How SmarterDx Became a Generational Healthcare AI Company

Physician co-founders with technical depth and a shared vision

Mike Gao, MD, didn’t set out to become a healthcare entrepreneur—he imagined a future practicing medicine, but looking back, the signs were always there. As an undergrad, Mike started a design firm. As a medical student, Mike launched two nonprofits including a platform to connect uninsured patients to care. For Mike, starting a company was less about being an ‘entrepreneur’ and more about using his mathematical way of thinking to solve complex problems at scale.

It was at New York-Presbyterian (NYP) where Mike met Dr. Josh Geleris, a fellow resident with a rare combination of medical training and deep software and AI expertise. The two immediately bonded over a shared frustration—physicians were increasingly expected to manage heavy patient loads while ensuring complete and accurate clinical documentation for every patient they saw. Mike and Josh quickly realized that complete and accurate documentation wasn’t just an administrative burden—it had a significant financial impact on the health system.

After Mike completed his residency, he became Medical Director for Transformation at NewYork-Presbyterian, where he led the health system’s applied AI initiatives. Recognizing the significant gap in hospital revenue capture, Mike leveraged his clinical training and AI expertise to build a proof-of-concept model that identified millions in missed revenue for NYP. This early success catalyzed the formation of the founding team, with Mike bringing Josh on board to spearhead product — resulting in a far more sophisticated AI solution that became SmarterDx.

A legacy process ripe for AI disruption

The problem Mike and Josh encountered at NYP wasn’t unique, it was (and still is) a universal pain point for health systems nationwide. Every year, hospitals leave millions of dollars on the table due to incomplete clinical documentation. The root cause is a manual, inefficient revenue cycle management (RCM) process that overburdens physicians and leaves gaps in clinical documentation that directly impact a hospital’s ability to get paid.

The reality is that physicians can’t do it all. They are responsible for documenting every clinical detail—diagnoses, medical conditions, labs, complications, etc.—all of which determine how much a hospital can bill for a patient’s care. But between managing dozens of patients, making critical care decisions, and navigating antiquated workflows, physicians simply don’t have the time, coding training, or mental bandwidth to capture every detail.

To reduce these inevitable documentation gaps, hospitals rely on specialized nurses to review chart accuracy. These nurses sift through every patient record to ensure all clinical details have been appropriately captured. This process is called clinical documentation improvement (CDI), and it is highly manual and error prone. The reality is CDI teams don’t have the capacity to review every patient case, and even if they did, a highly trained human eye simply can’t find every missing component.

The financial toll of incomplete documentation is staggering. A single missing diagnosis code can cost a hospital thousands of dollars per patient—this revenue is rightfully earned but won't be reimbursed. Multiply that across thousands of in-patient stays each year, and health systems are leaving tens of millions in revenue on the table annually.

It’s no surprise that Mike and Josh saw the CDI process as a perfect use case for AI—a platform that could analyze every piece of clinical data and identify what is missing—helping hospitals capture substantial lost revenue.

Guaranteed hard-dollar ROI at scale

Mike and Josh got to work quickly. In 2020, SmarterDx launched PreBill—an AI platform for CDI teams that performs an automated second-pass review of every patient chart. It ingests over 30,000 clinical data points to ensure all revenue opportunities are accurately captured and appropriately billed. And because SmarterDx is the final checkpoint before billing, every newly found revenue opportunity is directly attributable to its platform.

The result—SmarterDx has a contingency-based pricing model that puts its money where its mouth is. Health systems only pay SmarterDx when the platform uncovers new, billable revenue. No risk—just guaranteed results and a 5:1 hard-dollar ROI. In an industry rife with expensive solutions and uncertain returns, this contingency-based pricing structure has been a game-changer for health system adoption. Said differently, for every day a health system doesn’t have SmarterDx, they are leaving revenue on the table.

Transformative results = unprecedented adoption

During a time when hospital margins have been under extreme margin pressure, SmarterDx’s value proposition has made them a “must have” solution—catalyzing an unprecedented growth trajectory.

SmarterDx’s impact on hospital revenue and margins has been transformative—and the numbers speak for themselves. On average, its AI-native platform uncovers $2 million in net new revenue for every 10,000 patient discharges. Since launch, SmarterDx has identified hundreds of millions in aggregate new net patient revenue across its health system customers that would have otherwise been missed. That kind of impact isn’t just helping hospitals stay afloat—it’s enabling them to reinvest in their clinicians and deliver better patient care.

What makes the platform truly unique is that the AI continuously gets ‘smarter’—with every patient record analyzed and every coding pattern uncovered, the algorithms continuously refine their ability to spot missed revenue opportunities. This generates compounding returns for hospitals, which see sustained and often growing revenue capture year over year.

It’s a flywheel effect—the more health systems that adopt SmarterDx, the richer the dataset and the more value the AI can deliver for every customer.

The future looks smarter and smarter

We couldn’t be prouder of Mike, Josh, and the entire SmarterDx team on their acquisition by New Mountain Capital, cementing their status as a generational healthcare AI company. The company will now be part of Smarter Technologies, joining forces with two complementary New Mountain businesses to build a next generation, AI-powered RCM platform.

At Transformation, we partner with founders who have the potential to transform our healthcare system, just as Mike and Josh are doing with SmarterDx. It’s been a privilege to back this team, and we are excited for the continued, substantial impact SmarterDx will have on the US healthcare system for many years to come!