Taxo Raises $5M to Simplify Healthcare Admin with AI

The Administrative Challenges Faced by Physicians

The extensive paperwork required of physicians was a significant surprise to Dr. Ahmed Kerwan when he began his medical career. He often found himself dedicating a mere three hours to direct patient care, while the remainder of his workday was consumed by administrative tasks, such as processing insurance claims.

AI-Powered Solutions in Healthcare Administration

Numerous startups, potentially numbering in the hundreds, are currently leveraging artificial intelligence (AI) to alleviate the complex administrative burdens within the healthcare system. Companies like Abridge, specializing in note-taking, and Ambience, an AI assistant provider, are actively competing to enhance operational efficiencies.

Kerwan, now an entrepreneur himself, has founded Taxo, a company designed to address these challenges. Taxo provides an application utilized by doctors and other healthcare professionals for tasks including securing prior authorizations from insurers, managing patient intake, and handling medical billing.

Taxo's Differentiating "Reasoning Engine"

According to Kerwan, Taxo distinguishes itself through its AI “reasoning engine.” This feature provides transparent explanations of the decision-making process to users, fostering trust among medical professionals.

The implementation of reasoning models gained prominence in the AI landscape towards the end of the previous year, as these models began openly presenting the logic behind their outputs. At Taxo, this technology minimizes inaccuracies and reportedly achieves a 98% prior authorization approval rate, exceeding the industry average of approximately 80%.

Building a Specialized AI System

Taxo’s “reasoning engine” was developed by integrating a healthcare-specific layer onto existing models, such as those offered by OpenAI and Anthropic. The system is trained on proprietary healthcare data, making it difficult for competitors to replicate quickly.

“Our intention was to avoid being overtaken with each new model release from OpenAI,” Kerwan explained to TechCrunch.

Investor Confidence and Market Traction

The growing trend of reasoning in AI is still in its early stages, gaining momentum with the emergence of the Chinese startup DeepSeek. However, the significant investor interest in Taxo indicates potential for wider adoption of this technique beyond core AI development companies.

Taxo recently secured $5 million in seed funding, led by Y Combinator, General Catalyst, and Character Capital.

Rapid Growth and Customer Base

Established last year and headquartered in San Francisco, Taxo reports achieving $1 million in Annual Recurring Revenue (ARR) just six months after its launch. Currently, the company serves approximately 15 clients, including clinics and government healthcare providers.

Addressing Concerns About AI Transparency

Doctors initially expressed caution regarding the use of ChatGPT due to the lack of clarity surrounding its recommendations and the inability to trace its reasoning, as Kerwan noted in his discussion with TechCrunch. He believes Taxo offers a solution to this issue.

“Users can clearly see the source of the information and the rationale behind its presentation,” he stated.