Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 60% of modeled bridge. Risks: Occupancy Rate, Revenue per Bed. Risk-adjusted uplift: $3.9M (vs $6.5M 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 |
|---|---|---|---|---|---|---|---|
| Cost to Collect | 4.5% DEFAULT | 2.5% BENCHMARK | $0 | $2.5M | $2.5M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $2.4M | $68K | $2.4M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $379K | $1.1M | $1.5M | $4.7M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $79K | $79K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 30.2% 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 | $618K | $1.2M | $1.9M | $2.5M | $2.5M | $2.5M | $2.5M |
| Denial Rate Reduction | $0 | $611K | $1.2M | $1.8M | $2.4M | $2.4M | $2.4M | $2.4M |
| A/R Days Reduction | $0 | $501K | $1.0M | $1.5M | $1.5M | $1.5M | $1.5M | $1.5M |
| Clean Claim Rate | $0 | $40K | $79K | $79K | $79K | $79K | $79K | $79K |
| Cumulative | $0 | $1.8M | $3.5M | $5.3M | $6.5M | $6.5M | $6.5M | $6.5M |
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 $6.5M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 67% / 12.8x | 71% / 14.6x | 75% / 16.4x | 77% / 17.3x | 79% / 18.2x |
| 9.0x | 62% / 11.0x | 66% / 12.6x | 70% / 14.2x | 72% / 15.0x | 74% / 15.8x |
| 10.0x | 57% / 9.6x | 62% / 11.0x | 66% / 12.5x | 67% / 13.2x | 69% / 13.9x |
| 11.0x | 53% / 8.4x | 58% / 9.7x | 62% / 11.0x | 63% / 11.7x | 65% / 12.3x |
| 12.0x | 49% / 7.5x | 54% / 8.7x | 58% / 9.8x | 60% / 10.4x | 62% / 11.0x |
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 | $6.3M | — | $6.3M | 5.1% |
| Year 1 | $6.5M | +$4.3M | $10.8M | 8.7% |
| Year 2 | $6.6M | +$6.5M | $13.1M | 10.6% |
| Year 3 | $6.8M | +$6.5M | $13.3M | 10.8% |
| Year 4 | $7.0M | +$6.5M | $13.5M | 11.0% |
| Year 5 | $7.3M | +$6.5M | $13.8M | 11.1% |
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 | $1.2M | $1.9M | $2.5M | $3.0M |
| Denial Rate Reductio | $1.2M | $1.8M | $2.4M | $2.9M |
| A/R Days Reduction | $751K | $1.1M | $1.5M | $1.8M |
| Clean Claim Rate | $40K | $59K | $79K | $95K |
| Total | $3.2M | $4.9M | $6.5M | $7.8M |
Peer Context — Where This Hospital Sits
Key metrics vs 47 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% | -4.6% | 5.2% | 14.9% | P47 |
| Net-to-Gross | 17.6% | 20.5% | 25.6% | 30.2% | P17 |
| Occupancy | 21.2% | 46.9% | 66.6% | 78.4% | P11 |
| Rev/Bed | $818K | $605K | $1.6M | $1.9M | P30 |
| Exp/Bed | $776K | $656K | $1.3M | $1.7M | P30 |
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.