Rohan Kulkarni — Executive Research Leader, Healthcare and Life Sciences, HFS Research[00:21]
Welcome to HFS Unfiltered. My name is Rohan Kulkarni, and I’m joined this morning by Titus Leo, who leads the healthcare provider business at Sagility. Welcome, Titus.
Titus Leo — Senior Vice President, Sagility Provider Solutions[00:31]
Thank you so much for having me.
Rohan Kulkarni — Executive Research Leader, Healthcare and Life Sciences, HFS Research[00:33]
HFS recently published the HFS Horizons Healthcare and Life Sciences Provider Services 2026 study, which evaluated 50 service providers for their ability to impact the cost of care, the experience of care, health outcomes and health equity — the quadruple aim of care.
This study reflects an inflection point in global healthcare: the reduction of public health funding worldwide, particularly in the US on the heels of the One Big Beautiful Bill, the Medicare sequestration that’s going on, and the ACA subsidy expiration. All of which will corrode all four elements of the quadruple aim of care. Both healthcare enterprises and consumers are already beginning to hurt.
Yet care delivery enterprises — including health systems, hospitals, ASCs and independent physician practices — will be obliged to care for their communities, which are both aging with comorbidities, and where the cost of care is rising at a rate of two to three times that of nominal inflation.
In the context of these unprecedented headwinds, healthcare provider enterprises and service providers must really begin to craft a new roadmap, given that the old roadmap is definitely destined for failure across the quadruple aim dimensions of finance, experience, health, as well as equity or market access.
So coming out of the study, HFS submits three roadmap ideas that bubbled up as a function of the insights we were able to capture.
Number one: health systems must really escape the value-based care theatre with direct-to-employer capitation. Fee-for-service is unsustainable, and value-based care has long been dead from our standpoint. Health systems and healthcare providers must find new predictable revenue streams with higher margin pathways. That can be realized with offerings to address the self-insured employers. And this approach will help providers reduce their dependence on commercial insurance and government programs like Medicare and Medicaid, which will only become even more administratively burdensome — which may be hard to patch at this point — even as reimbursement rates begin to shrink further. So directly addressing self-insured employers will be a win-win, for predictable, higher margin revenues for healthcare providers.
Number two: providers must stop dancing in the shadows and aggressively exploit the discounted self-pay options. Look, every failed prior authorization is an opportunity for providers to lean into offering self-pay options that improve cash flow at a higher margin with essentially no administrative burden. The math is quite compelling, given 90% of all consumers who are enrolled in high deductible health plans pay 100% of their non-preventive care out of pocket, since they never really meet their annual deductibles. Understand this in the context of the fact that 33% of US lives — or more than 100 million lives — are in HDHPs, with an average single deductible of close to $2,000. So those have giant financial implications.
And lastly, AI must inspire a proactive care delivery paradigm. Waiting for me to get sick is too late and too expensive. I think the math out there suggests that every year of delay in the onset of diabetes translates into about $16,000 in annual savings, $3,000 for hypertension, and the list continues to go on. Health systems must embrace a connected ecosystem of a variety of technologies and devices on the market, at scale and increasingly AI enabled, to be truly intelligent and capable of preventing disease, delaying its progression and better managing it. And yes, of course, the payment models will definitely need to change.
Those are some of the insights that we captured out of our study. So Titus, for you — please reflect on the study from a Sagility standpoint, given the fact that you were recognized as a market leader there. What stood out, and what are the top three takeaways from it for you?
Titus Leo — Senior Vice President, Sagility Provider Solutions[04:38]
Thanks, Rohan. The study was very insightful. It actually validated many of our perspectives, while also highlighting several emerging trends that warrant close attention.
As you mentioned, providers continue to face significant reimbursement pressures, including an increase in denials, a reduction in reimbursement rates, along with persistent cost inflation. So it’s really compressing their operating margins. And in this environment, global delivery models, combined with aggressive adoption of technology and AI-driven efficiencies, will be very critical to help providers improve their financial performance and remain competitive. And I think your study really captured these dynamics exceptionally well, from the Sagility point of view.
It reinforces another important trend which you also outlined. While the demand for revenue cycle services will continue to grow, the commercial models are increasingly shifting from traditional FTE-based towards outcome-based. And we are seeing this in all our conversations. These trends are playing out in our discussions, both with existing clients and prospective customers.
