Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 68% of modeled bridge. Strengths: Occupancy Rate, Revenue per Bed. Risks: Bed Count, Commercial Payer %. Risk-adjusted uplift: $32.7M (vs $48.5M 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 | $18.4M | $18.4M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $17.7M | $507K | $18.2M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $2.8M | $8.4M | $11.2M | $35.3M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $589K | $589K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 32.6% 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 | $4.6M | $9.2M | $13.8M | $18.4M | $18.4M | $18.4M | $18.4M |
| Denial Rate Reduction | $0 | $4.6M | $9.1M | $13.7M | $18.2M | $18.2M | $18.2M | $18.2M |
| A/R Days Reduction | $0 | $3.7M | $7.5M | $11.2M | $11.2M | $11.2M | $11.2M | $11.2M |
| Clean Claim Rate | $0 | $295K | $589K | $589K | $589K | $589K | $589K | $589K |
| Cumulative | $0 | $13.2M | $26.4M | $39.3M | $48.5M | $48.5M | $48.5M | $48.5M |
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 $48.5M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 206% / 267.9x | 212% / 298.0x | 219% / 328.2x | 221% / 343.2x | 224% / 358.3x |
| 9.0x | 199% / 237.8x | 205% / 264.6x | 211% / 291.3x | 214% / 304.7x | 217% / 318.1x |
| 10.0x | 192% / 213.7x | 199% / 237.8x | 205% / 261.9x | 207% / 273.9x | 210% / 286.0x |
| 11.0x | 187% / 193.9x | 193% / 215.9x | 199% / 237.8x | 201% / 248.7x | 204% / 259.7x |
| 12.0x | 182% / 177.5x | 188% / 197.6x | 193% / 217.7x | 196% / 227.7x | 199% / 237.8x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 96% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 0.2x, adding 8.2 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 | $1.3M | — | $1.3M | 0.1% |
| Year 1 | $1.4M | +$32.3M | $33.7M | 3.7% |
| Year 2 | $1.4M | +$48.5M | $49.9M | 5.4% |
| Year 3 | $1.5M | +$48.5M | $49.9M | 5.4% |
| Year 4 | $1.5M | +$48.5M | $50.0M | 5.4% |
| Year 5 | $1.6M | +$48.5M | $50.0M | 5.4% |
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 | $9.2M | $13.8M | $18.4M | $22.1M |
| Denial Rate Reductio | $9.1M | $13.7M | $18.2M | $21.9M |
| A/R Days Reduction | $5.6M | $8.4M | $11.2M | $13.4M |
| Clean Claim Rate | $295K | $442K | $589K | $707K |
| Total | $24.2M | $36.3M | $48.5M | $58.1M |
Peer Context — Where This Hospital Sits
Key metrics vs 35 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 0.1% | -6.1% | -0.1% | 4.1% | P50 |
| Net-to-Gross | 28.0% | 22.6% | 27.9% | 32.6% | P50 |
| Occupancy | 62.2% | 60.8% | 68.0% | 77.3% | P29 |
| Rev/Bed | $2.1M | $1.4M | $1.9M | $2.3M | P62 |
| Exp/Bed | $2.1M | $1.4M | $1.8M | $2.3M | P63 |
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.