Sagility reinvents to focus on health tech services

HGS Healthcare has been rebranded Sagility in a private equity-backed move to bring a tech-and-services-led challenge to healthcare incumbents. Baring Private Equity Asia acquired HGS Healthcare in August 2021 for approximately $1.2 billion and rebranded it to Sagility in September 2022. Sagility is focusing on strengthening its healthcare solutions portfolio, targeting s $1 billion in revenue by 2026.

In this highlight, we outline why healthcare services firms should beware of increased competitiveness from Sagility in this dynamic and uber-competitive healthcare market.

A healthcare-only enterprise allows Sagility to go deep into healthcare

HGS healthcare, before rebranding as Sagility, had 20-plus years of domain experience. Deep domain expertise in healthcare is central to its plan to grow by developing technological solutions. Its target market includes payers, providers, life sciences, and labs. In the past, HGS Healthcare had to compete for investment as part of the diversified HGS enterprise; however, in its current structure, it can focus on deploying its investments in healthcare. It is targeting key acquisitions to strengthen its offerings and capabilities. The company’s growth plans include expanding its client base, increasing its focus on mid-market clients, and adding new services.

Differentiating in a marketplace of experienced competition will require some doing

Payer and provider markets have been shifting steadily to create new business models, requiring a new level of vertical integration. Sagility needs a CAGR of nearly 15% to reach a revenue of $1 billion by 2026. Competing with experienced providers in the payer and provider space requires an X factor. HFS covered payer and provider markets and conducted a detailed analysis of the market and different service providers. We found that healthcare challenges attract participants across multiple heritages (IT, BPO, consulting, and healthcare focus) that will inspire the most effective solutions. The healthcare industry is competitive, and the chances of having similar offerings between peers are high. But a customer-centric approach focusing on outcomes (instead of just service delivery) can help differentiate entrants. With many firms focusing on profit, addressing health outcomes will address the needs of health consumers (members, patients, beneficiaries, etc.) and help gain market share.

Tech enablement earns Sagility the right to address more complex opportunities

A healthcare tech firm can form a synergistic relationship with Sagility’s services, providing the energy to target complementary enterprises. The Baring umbrella offers the advantage of a technology-focused services player in the healthcare space as part of its portfolio of companies, allowing Sagility to offer a tech-plus-services package in areas with a natural alignment of the two companies offerings. Sagility is developing proprietary solutions with a blend of technology and services to address common pain points. A tech-plus-services approach can create a robust partner ecosystem to deliver superior business outcomes for clients and increase opportunities for Sagility to expand across healthcare services.

The Bottom Line: With a new growth strategy, Sagility is aggressively developing capabilities and solutions in the healthcare space using its two decades of learning. Healthcare providers should keep watch on the upgraded version of HGS Healthcare as Sagility has deep expertise in BPS and is adding technology services to its bag of tricks.

The traditional boundaries of the healthcare ecosystem are changing rapidly as vertical integration creates new value (CVS Health and Aetna, Humana, and Kindred) and new opportunities (claims processing was so yesterday). Service providers must keep finding ways to differentiate themselves in this dynamic and uber-competitive world.