Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 70% of modeled bridge. Strengths: Occupancy Rate, Revenue per Bed. Risks: Bed Count. Risk-adjusted uplift: $47.7M (vs $68.0M 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 | $25.9M | $25.9M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $24.9M | $711K | $25.6M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $4.0M | $11.8M | $15.7M | $49.6M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $827K | $827K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 28.4% 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 | $6.5M | $12.9M | $19.4M | $25.9M | $25.9M | $25.9M | $25.9M |
| Denial Rate Reduction | $0 | $6.4M | $12.8M | $19.2M | $25.6M | $25.6M | $25.6M | $25.6M |
| A/R Days Reduction | $0 | $5.2M | $10.5M | $15.7M | $15.7M | $15.7M | $15.7M | $15.7M |
| Clean Claim Rate | $0 | $414K | $827K | $827K | $827K | $827K | $827K | $827K |
| Cumulative | $0 | $18.5M | $37.0M | $55.1M | $68.0M | $68.0M | $68.0M | $68.0M |
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 $68.0M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 57% / 9.6x | 61% / 11.0x | 65% / 12.4x | 67% / 13.1x | 69% / 13.8x |
| 9.0x | 52% / 8.1x | 57% / 9.4x | 61% / 10.7x | 62% / 11.3x | 64% / 11.9x |
| 10.0x | 48% / 7.0x | 52% / 8.1x | 56% / 9.3x | 58% / 9.8x | 60% / 10.4x |
| 11.0x | 43% / 6.1x | 48% / 7.1x | 52% / 8.1x | 54% / 8.7x | 56% / 9.2x |
| 12.0x | 40% / 5.3x | 44% / 6.2x | 48% / 7.2x | 50% / 7.7x | 52% / 8.1x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 18% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 5.3x, adding 3.1 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 | $115.0M | — | $115.0M | 8.9% |
| Year 1 | $118.4M | +$45.3M | $163.8M | 12.7% |
| Year 2 | $122.0M | +$68.0M | $190.0M | 14.7% |
| Year 3 | $125.7M | +$68.0M | $193.7M | 15.0% |
| Year 4 | $129.4M | +$68.0M | $197.4M | 15.3% |
| Year 5 | $133.3M | +$68.0M | $201.3M | 15.6% |
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 | $12.9M | $19.4M | $25.9M | $31.0M |
| Denial Rate Reductio | $12.8M | $19.2M | $25.6M | $30.7M |
| A/R Days Reduction | $7.9M | $11.8M | $15.7M | $18.9M |
| Clean Claim Rate | $414K | $621K | $827K | $993K |
| Total | $34.0M | $51.0M | $68.0M | $81.6M |
Peer Context — Where This Hospital Sits
Key metrics vs 34 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 8.9% | -19.2% | -6.4% | 0.3% | P90 |
| Net-to-Gross | 30.2% | 16.7% | 23.1% | 28.4% | P77 |
| Occupancy | 78.5% | 63.6% | 73.7% | 78.3% | P74 |
| Rev/Bed | $2.3M | $1.3M | $2.0M | $2.6M | P61 |
| Exp/Bed | $2.1M | $1.4M | $1.9M | $2.6M | P59 |
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.