Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 67% of modeled bridge. Strengths: Occupancy Rate. Risks: Bed Count. Risk-adjusted uplift: $50.3M (vs $75.6M 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 | $28.7M | $28.7M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $27.7M | $790K | $28.4M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $4.4M | $13.1M | $17.5M | $55.1M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $919K | $919K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 31.7% 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 | $7.2M | $14.4M | $21.5M | $28.7M | $28.7M | $28.7M | $28.7M |
| Denial Rate Reduction | $0 | $7.1M | $14.2M | $21.3M | $28.4M | $28.4M | $28.4M | $28.4M |
| A/R Days Reduction | $0 | $5.8M | $11.7M | $17.5M | $17.5M | $17.5M | $17.5M | $17.5M |
| Clean Claim Rate | $0 | $460K | $919K | $919K | $919K | $919K | $919K | $919K |
| Cumulative | $0 | $20.6M | $41.2M | $61.3M | $75.6M | $75.6M | $75.6M | $75.6M |
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 $75.6M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 57% / 9.6x | 62% / 11.0x | 66% / 12.4x | 67% / 13.2x | 69% / 13.9x |
| 9.0x | 52% / 8.2x | 57% / 9.4x | 61% / 10.7x | 63% / 11.3x | 64% / 12.0x |
| 10.0x | 48% / 7.0x | 52% / 8.2x | 56% / 9.3x | 58% / 9.9x | 60% / 10.5x |
| 11.0x | 44% / 6.1x | 48% / 7.1x | 52% / 8.2x | 54% / 8.7x | 56% / 9.2x |
| 12.0x | 40% / 5.3x | 44% / 6.3x | 48% / 7.2x | 50% / 7.7x | 52% / 8.2x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 19% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 5.3x, adding 3.2 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 | $126.5M | — | $126.5M | 8.8% |
| Year 1 | $130.3M | +$50.4M | $180.6M | 12.6% |
| Year 2 | $134.2M | +$75.6M | $209.7M | 14.6% |
| Year 3 | $138.2M | +$75.6M | $213.8M | 14.9% |
| Year 4 | $142.3M | +$75.6M | $217.9M | 15.2% |
| Year 5 | $146.6M | +$75.6M | $222.2M | 15.5% |
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 | $14.4M | $21.5M | $28.7M | $34.5M |
| Denial Rate Reductio | $14.2M | $21.3M | $28.4M | $34.1M |
| A/R Days Reduction | $8.7M | $13.1M | $17.5M | $21.0M |
| Clean Claim Rate | $460K | $690K | $919K | $1.1M |
| Total | $37.8M | $56.7M | $75.6M | $90.7M |
Peer Context — Where This Hospital Sits
Key metrics vs 326 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 8.8% | -14.8% | -4.5% | 4.0% | P86 |
| Net-to-Gross | 28.5% | 20.5% | 26.7% | 31.7% | P58 |
| Occupancy | 77.9% | 68.3% | 76.5% | 84.6% | P53 |
| Rev/Bed | $1.6M | $1.5M | $1.9M | $2.6M | P35 |
| Exp/Bed | $1.5M | $1.4M | $2.0M | $2.7M | P27 |
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.