Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 72% of modeled bridge. Strengths: Revenue per Bed, Occupancy Rate. Risk-adjusted uplift: $3.2M (vs $4.5M 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 | $1.7M | $1.7M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $1.6M | $47K | $1.7M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $262K | $778K | $1.0M | $3.3M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $55K | $55K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 53.7% 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 | $427K | $855K | $1.3M | $1.7M | $1.7M | $1.7M | $1.7M |
| Denial Rate Reduction | $0 | $423K | $846K | $1.3M | $1.7M | $1.7M | $1.7M | $1.7M |
| A/R Days Reduction | $0 | $347K | $693K | $1.0M | $1.0M | $1.0M | $1.0M | $1.0M |
| Clean Claim Rate | $0 | $27K | $55K | $55K | $55K | $55K | $55K | $55K |
| Cumulative | $0 | $1.2M | $2.4M | $3.6M | $4.5M | $4.5M | $4.5M | $4.5M |
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 $4.5M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 56% / 9.2x | 60% / 10.6x | 64% / 12.0x | 66% / 12.7x | 68% / 13.3x |
| 9.0x | 51% / 7.8x | 55% / 9.0x | 59% / 10.3x | 61% / 10.9x | 63% / 11.5x |
| 10.0x | 46% / 6.7x | 51% / 7.8x | 55% / 8.9x | 57% / 9.5x | 59% / 10.0x |
| 11.0x | 42% / 5.8x | 47% / 6.8x | 51% / 7.8x | 53% / 8.3x | 55% / 8.8x |
| 12.0x | 38% / 5.0x | 43% / 6.0x | 47% / 6.9x | 49% / 7.3x | 51% / 7.8x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 16% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 5.5x, adding 3.0 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 | $8.3M | — | $8.3M | 9.7% |
| Year 1 | $8.5M | +$3.0M | $11.5M | 13.5% |
| Year 2 | $8.8M | +$4.5M | $13.3M | 15.6% |
| Year 3 | $9.1M | +$4.5M | $13.6M | 15.9% |
| Year 4 | $9.3M | +$4.5M | $13.8M | 16.2% |
| Year 5 | $9.6M | +$4.5M | $14.1M | 16.5% |
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 | $855K | $1.3M | $1.7M | $2.1M |
| Denial Rate Reductio | $846K | $1.3M | $1.7M | $2.0M |
| A/R Days Reduction | $520K | $780K | $1.0M | $1.2M |
| Clean Claim Rate | $27K | $41K | $55K | $66K |
| Total | $2.2M | $3.4M | $4.5M | $5.4M |
Peer Context — Where This Hospital Sits
Key metrics vs 31 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 9.7% | -12.5% | 1.3% | 10.3% | P68 |
| Net-to-Gross | 49.9% | 28.0% | 43.6% | 53.7% | P65 |
| Occupancy | 57.5% | 25.3% | 36.7% | 56.8% | P74 |
| Rev/Bed | $3.4M | $579K | $1.1M | $1.9M | P94 |
| Exp/Bed | $3.1M | $735K | $1.0M | $1.8M | P94 |
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.