This week, another startup seeking to solve the trillion-dollar problem of healthcare administration raked in millions of dollars.
Palo Alto-based Penguin Ai closed a $29.7 million funding round led by Greycroft. Some of the startup’s other investors include UPMC Enterprises, Snowflake Ventures, Watershed Ventures, Overwater Ventures, Multiball Capital, Canvas Prime and Plug and Play.
The company was founded last year to improve healthcare’s costly, inefficient administration workflows, said founder and CEO Fawad Butt.
The U.S. spends about $1 trillion per year on administrative workflows in healthcare, he noted. A handful of processes including prior authorization, claims processing, medical coding and risk stratification account for the bulk of these costs, he added.
Penguin aims to reduce this burden through its AI-powered agents designed to automate and streamline these workflows.
Many of Penguin’s provider customers are attracted to the startup’s medical coding and revenue cycle management tools, Butt stated.
As for payer customers, he said they appreciate tools that simplify prior authorizations. Penguin’s agents classify requests, match evidence against payers’ guidelines and then generate recommendations for human reviewers.
“That entire process for the human now goes down to one-and-a-half to two minutes versus what it used to take — 25 to 30 minutes. And the accuracy has actually gone up because the machine can see things and remember things that humans can’t,” Butt explained.
He acknowledged that there are a lot of other healthcare-focused AI agents on the market and said that Penguin is unique in the sense that it’s not a point solution. Many other startups only focus on one workflow, such as documentation or coding, Butt noted.
In his eyes, Penguin is building a comprehensive, healthcare-specific AI platform that supports multiple use cases for both payers and providers — all in one place. He said it’s “kind of like trying to build the Epic of the healthcare back office.”
Butt pointed out that he used to be “the biggest buyer in healthcare” — as his previous roles include chief data officer at Optum, chief data and analytics officer at UnitedHealthcare and chief data officer at Kaiser Permanente.
“I’ve bought and built products in this space for a long time. And the challenge that I would see is that nobody was building a platform for healthcare. The people that were building platforms were generic technology companies like Azure and AWS and GCP — they were building platforms for financial services or automotive, but then they would put lipstick on it and say, ‘Oh, you can use it on healthcare too.’ But for me, healthcare is a unique business,” he declared.
When a platform is built for other industries, it will always require extensive customization to meet healthcare’s unique needs when it comes to data management, compliance and privacy, Butt said.
In a crowded market of point solutions, Penguin is wagering that a comprehensive platform will help distinguish it from the noise.
Photo: Weiquan Lin, Getty Images
