Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 70% of modeled bridge. Strengths: Revenue per Bed, Occupancy Rate. Risks: Bed Count, Commercial Payer %. Risk-adjusted uplift: $23.8M (vs $34.2M 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 | $13.0M | $13.0M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $12.5M | $357K | $12.9M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $2.0M | $5.9M | $7.9M | $24.9M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $416K | $416K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 38.6% 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 | $3.2M | $6.5M | $9.7M | $13.0M | $13.0M | $13.0M | $13.0M |
| Denial Rate Reduction | $0 | $3.2M | $6.4M | $9.6M | $12.9M | $12.9M | $12.9M | $12.9M |
| A/R Days Reduction | $0 | $2.6M | $5.3M | $7.9M | $7.9M | $7.9M | $7.9M | $7.9M |
| Clean Claim Rate | $0 | $208K | $416K | $416K | $416K | $416K | $416K | $416K |
| Cumulative | $0 | $9.3M | $18.6M | $27.7M | $34.2M | $34.2M | $34.2M | $34.2M |
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 $34.2M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 92% / 26.0x | 96% / 29.3x | 101% / 32.5x | 103% / 34.1x | 104% / 35.8x |
| 9.0x | 87% / 22.8x | 91% / 25.6x | 95% / 28.5x | 97% / 30.0x | 99% / 31.4x |
| 10.0x | 82% / 20.2x | 87% / 22.8x | 91% / 25.4x | 93% / 26.7x | 95% / 28.0x |
| 11.0x | 78% / 18.0x | 83% / 20.4x | 87% / 22.8x | 89% / 23.9x | 91% / 25.1x |
| 12.0x | 75% / 16.3x | 79% / 18.4x | 83% / 20.6x | 85% / 21.7x | 87% / 22.8x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline 66% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 2.2x, adding 6.3 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 | $12.0M | — | $12.0M | 1.9% |
| Year 1 | $12.4M | +$22.8M | $35.2M | 5.4% |
| Year 2 | $12.7M | +$34.2M | $46.9M | 7.2% |
| Year 3 | $13.1M | +$34.2M | $47.3M | 7.3% |
| Year 4 | $13.5M | +$34.2M | $47.7M | 7.3% |
| Year 5 | $13.9M | +$34.2M | $48.1M | 7.4% |
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 | $6.5M | $9.7M | $13.0M | $15.6M |
| Denial Rate Reductio | $6.4M | $9.6M | $12.9M | $15.4M |
| A/R Days Reduction | $4.0M | $5.9M | $7.9M | $9.5M |
| Clean Claim Rate | $208K | $312K | $416K | $499K |
| Total | $17.1M | $25.6M | $34.2M | $41.0M |
Peer Context — Where This Hospital Sits
Key metrics vs 29 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 1.9% | -12.7% | 0.9% | 6.1% | P52 |
| Net-to-Gross | 34.1% | 28.0% | 33.5% | 38.6% | P54 |
| Occupancy | 59.5% | 47.7% | 60.5% | 65.9% | P41 |
| Rev/Bed | $2.7M | $1.1M | $1.5M | $2.4M | P82 |
| Exp/Bed | $2.7M | $1.3M | $1.7M | $2.5M | P79 |
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.