ASCENSION SETON EDGAR B DAVIS
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: 64% of modeled bridge. Strengths: Bed Count. Risks: Occupancy Rate, Commercial Payer %. Risk-adjusted uplift: $1.2M (vs $1.8M 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 | $703K | $703K | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $676K | $19K | $696K | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $108K | $320K | $428K | $1.3M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $22K | $22K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 53.9% 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 | $176K | $351K | $527K | $703K | $703K | $703K | $703K |
| Denial Rate Reduction | $0 | $174K | $348K | $522K | $696K | $696K | $696K | $696K |
| A/R Days Reduction | $0 | $143K | $285K | $428K | $428K | $428K | $428K | $428K |
| Clean Claim Rate | $0 | $11K | $22K | $22K | $22K | $22K | $22K | $22K |
| Cumulative | $0 | $503K | $1.0M | $1.5M | $1.8M | $1.8M | $1.8M | $1.8M |
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 $1.8M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 66% / 12.7x | 71% / 14.5x | 75% / 16.2x | 76% / 17.1x | 78% / 18.0x |
| 9.0x | 61% / 10.9x | 66% / 12.5x | 70% / 14.1x | 72% / 14.9x | 73% / 15.7x |
| 10.0x | 57% / 9.5x | 61% / 10.9x | 65% / 12.3x | 67% / 13.1x | 69% / 13.8x |
| 11.0x | 53% / 8.3x | 57% / 9.6x | 61% / 10.9x | 63% / 11.6x | 65% / 12.2x |
| 12.0x | 49% / 7.4x | 54% / 8.6x | 58% / 9.8x | 60% / 10.3x | 61% / 10.9x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 36% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 4.2x, adding 4.3 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 | $1.8M | — | $1.8M | 5.1% |
| Year 1 | $1.9M | +$1.2M | $3.1M | 8.8% |
| Year 2 | $1.9M | +$1.8M | $3.8M | 10.7% |
| Year 3 | $2.0M | +$1.8M | $3.8M | 10.9% |
| Year 4 | $2.0M | +$1.8M | $3.9M | 11.1% |
| Year 5 | $2.1M | +$1.8M | $3.9M | 11.2% |
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 | $351K | $527K | $703K | $843K |
| Denial Rate Reductio | $348K | $522K | $696K | $835K |
| A/R Days Reduction | $214K | $321K | $428K | $513K |
| Clean Claim Rate | $11K | $17K | $22K | $27K |
| Total | $924K | $1.4M | $1.8M | $2.2M |
Peer Context — Where This Hospital Sits
Key metrics vs 236 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 5.1% | -37.9% | -8.6% | 8.9% | P69 |
| Net-to-Gross | 29.4% | 25.1% | 36.9% | 53.9% | P34 |
| Occupancy | 30.8% | 12.7% | 27.9% | 53.8% | P54 |
| Rev/Bed | $1.5M | $438K | $656K | $1.3M | P81 |
| Exp/Bed | $1.4M | $464K | $876K | $1.4M | P76 |
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.