Tandem, a three-year-old startup automating medication approvals, reached a $1 billion valuation in January 2026 after raising funds from Thrive Capital, General Catalyst, and Bain Capital Ventures.
The New York-based company joined at least 16 U.S. health tech firms that crossed the billion-dollar mark in 2025, more than double the number from 2024. AI-focused health companies captured 54% of digital health investment in 2025, up from 37% in 2024, according to industry data.
Tandem’s platform handles the full medication access process, from insurance verification to prior authorization submissions and appeals. The system integrates directly with electronic health records and works across all drugs, insurers, and pharmacies. It also identifies financial assistance programs and routes prescriptions based on cost and patient preference.
The company addresses a documented problem: physician practices spend an average of 14 hours weekly on prior authorizations. Tandem’s automation could cut that time by 80 to 90 percent, potentially saving 11 to 12 hours per practice each week.
Founder Sahir Jaggi, 29, previously worked as a product leader at Oscar Health for six years before starting Tandem in 2023. Pear VC provided seed funding that year. Jaggi made Forbes’ 30 Under 30 Healthcare list in 2024.
The broader market for AI in healthcare administration is projected to grow from $2.43 billion in 2024 to $5.74 billion by 2029, an 18.7% annual growth rate. Administrative costs represent 25% of total U.S. healthcare spending, or roughly $1.3 trillion of the $5.3 trillion spent in 2024. Three out of four health plans already use AI for prior authorization approvals, and 67% expect to reevaluate vendor contracts by 2026.
But the technology faces mounting scrutiny. The American Medical Association reported in February 2026 that 61% of physicians believe AI is increasing prior authorization denials and causing avoidable patient harm. A 2024 Senate committee report accused some AI tools of producing denial rates 16 times higher than typical rates.
ECRI, a patient safety organization, named misuse of AI chatbots in healthcare as the top health technology hazard for 2026. The group warned that chatbots can generate responses that sound authoritative but may be inaccurate or misleading, potentially leading to patient harm.
Prior authorization appeals have an 82% overturn rate, suggesting significant problems with initial denials. The high reversal rate indicates either overly restrictive automated decisions or errors in the AI evaluation process.
Tandem’s investor list includes eight institutional backers. The company supports thousands of patients weekly and has built integrations that allow providers to submit authorization requests without leaving their workflow systems.
Healthcare administrative waste remains a persistent issue. The medication access process involves multiple steps: verifying insurance benefits, checking formulary coverage, generating prior authorization documentation, tracking approval status, and coordinating with pharmacies. Each step traditionally required manual work by clinic staff.
The company’s technology analyzes formularies, generates authorization requests, manages appeals, and identifies copay assistance programs automatically. It also selects pharmacies based on network status and patient cost.