Penguin Ai, a startup that has constructed an AI-based platform designed to streamline administrative inefficiencies in healthcare, has pulled in $29.7 million in enterprise funding to pay for product growth and to scale up deployments with payers and suppliers. Fawad Butt, founder and CEO of Penguin Ai and former chief information officer of UnitedHealthcare, Kaiser Permanente and Optum, lately spoke with Healthcare Innovation in regards to the transition happening to the brand new world of agentic AI.
The Palo Alto, Calif.-based firm says its flagship platform combines task-specific small language fashions (SLMs), digital staff and brokers, with a healthcare-specific AI platform to streamline processes equivalent to prior authorizations, claims processing, medical information summarization, and appeals administration.
Healthcare Innovation: May you discuss a bit bit about your background as a chief information officer and the way it helped you kind the thought for this firm?
Butt: Earlier than beginning Penguin, I spent a bit little bit of time within the VC world at Canvas Ventures, being an working companion, and earlier than that I used to be the chief information officer at Optum, liable for all information and analytics capabilities throughout all three traces of enterprise at Optum. Earlier than that, I used to be on the insurance coverage aspect of the home at United Healthcare because the chief information and analytics officer. Previous to that, I used to be in the identical function at Kaiser Permanente. So when you have got that distinctive vantage level, you see patterns. One of many patterns I noticed was that the information could be very disorganized. That’s why they created roles for for individuals like me.
The information is disorganized as a result of over the course of a number of improvements, we purchased best-of-breed options, and abruptly we have got a spaghetti mess of 10,000 techniques attempting to push information forwards and backwards, in order that was all the time a difficult factor.
Additionally, once I was in these positions, I may purchase any platform within the business, as a result of we had the budgets to do it. I may go to AWS, Google Cloud or Azure, however the issue was that these are horizontal, generic platforms. They did not perceive healthcare. In the event you purchased that know-how, you needed to assemble a group and work out how one can use these generic instruments and apply them towards healthcare issues. So to me, the thesis was all the time that healthcare deserves its personal platforms, proper? And why aren’t there extra of these? And if I ever had the chance, I used to be going to construct one.
HCI: Isn’t it additionally a difficulty that historically the payers had the claims information and the suppliers had the EHR information, and so they did not actually wish to share?
Butt: The truth is that for our well being system to function, that information does get shared. A supplier has to offer medical information when you’re submitting a declare or a previous authorization, in order that information does get shared. The foundational argument that I’ve heard all through my profession is that the incentives are misaligned. I agree with that, however the actuality is that the incentives are misaligned, and we share the information nonetheless.
The larger problem I see is that numerous these corporations have grown via acquisitions — United Healthcare, for instance. Each time you buy a plan, you get 13 core techniques that include it. In the event you try this 20 instances, abruptly you have got spaghetti techniques doing too many issues.
The truth is that there hasn’t been a know-how evolution, till lately, that would take that spaghetti mess and in reasonably priced approach give you a brand new structure that might be deployed. However now the world goes agentic for probably the most half, which implies the codecs do not matter anymore. Brokers can just about perceive and devour each structured and unstructured information and context round that.
So the subsequent model of healthcare is agentic healthcare. If we imagine that premise, and you are a CIO or a CEO at a hospital system or a payer, you would possibly say, I’ve to construct 1,000 brokers, proper? You want a platform to have the ability to try this on. You would use the Azure platform or AWS and attempt to educate it healthcare. Or you possibly can come to Penguin and discuss to us, as a result of we constructed the parts which can be required for an enterprise to undertake a platform. We’ve got the connectors to your information, whether or not it is in Epic or Cerner or athena or Oracle or Knowledge Bricks or Snowflake — you identify it. We’ve got that in-built. We’ve got a privateness engine in-built that de-identifies that data. We’ve got a bias mitigation and scoring algorithm that checks to see when you’re introducing bias into your fashions. We constructed our personal small language fashions for prior auth, danger adjustment, and claims adjudication, after which we offer you our brokers out of the field. That is what a platform is meant to do. It’s supposed to present you what you want so you may get to ROI in 90 to 120 days.
HCI: So are you envisioning each the well being techniques and payers as potential clients?
Butt: 100%. As a result of, to me, it is a false dichotomy in some ways. Issues begin on the payer aspect and finish on the supplier aspect, or begin on the supplier aspect and finish on the payer aspect. They simply name them various things, proper? One could be referred to as declare scrubbing and one could be referred to as claims adjudication, however it’s basically a really related processes. So why not construct it as soon as, after which let’s carry the information and the intelligence collectively in a single place, so it is not payer towards supplier, it’s payer and supplier.
HCI: I used to be speaking to a well being system CIO who stated they have been beginning to construct brokers in home, and the payers are constructing their brokers. And it is nearly like it’ll turn into this battle between the 2 to see whose are higher. And he or she stated that agent conflict just isn’t the place they wish to be.
Butt: No, however that conflict has began. The agent wars are right here, proper? It’s not this futuristic factor that is going to occur. It is occurring at the moment. I sat with the CEO of one of many largest regional well being plans within the nation. He stated what they’re seeing is that, in some methods, the suppliers have adopted brokers lots faster than the payer aspect, as a result of the payers’ processes are extra advanced. In a single state of affairs, he stated, a small community of suppliers that used to do 5% appeals on denials is now doing 100% appeals on each denial the well being plan is sending them. He believes the supplier group has an agent on their aspect, and the well being plan has eight individuals on its aspect. So how are they going to win that?
