Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 55% of modeled bridge. Strengths: Net-to-Gross Ratio. Risks: Bed Count, Revenue per Bed. Risk-adjusted uplift: $38.1M (vs $69.3M 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 | $26.3M | $26.3M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $25.4M | $724K | $26.1M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $4.0M | $12.0M | $16.0M | $50.5M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $843K | $843K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 24.6% 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 | $6.6M | $13.2M | $19.8M | $26.3M | $26.3M | $26.3M | $26.3M |
| Denial Rate Reduction | $0 | $6.5M | $13.0M | $19.6M | $26.1M | $26.1M | $26.1M | $26.1M |
| A/R Days Reduction | $0 | $5.3M | $10.7M | $16.0M | $16.0M | $16.0M | $16.0M | $16.0M |
| Clean Claim Rate | $0 | $422K | $843K | $843K | $843K | $843K | $843K | $843K |
| Cumulative | $0 | $18.9M | $37.7M | $56.2M | $69.3M | $69.3M | $69.3M | $69.3M |
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 $69.3M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 52% / 8.0x | 56% / 9.3x | 60% / 10.5x | 62% / 11.2x | 64% / 11.8x |
| 9.0x | 47% / 6.8x | 51% / 7.9x | 55% / 9.0x | 57% / 9.6x | 59% / 10.1x |
| 10.0x | 42% / 5.8x | 47% / 6.8x | 51% / 7.8x | 53% / 8.3x | 54% / 8.8x |
| 11.0x | 38% / 5.0x | 42% / 5.9x | 47% / 6.8x | 49% / 7.2x | 50% / 7.7x |
| 12.0x | 34% / 4.3x | 39% / 5.1x | 43% / 5.9x | 45% / 6.4x | 47% / 6.8x |
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 6.1x, adding 2.3 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 | $180.8M | — | $180.8M | 13.7% |
| Year 1 | $186.2M | +$46.2M | $232.4M | 17.6% |
| Year 2 | $191.8M | +$69.3M | $261.1M | 19.8% |
| Year 3 | $197.6M | +$69.3M | $266.9M | 20.3% |
| Year 4 | $203.5M | +$69.3M | $272.8M | 20.7% |
| Year 5 | $209.6M | +$69.3M | $278.9M | 21.2% |
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 | $13.2M | $19.8M | $26.3M | $31.6M |
| Denial Rate Reductio | $13.0M | $19.6M | $26.1M | $31.3M |
| A/R Days Reduction | $8.0M | $12.0M | $16.0M | $19.2M |
| Clean Claim Rate | $422K | $632K | $843K | $1.0M |
| Total | $34.6M | $52.0M | $69.3M | $83.2M |
Peer Context — Where This Hospital Sits
Key metrics vs 11 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 13.7% | -14.7% | 5.2% | 13.2% | P73 |
| Net-to-Gross | 10.6% | 12.5% | 20.7% | 24.6% | P9 |
| Occupancy | 52.5% | 67.1% | 75.7% | 81.0% | P0 |
| Rev/Bed | $879K | $1.3M | $1.5M | $2.0M | P9 |
| Exp/Bed | $759K | $946K | $1.6M | $2.5M | P9 |
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.