As artificial intelligence in revenue cycle management proliferates, a new startup, Procode AI, has launched from stealth a unique approach to AI-powered RCM for complex procedures and surgical cases.
The company has adopted an AI roll-up strategy, acquiring established surgical billing businesses to incorporate AI into their workflows, while also strategically focusing on building an intelligent billing infrastructure for practitioners.
Procode AI co-founders Jeff Cripe, a high-tech startup entrepreneur, Kameron Rezadeh, MD, a board-certified plastic and reconstructive surgeon, and James Baez-Silva, an engineer, found that the RCM market was fragmented and did not meet the needs of practitioners facing increased administrative burden and uncertainty around reimbursement. Many smaller RCM companies outside of the largest companies struggle to scale and lack the resources to deploy the latest AI technologies.
“Medical billing outsourcing is a huge $15 billion industry, growing at about 13% per year. When you consider R1 and its peers, the largest companies in the space generate about 10% of its revenue, and the remaining 90% is generated by about 5,000 companies. Of these, 85% have annual revenues of less than $5 million, meaning that most of the market’s revenue is generated by thousands of very small, mom-and-pop businesses that clearly have difficulty generating more than $5 million in annual revenue.” He said this in an interview with Healthcare.
RCM is a labor-intensive business, and many companies face hurdles in increasing their talent pool.
“We thought that if we built AI products around medical coding, AR[accounts receivable]and repudiation management, we could chip away at the talent inefficiency of these companies,” said Kreip, a former Birchbox team member and founder of Cargo, a startup that turned ride-sharing vehicles into mobile vending machines.
However, he noted that Procode AI’s strategy is not to sell AI technology to RCM companies, but to acquire AI technology within those companies and vertically integrate it to increase efficiency.
“Our strategy is to acquire these companies and give them the tools to increase their efficiency and productivity by three to five times while retaining all of their employees,” he said.
According to the company, Procode AI has built automation to grow benefits and reimbursement outcomes for its customers with an AI coding co-pilot tool for surgeries, an AR/denial management engine that leverages AI for AR decision-making, claim posting, and other AR processes, and a provider app that puts real-time financial and billing data at surgeons’ fingertips.
According to the company, AI CoPilot allows medical programmers to code surgical reports 90% faster and with much higher accuracy by converting them into billing and diagnosis codes.
Last year, Procode AI raised $4 million in a seed round led by Story Ventures with participation from CHAP Health Ventures, Progression Fund, and Perplexity Chief Business Officer Dmitry Shevelenko. The startup acquired Auctus Group, a plastic and reconstructive surgery and dermatology RCM company serving more than 300 plastic surgery and dermatology providers.
The startup employs a “build then buy” strategy rather than the typical “buy then build” rollup strategy. Cripe said the goal is to create “the first, best, and largest AI-powered revenue cycle management company for private practices.”
“Auctus Group is a missionary, technology-driven team who wants to build the next generation of billers with us,” he said.
The company is already generating $2 million in annual recurring revenue five months after the acquisition, and Cripe said it has proven benefits for providers, including fewer coding-related rejections, fewer AR days, and maximizing reimbursement.
“We are using this first company we acquired as a concept, and then we want to acquire more companies in this space and transform them in the same way that we did with this same company, so that ultimately we will build a large surgical-focused, AI-powered RCM company that is AI-native from the ground up and will rival the large companies in this space in the near future,” he said.
Procode AI also wants to provide better billing and RCM services to doctors and practitioners. Rezzadeh, one of the co-founders of Procode AI, is a plastic surgeon who was frustrated with outsourced billing/RCM services that often cost him hundreds of thousands of dollars annually for poor quality results. Antiquated spreadsheet-based claims tracking, claim denials for past-due claims, and frequent CPT coding errors have been accepted by surgeons as the industry standard when dealing with insurance companies through third-party billers, Cripe said in a LinkedIn post.
Procode’s technology ensures that providers are fairly reimbursed for procedures performed and are reimbursed more quickly. The company uses its provider app to give surgeons easy access to billing and financial data.
Procode’s AI coding copilot transforms operational reports into billing and diagnostic codes, significantly reducing manual coding time and downstream rejections, executives said.
