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. Risks: Bed Count. Risk-adjusted uplift: $32.9M (vs $48.0M 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 | $18.3M | $18.3M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $17.6M | $502K | $18.1M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $2.8M | $8.3M | $11.1M | $35.0M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $585K | $585K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 27.8% 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 | $9.1M | $13.7M | $18.3M | $18.3M | $18.3M | $18.3M |
| Denial Rate Reduction | $0 | $4.5M | $9.0M | $13.6M | $18.1M | $18.1M | $18.1M | $18.1M |
| A/R Days Reduction | $0 | $3.7M | $7.4M | $11.1M | $11.1M | $11.1M | $11.1M | $11.1M |
| Clean Claim Rate | $0 | $292K | $585K | $585K | $585K | $585K | $585K | $585K |
| Cumulative | $0 | $13.1M | $26.2M | $39.0M | $48.0M | $48.0M | $48.0M | $48.0M |
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 $48.0M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 147% / 92.7x | 153% / 103.3x | 158% / 114.0x | 160% / 119.3x | 163% / 124.7x |
| 9.0x | 141% / 82.0x | 147% / 91.5x | 152% / 101.0x | 154% / 105.7x | 156% / 110.4x |
| 10.0x | 136% / 73.5x | 141% / 82.0x | 146% / 90.5x | 149% / 94.8x | 151% / 99.1x |
| 11.0x | 132% / 66.5x | 137% / 74.3x | 141% / 82.0x | 144% / 85.9x | 146% / 89.8x |
| 12.0x | 127% / 60.7x | 132% / 67.8x | 137% / 74.9x | 139% / 78.5x | 141% / 82.0x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 90% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 0.7x, adding 7.8 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 | $4.0M | — | $4.0M | 0.4% |
| Year 1 | $4.1M | +$32.0M | $36.2M | 4.0% |
| Year 2 | $4.3M | +$48.0M | $52.3M | 5.7% |
| Year 3 | $4.4M | +$48.0M | $52.4M | 5.7% |
| Year 4 | $4.5M | +$48.0M | $52.6M | 5.8% |
| Year 5 | $4.7M | +$48.0M | $52.7M | 5.8% |
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 | $9.1M | $13.7M | $18.3M | $21.9M |
| Denial Rate Reductio | $9.0M | $13.6M | $18.1M | $21.7M |
| A/R Days Reduction | $5.6M | $8.3M | $11.1M | $13.3M |
| Clean Claim Rate | $292K | $438K | $585K | $701K |
| Total | $24.0M | $36.0M | $48.0M | $57.7M |
Peer Context — Where This Hospital Sits
Key metrics vs 13 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 0.4% | -2.3% | 1.1% | 8.3% | P38 |
| Net-to-Gross | 25.9% | 17.6% | 21.7% | 27.8% | P54 |
| Occupancy | 77.7% | 76.0% | 77.7% | 82.5% | P46 |
| Rev/Bed | $1.5M | $1.5M | $1.6M | $2.1M | P31 |
| Exp/Bed | $1.5M | $1.2M | $1.6M | $1.8M | P38 |
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.