REHABILITATION HOSPITAL OF BRISTOL
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: 75% of modeled bridge. Strengths: Occupancy Rate, Bed Count. Risks: Revenue per Bed, Net-to-Gross Ratio. Risk-adjusted uplift: $0.5M (vs $0.6M 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 | $235K | $235K | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $226K | $8K | $234K | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $36K | $107K | $143K | $451K | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $10K | $10K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 46.8% 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 | $59K | $117K | $176K | $235K | $235K | $235K | $235K |
| Denial Rate Reduction | $0 | $59K | $117K | $176K | $234K | $234K | $234K | $234K |
| A/R Days Reduction | $0 | $48K | $95K | $143K | $143K | $143K | $143K | $143K |
| Clean Claim Rate | $0 | $5K | $10K | $10K | $10K | $10K | $10K | $10K |
| Cumulative | $0 | $170K | $340K | $505K | $622K | $622K | $622K | $622K |
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 $622K is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 51% / 7.8x | 55% / 9.1x | 59% / 10.3x | 61% / 10.9x | 63% / 11.5x |
| 9.0x | 46% / 6.6x | 50% / 7.7x | 54% / 8.8x | 56% / 9.3x | 58% / 9.9x |
| 10.0x | 41% / 5.6x | 46% / 6.6x | 50% / 7.6x | 52% / 8.1x | 54% / 8.6x |
| 11.0x | 37% / 4.8x | 42% / 5.7x | 46% / 6.6x | 48% / 7.0x | 50% / 7.5x |
| 12.0x | 33% / 4.1x | 38% / 5.0x | 42% / 5.8x | 44% / 6.2x | 46% / 6.6x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 4% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 6.2x, adding 2.2 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 | $1.7M | — | $1.7M | 14.8% |
| Year 1 | $1.8M | +$415K | $2.2M | 18.8% |
| Year 2 | $1.9M | +$622K | $2.5M | 21.0% |
| Year 3 | $1.9M | +$622K | $2.5M | 21.5% |
| Year 4 | $2.0M | +$622K | $2.6M | 22.0% |
| Year 5 | $2.0M | +$622K | $2.6M | 22.5% |
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 | $117K | $176K | $235K | $282K |
| Denial Rate Reductio | $117K | $176K | $234K | $281K |
| A/R Days Reduction | $71K | $107K | $143K | $172K |
| Clean Claim Rate | $5K | $7K | $10K | $12K |
| Total | $311K | $466K | $622K | $746K |
Peer Context — Where This Hospital Sits
Key metrics vs 27 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 14.8% | -10.8% | -0.7% | 12.0% | P78 |
| Net-to-Gross | 62.0% | 26.3% | 31.6% | 46.8% | P85 |
| Occupancy | 90.2% | 39.7% | 49.7% | 71.4% | P93 |
| Rev/Bed | $470K | $528K | $1.2M | $2.0M | P15 |
| Exp/Bed | $400K | $464K | $1.4M | $1.9M | P15 |
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.