Another Healthcare AI Startup Gets $29.7M to "Fix" What's Unfixable - September 11, 2025

Here's the thing about that magical $1 trillion administrative burden everyone loves to quote: most of it exists on purpose. Insurance companies WANT prior authorizations to be slow and painful. That's literally their business model - delay, deny, hope people give up or die first. Care denials increased an average of 20.2% between 2022 and 2023.

Fawad Butt worked as Chief Data Officer at UnitedHealthcare, Kaiser Permanente, and Optum. You know what those companies have in common? They're some of the biggest architects of the administrative nightmare he's now promising to solve. It's like the arsonist starting a fire department.

Healthcare AI funding has nearly tripled since 2022, according to Silicon Valley Bank data.

Let me explain how this really works: UnitedHealthcare spends millions building systems specifically designed to make claims processing difficult. They hire teams of people whose entire job is finding reasons to deny legitimate claims. Practices complete 39 prior authorization requests per physician, per week, and denial rates average 17.3%. Now Butt wants to sell AI to make that process more "efficient"? Efficient at what - finding more creative ways to fuck over patients?

The "Strategic Investors" Aren't Buying The Solution

UPMC Enterprises and Horizon Mutual Holdings aren't investing because they want to fix healthcare. They're investing because they want to own the next generation of tools to make their denial processes look more legitimate. When an AI denies your claim instead of a human, it feels more objective, right? Wrong - it's the same bias, just coded into an algorithm.

"Security and fairness" in healthcare AI is corporate speak for "we want plausible deniability when our AI denies cancer treatment." I've seen these "fair" healthcare algorithms - they're trained on historical data that's already biased as hell, then they perpetuate that bias at scale. Over 80% of prior auth appeals succeed, proving most denials are bullshit to begin with.

Platform Bullshit Bingo

Every healthcare AI startup claims they've built a "complete platform purpose-built for healthcare." You know what's actually purpose-built for healthcare? COBOL systems from 1987 that somehow still process most insurance claims because healthcare IT moves at the speed of regulatory approval.

Their list of automated processes reads like a greatest hits of healthcare bureaucracy:

• Medical coding automation (already exists, still sucks)
• Prior authorization processing (designed to be slow on purpose)
• Claims adjudication (optimized for denials, not approvals)
• Appeals management (aka "how to make patients give up")

Here's what actually happens when you try to "streamline" these processes: the insurance companies just add more steps. You automate their denial process? Great, now they require three additional forms. It's not a technical problem - it's a business model problem.

The Healthcare IT Reality Check

I've worked in healthcare IT. You know what healthcare organizations actually need? Systems that talk to each other without requiring a PhD in HL7 FHIR standards. They need EHRs that don't crash when you look at them wrong. They need software that takes less than 47 clicks to order a goddamn aspirin. Nearly half of healthcare providers face one-way sharing issues due to interoperability problems.

But those aren't sexy AI problems, so nobody funds them. Instead we get another startup promising to revolutionize prior authorizations while the current system can't even send a fax reliably in 2025.

VCs keep throwing money at healthcare AI because they don't understand that healthcare's problems aren't technical - they're political and regulatory. You can't code your way out of a system designed to extract maximum profit from human suffering.

"Enterprise-Grade" = "Expensive and Complicated"

"Governance, bias correction, and compliance capabilities" is VC speak for "this will cost $2 million to implement and require 6 months of security audits." Healthcare organizations are already drowning in vendor management. The last thing they need is another AI platform that promises to integrate with everything but actually works with nothing.

Here's what "AI native from the ground up" means in healthcare: you have to rewrite every integration, retrain every user, and somehow convince Epic or Cerner to play nice with your shiny new AI. Good luck with that. Epic charges $500K just to look at your integration requirements.

The Customer "Traction" Reality

"Secured partnerships with leading health plans" means they signed pilot agreements that will never go anywhere. I've seen this movie before. Health plan says "we're very interested in your AI solution," does a 6-month pilot, finds 47 reasons why it won't work in production, then goes back to their COBOL system from 1987.

Healthcare procurement cycles are measured in geological time. You know how long it takes to get a new software vendor approved at a major health system? 18-24 months on average. That includes security reviews, compliance audits, legal reviews, and approximately 847 committee meetings where someone always says "but what about HIPAA?"

The Competition Isn't Other Startups

The real competition isn't other healthcare AI companies - it's the status quo. Healthcare organizations have billions invested in legacy systems that barely work but are "good enough" to pass audits. When you're a CTO at a health system, you don't get fired for sticking with the terrible system everyone else uses. You do get fired for implementing something new that breaks and takes down the EHR during flu season.

"Administrative automation remains underserved" isn't a market opportunity - it's a sign that the market doesn't actually want to be served. If there was real demand for fixing prior authorizations, UnitedHealthcare would have automated them years ago. They don't want them fixed because slow authorizations save them money.

The Regulatory Reality Check

Here's what Butt's "unique credibility" means: he knows exactly which regulations will kill this startup. HIPAA compliance alone will eat half their runway. FDA oversight of AI medical devices will eat the other half. By the time they navigate the regulatory maze, their technology will be obsolete and their competitors will be funded by insurance companies with infinite money.

Healthcare doesn't move fast and break things. Healthcare moves slowly and audits everything twice. That's not a bug - it's a feature designed to prevent liability lawsuits when someone's grandma dies because the AI misread her chart.

This funding round is $29.7 million to learn what everyone else already knows: healthcare wants to buy solutions to problems they don't actually want solved.