I’ve known Fawad Butt for years, from his time as Chief Data Officer at Kaiser Permanente, United Healthcare and Optum. After a successful career in all of these C-suite roles, he then landed at Canvas Ventures as an Operating Partner, the same VC firm that I also had the pleasure of working with. Our paths crossed once again at Redesign Health, where he became one of our Executive Board Advisors. Over those four years, we both saw the transformative potential of generative AI, and when the technology reached a point where it could truly tackle healthcare’s complex administrative problems, Fawad knew it was time to put all of his past experience to work as one of the country’s largest buyers of technology in healthcare. This is what led to the launch of Penguin Ai. Given our past collaboration at Redesign, and my experience incubating and seeding companies from 0-10, I was excited to help him bring this company to market.
I caught up with Fawad as Penguin Ai came out of stealth mode at the HLTH conference this week.
Missy: There’s an explosion of AI companies across industries, and some are starting to focus on healthcare. Why did you decide to jump into this space?
Fawad: Across my career, I’ve managed 70% of U.S. healthcare data—through roles at Kaiser Permanente, United Healthcare, and Optum. As a buyer, I spent hundreds of millions on platforms like GCP, Snowflake, and Databricks, and every time I was frustrated. These companies lacked a deep understanding of the healthcare industry. They offered generic platforms that weren’t built for our needs, forcing us to customize and inform them how to operate in healthcare. That frustration, combined with the massive inefficiencies in healthcare, is why I knew there was an opportunity to create something purpose-built for the industry.
Missy: What’s the problem you’re trying to solve?
Fawad: The administrative workflows in healthcare are where we’re focusing. There are three major areas of opportunity in healthcare: 1). drug discovery, 2). clinical improvements (telehealth, digital therapeutics, etc.), and 3). administrative workflows. Despite the tens of billions invested in the first two, the administrative side has been neglected, even though it accounts for 70% of the costs, which translates to about $1 trillion annually. There are several key processes—like prior authorizations, claims, risk adjustment, and fraud detection—that drive these costs. These aren’t just numbers on a spreadsheet; they lead to real human suffering as inefficiencies delay care and overburden providers.
Missy: So, what is Penguin Ai?
Fawad: Penguin Ai is a full-service healthcare intelligence platform built to tackle these administrative inefficiencies. We automate complex tasks like prior authorizations, claims processing, and risk adjustment—all areas that contribute to the $1 trillion problem. What sets us apart is that we use healthcare-specific language models. Our models are pre-trained on healthcare data, which means they can streamline workflows, improve accuracy, and reduce costs from day one. On top of that, we offer Digital Workers, AI-powered applications that handle these tasks autonomously, freeing up staff to focus on more critical work. Unlike many point solutions that tackle only one problem, Penguin Ai provides an integrated platform capable of scaling with the organization’s needs. Compliance and governance are baked into everything we do, ensuring that we meet healthcare regulations like HIPAA and avoid data bias.
Missy: Who are you selling to?
Fawad: Our primary customers are Payers and Providers. We’re working with health insurance companies, healthcare systems, hospitals, and other large entities that face significant administrative burdens. These organizations need solutions that streamline processes like prior authorizations, claims adjudication, and risk adjustment. Our platform is designed to reduce costs, improve accuracy, and modernize back-office operations by offering pre-trained AI models for healthcare-specific tasks.
Missy: What makes your approach different?
Fawad: Most of the current solutions use general-purpose AI models, like OpenAI or LLaMA, which are designed to solve problems across all industries. These are what I call “God Models.” While they’re powerful, they’re not optimized for healthcare. At Penguin Ai, we believe in Small Language Models (SLMs) that are task-specific and healthcare-trained. Here’s why they’re better:
- Fewer hallucinations: SLMs are more focused and reliable.
- Faster and cheaper to run: These models are lean, designed for specific tasks.
- More accurate: By mimicking the expertise of specialists, they deliver precise results.
In essence, SLMs act like healthcare experts, built to solve the specific challenges of this industry.
Missy: Why do buyers need this solution now?
Fawad: Healthcare organizations are under enormous pressure to cut costs, improve efficiency, and comply with ever-changing regulations. Here’s why Penguin Ai is essential right now:
- Rising administrative costs: The U.S. healthcare system spends over $1 trillion annually on administrative tasks. Many of these are manual, inefficient, and prone to errors. Penguin Ai automates these processes, cutting costs and minimizing errors.
- Regulatory pressures: Compliance is more critical than ever. Our platform has robust governance and compliance tools, ensuring data integrity and adherence to regulations.
- Improved patient outcomes: By automating back-office tasks, we accelerate care delivery, which directly improves patient outcomes.
- Economic pressures on payers: Insurers are facing squeezed margins due to rising medical costs. By using AI to optimize processes, payers can cut costs by up to 25% on the administrative side.
Missy: How can we accelerate the AI journey for payers and providers?
Fawad: We must address the gorilla in the room—governance, legal, and compliance. Healthcare won’t move forward without solving these challenges. There’s confusion around what governance should look like, how to involve compliance teams, and which datasets are AI-ready. Penguin Ai provides the key tooling to tackle these issues, like PII and PHI redaction, bias detection, and aligning with industry frameworks like the Coalition for Health AI (CHAI). Without solving these foundational issues, organizations can’t make meaningful progress in AI.
Missy: How is Penguin Ai different from point solutions?
Fawad: Point solutions often target just one administrative workflow, but we’re offering a comprehensive platform built for healthcare. Our platform integrates multiple functions—prior authorizations, claims, eligibility checks, and risk adjustment—to address the whole ecosystem. With custom healthcare-specific models and a focus on compliance and governance, Penguin Ai is built to scale and evolve with healthcare organizations. We’re also faster: we can deliver a proof of concept in less than 90 days, which is much quicker than traditional solutions. By offering a platform that addresses multiple administrative challenges, we give organizations a more efficient and scalable solution than single-task AI tools.
Missy: Fawad, it’s been an absolute pleasure helping you bring this vision to market given all your years on the buyer side. So what’s next, do you have a team and a platform ready to sell now?
Fawad: Thank you, it’s been an incredible journey to bring this vision to life. And yes, Penguin Ai is fully open for business—we’re ready to engage with customers right now. We’ve built a strong team, including some of the best minds in healthcare AI, and our platform is up and running. We’re actively working with payers, payviders, and health systems to help them solve some of the most complex administrative workflows, from prior authorizations to claims processing.
If you're looking for solutions that can dramatically reduce inefficiencies and streamline your healthcare operations, now is the perfect time to reach out to us. Our platform is designed to go live in just 90 days, delivering fast, tangible results. We’re excited to talk with anyone ready to embrace AI-driven transformation in healthcare. Please contact us for a demo today.