British doctor Ahmed Kerwan was shocked by the paperwork burden he faced when he began his medical practice, spending only three hours a day caring for patients and the rest on administrative tasks. This experience inspired him to found Taxo, a healthtech startup that aims to revolutionize healthcare administration with its AI-powered "reasoning engine."

Taxo is not alone in its mission to streamline healthcare administration. Dozens of startups are already using AI to tackle the complex administrative tasks that plague the industry. However, Taxo's approach sets it apart from the competition. Its AI "reasoning engine" provides transparent explanations for its decisions, helping to build trust with doctors and reducing errors.

The "reasoning engine" is built on top of existing models like OpenAI's and Anthropic's, with a healthcare-specific layer that makes it difficult for others to replicate. This unique approach has led to impressive results, with prior authorization approval rates reaching 98%, compared to an industry average of around 80%. Kerwan attributes this success to Taxo's ability to reduce hallucinations and provide clear explanations for its decisions.

The "reasoning trend" in AI is still in its early stages, but Taxo's recent $5 million seed round, led by Y Combinator, General Catalyst, and Character Capital, suggests that investors are eager to support this innovative approach. Founded just last year, Taxo has already passed $1 million in annual recurring revenue (ARR) and serves around 15 customers, including clinics and government providers.

Kerwan believes that Taxo's transparent AI approach can address the concerns of doctors who were initially cautious about using ChatGPT due to its lack of explainability. "You can see exactly where we got the information and why it's being given," he explained. This level of transparency is crucial in healthcare, where decisions can have life-or-death consequences.

The success of Taxo and its "reasoning engine" could have far-reaching implications for the healthcare industry. By reducing administrative burdens and increasing the efficiency of healthcare providers, Taxo's technology could lead to better patient outcomes and improved healthcare systems. As the company continues to grow and expand its customer base, it will be interesting to see the impact it has on the industry as a whole.

With its innovative approach and impressive results, Taxo is well-positioned to make a significant difference in healthcare administration. As the industry continues to evolve and adopt new technologies, startups like Taxo are leading the charge towards a more efficient, effective, and patient-centric healthcare system.