Dec 7, 2023 · 30m · american-optimist
Ep 73: Lessons from Palantir & How Candid Health Is Fixing the $280B Healthcare Billing Fiasco · Joe Lonsdale
0:00 / 0:00
▶ Watch on YouTube →
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of American Optimist, host Joe Lonsdale interviews Candid Health co-founders Nick Perry and Doug Proctor to explore how lessons from Palantir and modern AI infrastructure are being deployed to automate the $280 billion U.S. healthcare billing industry.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Joe holds 25% of the talking time here. How this is scored →
Joe as informed peer 5.0 Guest teaching 4.7 Guest disagreement 0.3 Joe pushing back 0.6
speaking balance: gold is Joe, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 4:05 Doug gentle critique of Palantir's broad focus
Doug contrasts Candid's targeted mission against Palantir's tendency to attempt 'everything for everyone, always,' which Joe jokingly acknowledges.
Hardest push from Joe ▶ 17:16 Joe probing the difference between heuristics and AIJoe challenges Nick and Doug on whether their rules engine is actually AI or simply hardcoded heuristics, prompting Doug to clarify their recommendation engine architecture.
Biggest teaching moment ▶ 5:53 Nick explaining how payer standardization failedNick educates Joe on why healthcare claims fail despite universal forms, showing how individual payers mandate conflicting metadata fields in the exact same boxes.
Joe holds their own ▶ 29:06 Joe illustrating the mechanics of value-based careJoe steps in to clearly contextualize how value-based care bundles holistic procedures over time, explaining how tech infrastructure eliminates perverse volume incentives.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Joe as informed peer | Guest teaching | Guest disagreement | Joe pushing back | Why |
|---|---|---|---|---|---|---|
| Guest Introductions & Backgrounds at Palantir | 5 | 2 | 1 | 1 | Joe establishes shared history as a Palantir co-founder, prompting Doug to reflect on Palantir lessons. Doug notes that Palantir tried to solve everything for everyone, which Joe cheekily accepts as reflecting his own 21-year-old personality. | |
| Deconstructing the $280 Billion Healthcare Billing Fiasco | 4 | 6 | 1 | 1 | Joe asks foundational questions about the $280B healthcare billing market and why standardization failed. Nick explains that while the claim form was standardized, individual field requirements remain wildly fragmented across over a thousand payers. | |
| Closing the Feedback Loop & Licensing Rules Back to Payers | 5 | 5 | 0 | 0 | Doug details how legacy 30-year-old payer adjudication systems cause systematic claim bugs. Nick outlines how Candid pre-adjudicates claims to close the feedback loop and potentially license their rules engine directly back to payers. | |
| Applying AI & Modern Data Ontologies to Healthcare Claims | 6 | 5 | 0 | 1 | Joe connects Candid's approach to Palantir's early philosophy of human augmentation versus modern AI ontologies. Doug and Nick explain how they build structured data models and root-cause claim denials to feed automated prediction engines. | |
| Building Real AI Infrastructure & Modular API Strategy | 5 | 4 | 0 | 0 | Nick emphasizes that AI is only the tip of the iceberg and requires substantial underlying data infrastructure. Doug discusses Candid's modular API roadmap, enabling hospital systems to utilize specific modules like claim routing. | |
| Team Composition & The Power of High First-Pass Resolution | 4 | 5 | 0 | 1 | Joe inquires about team composition and clarifies technical terms like ERA. Doug explains how their ML roadmap evolves from automated denial prediction to recommending new rules for human editors. | |
| Navigating Adaptive Adversaries & Uncovering Payer System Bugs | 5 | 6 | 1 | 1 | Nick describes payers as adaptive adversaries and recounts discovering a major payer's system-wide bug before anyone else in the country. The group jokes about renaming Revenue Cycle Management to simply Revenue Management. | |
| Scaling Leadership, Team Culture & Key Operating Metrics | 5 | 4 | 0 | 0 | Doug details their hiring philosophy of putting overqualified early-career talent into high-challenge environments. Nick highlights their core operational metric: touchless claim rate rather than standard industry first-pass resolution. | |
| Value-Based Care & The Optimistic Future of U.S. Healthcare | 6 | 5 | 0 | 0 | Joe asks Nick to explain value-based care versus fee-for-service models, synthesizing how backend administrative infrastructure makes holistic care financially viable. They conclude on an optimistic view of healthcare startups. |
Statements from this episode (21)
Lonsdale: US Medical Insurance Billing Is a $280 Billion Annual Market
“And it sounds like medical insurance billing is a pretty small problem, but I guess it's about two hundred eighty billion dollars a year.”