HCI: Nicely, as a part of your pitch to those execs, have they got to ditch numerous this funding they’ve in all these costly legacy instruments that they’ve already made a guess on?
Butt: No, you probably have a beginning place that claims, let’s name that sunk value and begin afresh, you have not been in healthcare lengthy sufficient, proper? That is simply not how it’ll work. The funding by way of know-how could be legacy, however by way of data, it’s gold. The entire enterprise’ processes are captured in information all throughout these enterprises. So in case you are envisioning an agentic world, then you do not have a look at it as outdated know-how or new know-how. You have a look at it as helpful information or not helpful information, proper? And I can guarantee you that there’s some very helpful information in these legacy techniques that’s going to counterpoint the intelligence. In the event you’re constructing small language fashions or refining massive language fashions, that data goes to be important. We have been listening to that information is the brand new oil for a very long time, however the sincere fact is that now could be the time the place, when you can construct the suitable refinery, you possibly can flip that oil into gas in your group.
HCI: Does generative AI have potential to alleviate numerous the issues that individuals describe about information requirements or semantic interoperability?
Butt: I believe it does. It is already enjoying a significant function. It was once that the healthcare information world operated in constructions or in information fashions. So I’ve a knowledge mannequin and you’ve got a knowledge mannequin. If I must devour your information or share my information with you, our information fashions need to be aligned by constructing a bridge within the center which says your x means my y. So that you spent numerous time and power constructing these bridges as a result of that requires material specialists to weigh in, and people are exhausting to seek out and costly to retain. However now as a result of we’re not attempting to normalize information earlier than we will apply intelligence to it, we will devour that data in each codecs and be capable of analyze it in very related methods and derive insights in very related methods, in order that step that used to take 18 to 24 months of simply aligning the information…… I am not going to say ETL [extract, transform, and load] is lifeless, however it’s much less related within the agentic world.
HCI: UPMC Enterprises is one in all your buyers. That looks like a corporation that might be an apparent potential buyer.
Butt: We hope so. We can’t touch upon that. They have been a unbelievable companion for us. They have been one of many early ones to to understand what it’s that we have been doing, and so they’ve been supportive persistently all through the method. I might say in our earliest days, the establishment that acknowledged what we have been doing was UPMC.
HCI: Is a part of what buyers the group you’ve been capable of construct by way of execs with numerous expertise in healthcare?
Butt: Sure, three of the technical leaders — head of AI, head of supply, and head of engineering — are ex-Optum individuals. Lots of the group that now we have both labored at Kaiser, United, Optum, CVS and others on the technical aspect. Then now we have our chief technique officer, Mark Caron, who was the CIO at three completely different Blues plans and a CTO at Catholic Well being Initiatives, in addition to the CIO of the Collaborative Care Division at Optum.
And Missy Krasner, who’s been an advisor for us from the start. She’s been at Amazon, Google Well being, and Redesign Well being. I believe that reveals within the completeness of the imaginative and prescient and and it reveals within the understanding of the nuance on governance and safety and privateness that’s specific to healthcare.
HCI: Are there some issues on the coverage and regulatory aspect, or involving market pressures, which can be providing you with tailwinds to get extra engagement?
Butt: I believe there are two huge tailwinds. One is that payers have been decimated over the course of the final 18 months. The Medicare Benefit enterprise that was once extremely worthwhile has turned and their medical loss ratios have gone via the roof. So there’s large stress on them to cut back prices. And the associated fee that they’ll management just isn’t the MLR, it is the working value of working the enterprise.
Then CMS has some laws round interoperability and particularly round prior authorization that individuals are attempting to recalibrate round. With an agentic world changing into actuality, lots of people are selecting brokers to do this automation vs. one other software that they used to do. So we’re seeing an amazing quantity of demand and various engagements on that use case on the payer aspect. Threat adjustment is one other use case on the payer aspect that’s fairly sturdy for us. Claims is growing as one other space of of demand. On the supplier aspect, I might say it is round income cycle administration — the claims scrubbing, the extraction of medical codes. Medical coding itself is a giant use case for us. After which appeals is the opposite one. We’ll be launching some further capabilities that we’re piloting round sufferers and suppliers that shall be coming down quickly.
HCI: Do some agentic effectivity positive aspects to well being techniques or payers come from lowering administrative worker head counts? Or are they seen as instruments for these workers to make use of?
Butt: I do not see any alternative of head depend anytime quickly, frankly, and it is as a result of the system is capacity-constrained proper now. The nurses or medical doctors or admin staffers are being requested to do increasingly. An instance is prior authorizations. One of many huge payers instructed us their pharmacists used to need to evaluation 40 circumstances a day for prior authorization. Then that went as much as 70 circumstances a day. Now they’re asking their pharmacists to do 100-plus case critiques a day. And guess what’s occurring? They’re burning out. They’re making errors. They’re quitting and leaving the sector. I’ve a private story round this, as a result of my spouse was once a previous authorization pharmacist, and I noticed her go from working eight hours a day to 14 hours a day attempting to make quota. So I believe it is a capability subject. It’s going to simply relieve the individuals who have the accountability to do that work to concentrate on crucial a part of the work and work on the high of their license.
