Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 73% of modeled bridge. Strengths: Occupancy Rate, Revenue per Bed. Risks: Commercial Payer %, Bed Count. Risk-adjusted uplift: $34.2M (vs $47.1M 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 | $17.9M | $17.9M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $17.2M | $493K | $17.7M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $2.7M | $8.1M | $10.9M | $34.3M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $573K | $573K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 39.1% 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 | $4.5M | $9.0M | $13.4M | $17.9M | $17.9M | $17.9M | $17.9M |
| Denial Rate Reduction | $0 | $4.4M | $8.9M | $13.3M | $17.7M | $17.7M | $17.7M | $17.7M |
| A/R Days Reduction | $0 | $3.6M | $7.3M | $10.9M | $10.9M | $10.9M | $10.9M | $10.9M |
| Clean Claim Rate | $0 | $287K | $573K | $573K | $573K | $573K | $573K | $573K |
| Cumulative | $0 | $12.8M | $25.7M | $38.2M | $47.1M | $47.1M | $47.1M | $47.1M |
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 $47.1M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 65% / 12.1x | 69% / 13.8x | 73% / 15.5x | 75% / 16.3x | 77% / 17.2x |
| 9.0x | 60% / 10.4x | 64% / 11.9x | 68% / 13.4x | 70% / 14.2x | 72% / 14.9x |
| 10.0x | 55% / 9.0x | 60% / 10.4x | 64% / 11.7x | 66% / 12.4x | 67% / 13.1x |
| 11.0x | 51% / 7.9x | 56% / 9.1x | 60% / 10.4x | 62% / 11.0x | 63% / 11.6x |
| 12.0x | 47% / 7.0x | 52% / 8.1x | 56% / 9.2x | 58% / 9.8x | 60% / 10.4x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 33% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 4.4x, adding 4.1 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 | $50.3M | — | $50.3M | 5.6% |
| Year 1 | $51.8M | +$31.4M | $83.2M | 9.3% |
| Year 2 | $53.3M | +$47.1M | $100.4M | 11.2% |
| Year 3 | $54.9M | +$47.1M | $102.0M | 11.4% |
| Year 4 | $56.6M | +$47.1M | $103.7M | 11.6% |
| Year 5 | $58.3M | +$47.1M | $105.4M | 11.8% |
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 | $9.0M | $13.4M | $17.9M | $21.5M |
| Denial Rate Reductio | $8.9M | $13.3M | $17.7M | $21.3M |
| A/R Days Reduction | $5.4M | $8.2M | $10.9M | $13.1M |
| Clean Claim Rate | $287K | $430K | $573K | $688K |
| Total | $23.6M | $35.3M | $47.1M | $56.5M |
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 | 5.6% | 8.0% | 12.3% | 26.1% | P10 |
| Net-to-Gross | 58.8% | 33.9% | 36.9% | 39.1% | P90 |
| Occupancy | 77.0% | 47.0% | 64.7% | 72.4% | P82 |
| Rev/Bed | $3.1M | $1.5M | $2.1M | $2.6M | P90 |
| Exp/Bed | $2.9M | $929K | $1.5M | $2.3M | P91 |
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.