Healthcare’s Cost Crisis Isn’t About Cost

InnovationHealthcare’s Cost Crisis Isn’t About CostByFawad Butt,Forbes Councils Member.for Forbes Technology CouncilCOUNCIL POSTExpertise from Forbes Councils members, operated under license. Opinions expressed are those of the author. | Membership (fee-based)Jun 02, 2026, 09:00am EDTFawad is CEO and co-founder of Penguin Ai, a healthcare AI startup that sells to payers, providers and revenue cycle management companies. getty ​At one point in my career, I had a fair amount of oversight of U.S. healthcare claims. Billions of transactions a year moved through systems at Kaiser Permanente, UnitedHealthcare and Optum. What always alarmed me was how much of the work existed only because the systems underneath couldn’t talk to each other. Thousands of people spent their days stitching together information that lived in five different places, interpreting rules that changed depending on which system they were in.The U.S. spends roughly $1 trillion a year on healthcare administration. We tend to treat it as a spending problem. We think it’s something to solve with better tools or faster workflows. But after two decades managing the data infrastructure underneath those workflows, I see it differently. The operating model itself produces the spending, and it always has.The Model Was Built This Way Claims move across multiple disconnected systems before anyone can act on them. Prior authorizations make the problem worse, since they require manual handoffs between clinical and administrative teams who often work from different information. Underneath all of it, coders spend hours reconciling documentation that was captured in one format but needed in another. Each of these workflows was designed independently, and each one assumes a person will connect what the systems can't. I managed teams that did this kind of work. You'd automate one handoff, and two more would surface downstream. You'd consolidate a data feed and discover three other feeds still running on l...