Bridge Realization Estimate
ML model predicts what fraction of the bridge is achievable (accuracy: 60%, n=5,839)
Expected realization: 71% of modeled bridge. Strengths: Occupancy Rate, Revenue per Bed. Risk-adjusted uplift: $21.0M (vs $29.4M 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 | $11.2M | $11.2M | $0 | 12mo |
| Denial Rate Reduction | 12.0% DEFAULT | 6.5% BENCHMARK | $10.7M | $307K | $11.0M | $0 | 12mo |
| A/R Days Reduction | 52.00 DEFAULT | 38.00 BENCHMARK | $1.7M | $5.1M | $6.8M | $21.4M | 9mo |
| Clean Claim Rate | 88.0% DEFAULT | 96.0% BENCHMARK | $0 | $357K | $357K | $0 | 6mo |
| Net Collection Rate | 93.5% DEFAULT | 38.2% 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 | $2.8M | $5.6M | $8.4M | $11.2M | $11.2M | $11.2M | $11.2M |
| Denial Rate Reduction | $0 | $2.8M | $5.5M | $8.3M | $11.0M | $11.0M | $11.0M | $11.0M |
| A/R Days Reduction | $0 | $2.3M | $4.5M | $6.8M | $6.8M | $6.8M | $6.8M | $6.8M |
| Clean Claim Rate | $0 | $179K | $357K | $357K | $357K | $357K | $357K | $357K |
| Cumulative | $0 | $8.0M | $16.0M | $23.8M | $29.4M | $29.4M | $29.4M | $29.4M |
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 $29.4M is added at exit.
| Entry \ Exit | 9.0x | 10.0x | 11.0x | 11.5x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 49% / 7.4x | 54% / 8.6x | 58% / 9.8x | 60% / 10.4x | 61% / 11.0x |
| 9.0x | 44% / 6.2x | 49% / 7.3x | 53% / 8.3x | 55% / 8.9x | 57% / 9.4x |
| 10.0x | 40% / 5.3x | 44% / 6.2x | 48% / 7.2x | 50% / 7.7x | 52% / 8.1x |
| 11.0x | 35% / 4.5x | 40% / 5.4x | 44% / 6.2x | 46% / 6.7x | 48% / 7.1x |
| 12.0x | 31% / 3.9x | 36% / 4.7x | 40% / 5.5x | 42% / 5.8x | 44% / 6.2x |
Covenant Headroom (at 10x Entry, 6.5x Max Leverage)
Pro forma EBITDA can decline -0% before the 6.5x covenant trips. RCM uplift reduces leverage from 8.5x to 6.5x, adding 2.0 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 | $97.9M | — | $97.9M | 17.6% |
| Year 1 | $100.9M | +$19.6M | $120.4M | 21.6% |
| Year 2 | $103.9M | +$29.4M | $133.3M | 23.9% |
| Year 3 | $107.0M | +$29.4M | $136.4M | 24.4% |
| Year 4 | $110.2M | +$29.4M | $139.6M | 25.0% |
| Year 5 | $113.5M | +$29.4M | $142.9M | 25.6% |
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 | $5.6M | $8.4M | $11.2M | $13.4M |
| Denial Rate Reductio | $5.5M | $8.3M | $11.0M | $13.3M |
| A/R Days Reduction | $3.4M | $5.1M | $6.8M | $8.1M |
| Clean Claim Rate | $179K | $268K | $357K | $429K |
| Total | $14.7M | $22.0M | $29.4M | $35.2M |
Peer Context — Where This Hospital Sits
Key metrics vs 34 size-matched peers. Low percentile on margin/efficiency metrics = more room for improvement = larger bridge opportunity.
| Metric | Hospital | P25 | P50 | P75 | Percentile |
|---|---|---|---|---|---|
| Op Margin | 17.6% | -12.4% | -1.1% | 5.6% | P94 |
| Net-to-Gross | 31.4% | 28.3% | 33.9% | 38.2% | P42 |
| Occupancy | 64.1% | 47.3% | 59.3% | 64.5% | P71 |
| Rev/Bed | $2.9M | $1.1M | $1.8M | $2.6M | P85 |
| Exp/Bed | $2.4M | $1.2M | $1.7M | $2.6M | P68 |
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.