Death by 1000 authorizations

The American healthcare system is a $4.9 trillion paradox. It devours nearly one-fifth of GDP, 50% higher than comparable countries, yet delivers worse outcomes across the board. Americans live shorter lives, suffer more chronic illnesses, and pay dearly for the privilege.

Despite a ballooning workforce, productivity is falling. Healthcare accounted for nearly a quarter of all new US jobs in 2023, but those workers aren’t providing more care. They’re drowning in administration.

Two programs capture the dysfunction: prior authorization and the 340B drug pricing system. Both were built to control costs. Today, they are bloated, inefficient, and deeply misaligned with patient needs.

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Prior authorization: bureaucracy over care

What began as a cost-control tool has become a black hole. In 2023, Medicare Advantage plans processed nearly 50 million prior authorization requests. The majority were approved. Of those denied, over 80 percent were later overturned, suggesting many should have been approved in the first place. Doctors now spend an average of 12 hours a week wrangling approvals. Nine in ten physicians say authorization delays harm patient outcomes, including cases of hospitalization or death. Many patients simply give up on treatment.

The burden is crushing, and for what? Delayed care, wasted hours, and mounting frustration on all sides.

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340B: good intentions gone awry

The 340B program was designed to help safety-net hospitals access discounted drugs. It has since morphed into a $66 billion maze of compliance and complexity.

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Hospitals must meticulously track every drug across tangled networks of pharmacies, insurers, and patients. This administrative complexity not only consumes significant resources but also poses substantial risks. 

Minor errors in compliance can lead to financial penalties and significant losses, forcing organizations to dedicate entire teams to managing these complex tasks.

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AI: The right tool at the right time

Prior authorization and 340B workflows are repetitive, rules-driven, and paper-heavy. In other words, they are precisely the kinds of problems AI can solve by streamlining them with remarkable precision. Thankfully, we don’t have to wait: companies like Latent Health and Plenful are already making a huge difference for health systems. Recent advances in voice models have further unlocked this automation potential, enabling AI systems to call insurance companies directly for prior authorizations. 

Early adopters are reclaiming thousands of staff hours each month. Some AI tools now achieve first-pass approval rates of over 95%. When deployed thoughtfully, automation doesn’t just cut costs, it frees up doctors to do what they trained for: treat patients.

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Founders can rebuild this system

The opportunity for founders is clear. The workflows are painful, the costs massive, and the technology finally ready. Better still, the incentives are aligning. Regulators are enforcing faster timelines. Providers are eager for change. Even insurers want to cut the red tape.

Winning companies will embed into clinical systems, automate compliance, and show ROI from day one. This is more than just an opportunity to reduce paperwork, it’s a chance to rebuild trust in the system. If this mission speaks to you, we’d love to talk.

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