Penguin Ai Raises $29.7M to Automate Healthcare's $1T Admin Workflows

Penguin Ai Raises $29.7M to Fix Healthcare's Back Office at Scale

Palo Alto-based Penguin Ai closed a $29.7 million round led by Greycroft, with participation from UPMC Enterprises, Snowflake Ventures, Watershed Ventures, Overwater Ventures, Multiball Capital, Canvas Prime and Plug and Play.

The company, founded in 2024 by CEO Fawad Butt, targets healthcare's bloated administrative overhead. He points to an estimated $1 trillion spent each year on processes like prior authorization, claims, medical coding and risk stratification.

What Penguin Ai Does

Penguin builds a healthcare-specific platform of AI agents that automate key administrative workflows for both providers and payers. Providers are leaning into its medical coding and revenue cycle tools, while payers focus on prior authorization.

For prior auth, the agents classify requests, align evidence to payer guidelines and generate recommendations for human reviewers. Butt said this cuts review time from 25-30 minutes to about 1.5-2 minutes, with higher accuracy.

Why This Matters for Management

• Financial impact: Shorter cycle times, fewer denials and faster cash accelerate revenue and reduce rework.
• Capacity gains: Automating routine reviews frees staff for high-judgment cases without expanding headcount.
• Quality and compliance: Consistent application of payer rules improves audit readiness and reduces variance.
• Data advantage: Structured evidence trails and feedback loops enable continuous refinement of policies and prompts.

Platform vs. Point Solutions

According to Butt, most vendors handle one slice (documentation, coding, or prior auth). Penguin's bet is a single platform spanning multiple use cases for payers and providers - "the Epic of the healthcare back office."

His prior roles include chief data leadership at Optum, UnitedHealthcare and Kaiser Permanente. He argues generic cloud platforms often need heavy customization for healthcare's data models, PHI privacy, and compliance - which slows time-to-value and inflates total cost.

What to Ask Before You Pilot

• Business case: Which workflows first? Baseline your current handle time, denial rate, and rework. Define target KPIs and the payback period.
• Human-in-the-loop: Where do reviewers intervene? What approval thresholds and audit trails exist?
• Accuracy and drift: How is performance measured by use case? What monitoring and retraining cadence is in place?
• Integration: EHRs (e.g., Epic, Oracle Cerner), payer portals, EDI/X12, document ingestion and guidelines libraries. What's native vs. custom?
• Security and compliance: PHI handling, data residency, access controls, logging, and certifications. Who can see what, and when?
• Change management: Workflow design, role changes, coder/clinician training and escalation paths.
• Total cost: Pricing model, implementation fees, configuration effort, and internal resource requirements.
• Governance: Who signs off on outputs? How are payer-specific rules maintained and versioned?

Near-Term Impact Areas

Prior authorization is under pressure from regulators, interoperability rules and provider burnout. Expect faster throughput and cleaner documentation to become standard. See the CMS final rule summary on prior authorization and interoperability for context here.

For providers, the upside is reduced coding errors, smoother revenue cycle and fewer avoidable denials. For payers, it's lower admin cost per case, clearer clinical rationale, and better member experience.

Execution Playbook for Leaders

• Start narrow: Choose one high-volume workflow (e.g., specific prior auth category or coding specialty) with clear metrics.
• Instrument end-to-end: Track handle time, queue length, approval rate, denial reasons and rework by agent vs. human.
• Calibrate thresholds: Set confidence cutoffs for auto-approve, route-to-human and auto-deny; review weekly until stable.
• Scale by template: Once a workflow meets targets for four consecutive weeks, clone the playbook to the next use case.

The Bottom Line

Healthcare administration is a cost sink with clear, repeatable patterns. A healthcare-native platform that compresses decision time and standardizes evidence review will win budget - if it proves measurable gains, integrates cleanly and holds up under audit.

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