Healthcare AI startup, SmarterDx, recently closed a whopping $50 million Series B funding round. A significant contribution to the startup’s total funding, which now stands at $71 million. Founded in 2020 by Dr. Michael Gao, New York-based SmarterDx offers clinical review and quality audits for medical claims.
Dr. Gao’s experience as a physician at NewYork-Presbyterian informed the establishment of SmarterDx. Identifying a prevalent challenge across health systems, Dr. Gao highlighted that despite substantial investment in documentation improvement and coding by hospitals, the review process was inefficient and costly. Medical professionals reviewing charts stumbled upon ways to make documentation more accurate, but could only cover a limited spectrum due to the significant labor involved.
The former physician further noted that hospitals incur over $350 billion annually on administrative tasks related to revenue cycles. A significant chunk of this expenditure comes from the manual reconciliation of clinical documentation and coding. Consequently, minor errors or omissions may lead to lost, rejected, or underpaid claims, causing considerable revenue losses or drawn-out correction processes before hospitals receive proper compensation.
Recognizing this issue, Dr. Gao, along with co-founders Dr. Joshua Geleris and Nathan Perilo, developed an AI solution that allows second reviews for all patient charts. This innovative technology has the potential to save hospitals millions in revenue leakage and ensure accurate representation of care quality, according to Dr. Gao.
SmarterDx’s philosophy revolves around the idea that AI solutions should augment professional expertise rather than replacing them. Their solution, which eliminates tedious administrative tasks humans aren’t particularly skilled at, has the potential to empower clinical documentation integrity (CDI) teams.
Targeting large-scale hospitals and health systems, SmarterDx has an intriguing contingency-based business model. The firm is paid a percentage of the cost savings achieved or new revenue generated. That is, hospitals only pay for findings approved by their CDI team, ensuring net new revenue generation from the inception of their partnership with SmarterDx.
With a growing customer base, currently including 15 health system customers, SmarterDx is expanding rapidly in the healthcare sector. The breadth of clinical data ingested and the accuracy of its proprietary clinical AI algorithms makes SmarterDx a unique entity in the industry, Dr. Gao asserted.
For more details on this funding event and what this means for SmarterDx, read the full article here.