BAYLOR COUNTY HOSPITAL DISTRICT
value-creation walk.
7-lever RCM bridge from current EBITDA to pro-forma — denial / underpay / DAR / coding / contract / cost discipline / cash acceleration. Each lever shows current vs benchmark target with data provenance.
Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 59% of modeled bridge. Strengths: Bed Count. Risks: Occupancy Rate, Revenue per Bed. Risk-adjusted uplift: $0.3M (vs $0.5M 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 |
|---|---|---|---|---|---|---|---|
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $175K | $8K | $184K | $0 | 12mo |
| Cost to Collect | 4.5% DEFAULT | 2.5% BENCHMARK | $0 | $182K | $182K | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $28K | $83K | $111K | $350K | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $10K | $10K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 51.6% 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 |
|---|---|---|---|---|---|---|---|---|
| Denial Rate Reduction | $0 | $46K | $92K | $138K | $184K | $184K | $184K | $184K |
| Cost to Collect | $0 | $46K | $91K | $137K | $182K | $182K | $182K | $182K |
| A/R Days Reduction | $0 | $37K | $74K | $111K | $111K | $111K | $111K | $111K |
| Clean Claim Rate | $0 | $5K | $10K | $10K | $10K | $10K | $10K | $10K |
| Cumulative | $0 | $133K | $266K | $395K | $486K | $486K | $486K | $486K |
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 $486K is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | Loss | Loss | Loss | Loss | Loss |
| 9.0x | Loss | Loss | Loss | Loss | Loss |
| 10.0x | Loss | Loss | Loss | Loss | Loss |
| 11.0x | Loss | Loss | Loss | Loss | Loss |
| 12.0x | Loss | Loss | Loss | Loss | Loss |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 0% before the 6.5x covenant trips. RCM uplift reduces leverage from 99.0x to 99.0x, adding 0.0 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 | $-8.2M | — | $-8.2M | -90.2% |
| Year 1 | $-8.5M | +$324K | $-8.1M | -89.4% |
| Year 2 | $-8.7M | +$486K | $-8.2M | -90.4% |
| Year 3 | $-9.0M | +$486K | $-8.5M | -93.3% |
| Year 4 | $-9.3M | +$486K | $-8.8M | -96.2% |
| Year 5 | $-9.5M | +$486K | $-9.0M | -99.3% |
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% |
|---|---|---|---|---|
| Denial Rate Reductio | $92K | $138K | $184K | $220K |
| Cost to Collect | $91K | $137K | $182K | $219K |
| A/R Days Reduction | $55K | $83K | $111K | $133K |
| Clean Claim Rate | $5K | $7K | $10K | $12K |
| Total | $243K | $365K | $486K | $584K |
Peer Context — Where This Hospital Sits
Key metrics vs 263 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | -50.0% | -37.0% | -7.8% | 9.8% | P0 |
| Net-to-Gross | 42.4% | 24.7% | 35.7% | 51.6% | P62 |
| Occupancy | 18.0% | 13.9% | 30.9% | 57.1% | P32 |
| Rev/Bed | $338K | $423K | $645K | $1.3M | P17 |
| Exp/Bed | $642K | $453K | $834K | $1.4M | P39 |
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.