Organizations are increasingly seeking partners who can deliver measurable business outcomes rather than just capacity, and that has been our focus at Sagility as well. A lot of our existing contracts are tied to outcomes, and we always like to have skin in the game. That has been our approach, and we know increasingly that’s going to be a requirement, as opposed to just something that we would like to do.
The third thing was the trend of self-insured employers, which you called out in your report, increasingly pursuing direct contracting arrangements with providers. That was particularly interesting and a bit intriguing. That’s not something I’d really thought about, and that was something I think we need to pay more attention to. So as this model of direct contracting starts to gain traction, service providers like us will have to evolve our offerings to support these providers in these kinds of initiatives.
I do think that direct contracting has the potential to reduce many of the administrative complexities that currently exist in the traditional payer-provider relationship. I’m sure there will continue to be some opportunities to provide operational, financial and analytical support. And as you called out, this is a wide space in your report — a wide space where service providers are not focused much.
So I’m pretty sure, as these models start to mature, capabilities like contract performance analytics, increased patient engagement, care coordination, revenue and cost optimization — all these will become very important areas where experienced RCM providers like Sagility can add some meaningful value. So I think these are some of the things that I took away from the report, and we’ll definitely be looking at that very aggressively in the months and years ahead, to focus in these areas.
Rohan Kulkarni — Executive Research Leader, Healthcare and Life Sciences, HFS Research[07:40]
Very cool. And just along those lines, Titus, what’s next for the Sagility healthcare provider business? What do you think will differentiate Sagility, and where do you see you will have the most impact going forward and will be very visible?
Titus Leo — Senior Vice President, Sagility Provider Solutions[07:58]
Yeah, we’ll definitely build on our strengths. We’ll continue to expand and strengthen our clinical denials capability, which remains a key differentiator for Sagility. We have more than a decade of deep clinical expertise across the provider and payer segments, so we are uniquely positioned to deliver superior outcomes. And then we have developed a suite of AI and GenAI enabled solutions that enhance the accuracy, the efficiency and the effectiveness of our clinical and coding denials management. So we will continue to invest in these capabilities to further improve recovery rates, accelerate resolution of denials, and deliver greater value for our clients. So that’s something we are well on a journey with, and we’ll continue to focus on that.
And then, in line with your observations on the transformative impact of AI on revenue cycle, we have been preparing for this fundamental shift through continued investment in our Synchrony RCM life cycle platform. We are working on orchestrating a network of agentic agents across the revenue cycle continuum, to help drive greater automation, intelligence and operational efficiency. So these capabilities are designed, of course, primarily to improve financial and clinical outcomes, and to enhance the revenue for our clients, but also generate cost savings for our clients. And that’s something we are well on that journey with, and we will be focusing on that in an increased manner. I think your report just added credence to that — that we need to focus on that.
The third area, which I think again differentiates us, and which we will try to build on, is that we have deep patient engagement capabilities — more than 22 years, actually, of experience interacting with patients across the care continuum, both on the payer and provider side. So this strong foundation is something we are going to build on. And what we have done also is again infused AI and GenAI capabilities on our engagement platform, through a combination of in-house innovation and, of course, strategic acquisitions, like we discussed earlier in one of our meetings about the BirchAI acquisition and what it brings to the whole engagement management space.
So we are also piloting AI agents to autonomously manage lower-complexity patient interactions. At this point, the focus is trying to eliminate some of the low-hanging fruit, and then enabling our teams to focus on the higher value engagement. So that’s something we are very consciously working towards, and we feel we will be able to advance that significantly.
So all these advancements, we think, will significantly enhance two key areas that we are focusing on. One is, of course, patient engagement, customer service and contact center capabilities, as well as early-out collections. So these two areas are something we are focusing on, and we are very confident we can deliver better outcomes and improve the patient experience, which is very important, and of course better outcomes and lower cost for our clients.
So these are some of the key focus areas. Of course, like I said, the bread and butter, which is the end-to-end RCM — the entire services — is always a focus, which is going to be significantly enhanced with the AI and GenAI orchestration. But then these two other pockets are something that we are focusing on.
Rohan Kulkarni — Executive Research Leader, Healthcare and Life Sciences, HFS Research[11:10]
Very cool. Yeah, absolutely, Titus. I do think that you are well positioned to bring our services-as-software to life at the intersection of your clinical RCM and agentic AI, especially with Synchrony in play there. So, wonderful conversation. Thank you very much for your insights. Really appreciate it.
Titus Leo — Senior Vice President, Sagility Provider Solutions[11:32]
Thank you very much, Rohan. Great talking to you.
