In the aftermath of UnitedHealthcare CEO Brian Thompson’s fatal shooting on December 4, public anger toward health insurers has intensified, particularly around the industry’s increasing use of algorithms to deny patient claims. The incident has sparked a broader reckoning about how healthcare is paid for in the United States, as claim denial rates have risen for over a decade, costing hospitals hundreds of billions of dollars annually.
A new wave of AI-powered startups is emerging to address this crisis, attracting significant investor interest. These companies are leveraging artificial intelligence and machine learning to automate and improve healthcare’s notoriously complex billing process, from prior authorization to claims adjudication.
Ten notable startups are leading this transformation:
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Alaffia Health (founded 2020, $17.6M raised) uses generative AI to help insurers automate claims processing by reviewing medical records and policy documents, with a $10M Series A from FirstMark Capital in April.
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Anomaly (founded 2020, $30M raised) employs machine learning to parse insurer policies and historical claims data, helping clinicians predict and prevent denials.
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Anterior (founded 2023, $23M raised) automates prior authorizations for health insurers, backed by NEA, Sequoia Capital, and Microsoft AI head Mustafa Suleyman with a $20M Series A in June.
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Claimable (founded 2023) launched in October to help patients create appeal letters for denied claims, analyzing clinical research and insurer policies to generate personalized letters for $40.
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Cofactor AI (founded 2023, $4M raised) helps hospitals appeal claims denials by analyzing medical records, policies, and claims data.
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Cohere Health (founded 2019, $106M raised) contracts with major health plans like Humana to automate prior authorizations and reduce unnecessary denials.
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Humata Health (founded 2023, $25M raised) automates document collection for prior authorization requests and flags likely denials for hospitals.
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Goodbill (founded 2021, $5.3M raised) works with patients and employers to identify billing errors and overcharges.
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Guardian AI (founded 2024) provides hospitals with tools to analyze reimbursement patterns and automate handling of unpaid claims.
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Thoughtful AI (founded 2020, $40M raised) offers AI agents that help clinics process claims, check coverage, and record payments.
These startups represent a growing investment trend as venture capitalists rush to back companies addressing healthcare’s payment crisis through artificial intelligence automation.
Key Quotes
These parasites had it coming.
This line was reportedly found in a note possessed by Luigi Mangione, the suspect arrested for the UnitedHealthcare CEO shooting. It reflects the intense public hostility toward health insurers that has emerged following the incident and highlights the depth of frustration with insurance claim denial practices.
deny, defend, and depose
These words were reportedly found on shell casings at the crime scene, mirroring a phrase commonly used by insurance critics to describe tactics health plans use to avoid paying claims. This detail underscores how claim denial practices have become a focal point of public anger toward the health insurance industry.
Our Take
The emergence of these AI startups reveals a fascinating paradox in healthcare: artificial intelligence is being deployed both as a tool for insurers to deny claims more efficiently and as a solution to fight back against those denials. This creates a potential AI arms race in healthcare billing, where both sides leverage increasingly sophisticated technology. The significant venture capital investment—over $250 million across these ten startups—demonstrates confidence that AI can solve healthcare’s payment crisis, but it also raises questions about whether automation will truly benefit patients or simply shift power dynamics. The real test will be whether these AI solutions increase transparency and fairness in healthcare payments, or merely add another layer of algorithmic complexity to an already opaque system. The public backlash following the UnitedHealthcare incident suggests patients are demanding fundamental change, not just more efficient processing of the status quo.
Why This Matters
This wave of AI healthcare billing startups represents a critical inflection point for the American healthcare system. The timing is particularly significant given the public outcry following the UnitedHealthcare CEO shooting, which exposed deep frustration with claim denials and insurance practices. The convergence of social pressure and technological capability could fundamentally reshape how healthcare payments are processed.
These AI solutions address a massive economic problem—denied or delayed payments cost hospitals hundreds of billions of dollars annually—while potentially improving patient access to care. The involvement of major investors like Sequoia Capital, NEA, and Microsoft AI head Mustafa Suleyman signals that the AI industry views healthcare payments as a major market opportunity.
However, this development also raises important questions about AI’s role in healthcare decision-making. While automation could reduce administrative burden and improve accuracy, it also introduces concerns about algorithmic bias, transparency, and accountability. The fact that health insurers have already faced criticism for using algorithms to deny claims suggests the need for careful oversight as AI becomes more deeply embedded in healthcare payment systems. This trend will likely accelerate regulatory scrutiny of AI in healthcare.
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Source: https://www.businessinsider.com/startups-using-ai-to-disrupt-healthcare-insurance-payment-2024-12