $1.6M | P87 |
| Exp/Bed | $1.6M | $547K | $1.2M | $1.6M | P71 |
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.