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: $15.8M (vs $23.0M 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 | $8.7M | $8.7M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $8.4M | $240K | $8.7M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $1.3M | $4.0M | $5.3M | $16.8M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $280K | $280K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 25.2% 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 | $2.2M | $4.4M | $6.6M | $8.7M | $8.7M | $8.7M | $8.7M |
| Denial Rate Reduction | $0 | $2.2M | $4.3M | $6.5M | $8.7M | $8.7M | $8.7M | $8.7M |
| A/R Days Reduction | $0 | $1.8M | $3.5M | $5.3M | $5.3M | $5.3M | $5.3M | $5.3M |
| Clean Claim Rate | $0 | $140K | $280K | $280K | $280K | $280K | $280K | $280K |
| Cumulative | $0 | $6.3M | $12.5M | $18.6M | $23.0M | $23.0M | $23.0M | $23.0M |
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 $23.0M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 69% / 13.8x | 73% / 15.7x | 77% / 17.6x | 79% / 18.5x | 81% / 19.5x |
| 9.0x | 64% / 11.9x | 68% / 13.6x | 72% / 15.2x | 74% / 16.1x | 76% / 16.9x |
| 10.0x | 60% / 10.4x | 64% / 11.9x | 68% / 13.4x | 70% / 14.2x | 72% / 14.9x |
| 11.0x | 56% / 9.1x | 60% / 10.5x | 64% / 11.9x | 66% / 12.6x | 68% / 13.3x |
| 12.0x | 52% / 8.1x | 56% / 9.4x | 60% / 10.6x | 62% / 11.3x | 64% / 11.9x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 40% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 3.9x, adding 4.6 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 | $19.7M | — | $19.7M | 4.5% |
| Year 1 | $20.2M | +$15.3M | $35.6M | 8.1% |
| Year 2 | $20.9M | +$23.0M | $43.8M | 10.0% |
| Year 3 | $21.5M | +$23.0M | $44.5M | 10.2% |
| Year 4 | $22.1M | +$23.0M | $45.1M | 10.3% |
| Year 5 | $22.8M | +$23.0M | $45.8M | 10.5% |
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 | $4.4M | $6.6M | $8.7M | $10.5M |
| Denial Rate Reductio | $4.3M | $6.5M | $8.7M | $10.4M |
| A/R Days Reduction | $2.7M | $4.0M | $5.3M | $6.4M |
| Clean Claim Rate | $140K | $210K | $280K | $336K |
| Total | $11.5M | $17.2M | $23.0M | $27.6M |
Peer Context — Where This Hospital Sits
Key metrics vs 133 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 4.5% | -7.9% | 4.9% | 14.7% | P49 |
| Net-to-Gross | 18.5% | 12.6% | 18.0% | 25.2% | P53 |
| Occupancy | 60.4% | 54.5% | 66.6% | 75.6% | P35 |
| Rev/Bed | $1.6M | $720K | $1.2M | $1.5M | P78 |
| Exp/Bed | $1.5M | $713K | $1.1M | $1.5M | P75 |
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.