Perry: Over 1,000 US Health Insurers Have Different Claim Rules
“And all of, all those thousand, over a thousand insurance companies literally have different rules for how to submit the claim.”
Perry: US Healthcare Standardized Forms but Not Field Requirements
“They didn't, they standardized the form. But they did not standardize the field, what you put in each field in the form.”
Perry: Medical Billing Remains Manual Because Industry Lacks Good Software
“Why this is so expensive, so manual is because there's no good software today. People have to do this by memory or they're like, Creating their own rules or they're like doing things. They're hand jamming. There's a lot of manual work to actually try to do all…”
Perry: Cluster Denied Claims to Extract Rules Instead of Calling Payers
“Cluster your claims. Find which ones were denied for the same reason. Make one call. Don't call for all thousand of the ones were denied. That's smart. Take that rule, put it in the rules engine, and don't make that mistake anymore.”
Perry: Major US Health Insurer Manually Processes One in Eight Claims
“Yeah, actually, I know there's a large payer, ah, that I know manually processes one in eight claims because their adjudication system doesn't do it. It's a large payer. We'd all know the name of it.”
Perry: Candid Health Can Sell Its Pre-Adjudication Engine Back to Payers
“I 100% think we could because if you think about what we're doing, we're pre-adjudicating the claim. We know how the payer's, we know what the payer wants on their claims. We know, like, what their rules are for how to submit a claim. And there's a bunch of no…”
Perry: Most Surprise Medical Bills Stem From Provider Submission Errors
“In most of those cases, the provider submitted the claim wrong.”
Perry: Healthcare Billing Costs Could Be Cut in Half via Software
“Easily. At the end of the day, there's no software. They're throwing bodies at the problem. The last innovative thing we did in this industry was offshore it.”
Proctor: Legacy Billing Incumbents Rely on Offshore Labor Over Codified Rules
“They have this, like, very messy data model, very messy systems, and they're just throwing stuff into things like a JiraQ for offshore to fix, whereas we're actually going through with a fine-tooth comb, root-causing claims, and then codifying the rules engine…”
Proctor: Candid Health Controls the Full End-to-End Billing Loop
“What is really powerful about where we are today is we have this incredibly rich data set That we essentially have the end-to-end operational loop that we control. So we control the preparation, we control the submission, we control the entire cycle of how you…”
Perry: Effective AI in Healthcare Billing Requires Massive Underlying Infrastructure
“The actual useful application of machine learning is the tip of a very large iceberg, and we're building the infrastructure under the ocean right now of, like, the infrastructure for how do you do all that automation correctly and the machine learning correctl…”
Perry: Candid Health Submits Up to 99% of Claims Correctly First Time
“The rules engine, I think is probably the brain of what we're doing is probably the most valuable part of what we're building, and it's how we can submit, in some cases, 99% of claims correctly the first time.”
Proctor: AI Turns Billing Analysts From Authors Into Editors
“Phase two is essentially instead of having to have a really, like, Analytically oriented person digging through claims data and finding out the rules. It's actually like, how do you suggest the rules? Okay. These are the patterns of issues we're seeing. Consid…”
Proctor: Many Healthcare Providers See 20% to 40% of Claims Denied
“And in many cases, these are customers who have like, 2030, 40% of their claims were being denied. For reasons they didn't have visibility into.”
Perry: Candid Was First to Catch a Major Health Payer's Bug
“We were the first company in the country to identify that this very large payer had put a bug into their rule system. And they fixed the bug based on, like, us pointing out, hey, you guys, something seems to have happened here.”
Perry: Candid Health Grew Revenue 6x in 2023 to 100 Customers
“We grew six X this year and the team is around 50 people and have about a hundred customers now.”
Perry: Most Medical Billing Companies Ignore Touchless Claim Rates and Automation
“Most billing companies do not do that number because they don't care about automation. They care about first pass resolution, but we wanted first pass resolution where no manual steps were taken.”
Lonsdale: Fixing US Healthcare Billing Would Add 1–2 Points to GDP
“I mean, it's literally adding a point or two to GDP if you get this right and fix, fix this, which is like, it's a kind of hard to, it's a pretty amazing if a company could do that.”
Proctor: Insurance Billing Complexity Is a Major Barrier for Healthcare Startups
“It's very expensive to start a healthcare company, and one of the reasons it's expensive is, like, if you want to collect insurance, you need to know how to bill insurance, and that's expensive. And so, it's like, it's a barrier for people who want to deliver …”
Perry: Value-Based Care Struggles Under Legacy Fee-for-Service Claims Rails
“That actually opened up a can of worms on the move to value base of how do you actually pay for that? You actually, they, the way they implemented that in many cases is actually they like put that on the claims rails. So they actually submit these claims and i…”