Procode AI Launches with $4M for Surgical RCM
A new startup, Procode AI, has launched from stealth with $4M in seed funding to bring AI-powered RCM to private practice surgeons. The company also acquired billing firm The Auctus Group to target the $110B surgical RCM market with AI-driven denial management and payment acceleration.
Procode AI's founding team includes a surgeon, Kameron Rezzadeh, M.D., alongside co-founders Jeff Cripe and James Baez-Silva, grounding the company's mission in direct clinical experience. The $4 million seed round was led by Story Ventures, with participation from CHAP Health Ventures, Progression Fund, and Dmitry Shevelenko, the Chief Business Officer of Perplexity. The immediate acquisition of The Auctus Group, a leading biller for plastic surgeons and a top-three biller in dermatology, gives Procode AI an established base of over 300 providers. This move bypasses the slow process of selling software to individual clinics by acquiring a major distribution channel and its valuable workflow data. John Gwin, the CEO of The Auctus Group, will remain to lead the RCM business. Procode AI's core technology features a "Coding Copilot" that translates surgical operative reports into billing codes, aiming to make medical coders 90% faster and more accurate. An AI-driven "AR and Denials Management Engine" further tackles accounts receivable, payment posting, and charge posting to speed up collections. The integration of Procode's AI has already added $2 million in annual recurring revenue for The Auctus Group within five months. This growth is attributed to reducing coding-related denials, shortening the accounts receivable cycle, and improving reimbursement rates for surgeons. This new venture targets significant pain points in surgical RCM, where practices face challenges with complex coding, pre-authorizations, and high-value claims that are prone to denial. Reports indicate that nearly 30% of surgical claims are initially rejected, often due to documentation or coding mistakes. The global market for Ambulatory Surgery Center (ASC) revenue cycle management was estimated at $15.36 billion in 2023 and is projected to grow significantly. This growth is driven by an increasing volume of outpatient procedures and the need for greater operational efficiency to combat rising labor costs and complex payer rules.
