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latent health·Software Engineer·Onsite - System Design / Architecture·Senior

Senior
Apr 2026

Summary

System design round at Latent Health for a software engineering role. The whole session was basically one big deep-dive into designing a preauthorization middleware that sits between EHR systems and insurance payers. Dense, healthcare-specific, and a lot more to cover than I expected in a single round.

Questions Asked (7)

Q1

Design a middleware system that sits between EHR providers and insurance payers to handle healthcare preauthorization requests end to end.

System DesignAPI & Integrations
Author's notes

This was the core prompt and it basically ate the whole session.

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AI HintsAI Generated

Suggested Approach

Start by clarifying requirements and constraints, then outline the high-level architecture covering integration, workflow orchestration, and data flow. Dive into key components like API design, message queuing, and security, and discuss trade-offs and scalability.

Pro tip: Emphasize idempotency and auditability early, as healthcare systems require reliable, traceable transactions. Also, mention the importance of handling different EHR and payer standards (e.g., HL7, X12) to show domain awareness.

1. Clarify Requirements

Ask about expected volume, latency, compliance needs (HIPAA), and integration points with EHRs and payers. Confirm the scope: real-time vs batch, supported standards, and failure handling.

2. High-Level Architecture

Sketch a system with an API gateway, request orchestrator, message queue, and adapters for EHR/payer protocols. Include a database for tracking requests and a notification service.

3. Detailed Component Design

Elaborate on each component: API design (RESTful, FHIR), orchestration logic (state machine), queueing (Kafka/RabbitMQ), and adapters (HL7, X12). Discuss data model for preauth requests.

4. Scalability & Reliability

Explain how to scale horizontally, handle failures with retries and dead-letter queues, ensure idempotency, and maintain audit logs. Mention monitoring and alerting.

5. Security & Compliance

Cover authentication/authorization (OAuth2, mTLS), encryption in transit and at rest, and HIPAA compliance. Discuss audit trails and access controls.

Key Points to Mention

  • Use of standard healthcare protocols like HL7 and X12 for interoperability
  • Idempotent request handling to avoid duplicate preauthorizations
  • Asynchronous processing with message queues for reliability and decoupling
  • Comprehensive audit logging for compliance and traceability
  • Scalable architecture to handle varying loads from multiple providers and payers
  • Security measures including encryption, authentication, and authorization

AI-generated suggestions, not part of the candidate's original notes. May be inaccurate — verify before relying on them.

Q2

What does the data model look like for this system? Walk through the core entities and their relationships.

Data ModelingSystem Design
Author's notes

Went with Case as the central entity, hanging Patient, Procedure, Provider, Payer, Document, and Status off it.

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AI HintsAI Generated

Suggested Approach

Start by clarifying the system's scope and primary use cases, then outline the core entities and their relationships using a simple diagram or verbal description. Focus on how the data model supports key functionalities and scalability, and be prepared to discuss trade-offs in your design choices.

Pro tip: Proactively mention how you would handle data evolution and schema changes, showing foresight about long-term maintenance. Also, relate the data model to real-world healthcare scenarios (e.g., patient journeys) to demonstrate domain awareness.

1. Clarify Scope and Requirements

Ask clarifying questions about the system's purpose, expected scale, and key features to tailor your data model appropriately.

2. Identify Core Entities

List the main entities (e.g., Patient, Provider, Appointment, Record) and briefly describe their attributes and importance.

3. Define Relationships

Explain how entities relate (one-to-many, many-to-many) and the cardinality, using examples to illustrate.

4. Discuss Design Considerations

Cover normalization vs. denormalization, indexing, and how the model supports queries and scalability.

5. Address Evolution and Trade-offs

Mention how the model can evolve with changing requirements and any trade-offs made (e.g., consistency vs. performance).

Key Points to Mention

  • Entity-Relationship Diagram (ERD) or equivalent visual representation
  • Primary keys, foreign keys, and unique identifiers
  • Normalization forms and when to denormalize for performance
  • Indexing strategies for frequent queries
  • Handling sensitive data (HIPAA compliance, encryption)
  • Scalability considerations (sharding, replication, caching)

AI-generated suggestions, not part of the candidate's original notes. May be inaccurate — verify before relying on them.

Q3

How would you design the API layer, specifically handling the difference between provider-facing and payer-facing interfaces, and how do you deal with retries safely?

API & IntegrationsTechnical Trade-offs
Author's notes

Separate API surfaces for providers vs payers felt obvious once I said it out loud.

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AI HintsAI Generated

Suggested Approach

Start by clarifying the core differences between provider-facing and payer-facing APIs in terms of data sensitivity, access patterns, and compliance requirements. Then propose a layered architecture that separates concerns, such as a shared domain layer with distinct BFFs (Backend for Frontend) or API gateways. Finally, address retries by emphasizing idempotency, exponential backoff with jitter, and circuit breakers to ensure safe and resilient operations.

Pro tip: Highlight that retries must be paired with idempotency keys and that not all endpoints should be retried—only those that are safe and idempotent. Also, mention the importance of logging and monitoring retry attempts to detect systemic issues.

1. Identify differences between provider and payer interfaces

Discuss how provider-facing APIs often require real-time, high-volume data (e.g., patient records) with strict HIPAA compliance, while payer-facing APIs may involve batch processing, claims, and different authentication/authorization models.

2. Design a layered API architecture

Propose a shared domain/service layer to avoid duplication, with separate API gateways or BFFs for providers and payers to handle specific concerns like rate limiting, authentication, and data transformation.

3. Address cross-cutting concerns

Explain how to handle authentication (e.g., OAuth2, mTLS), authorization (RBAC/ABAC), versioning, and monitoring differently for each interface while keeping the core logic consistent.

4. Implement safe retry strategies

Describe using idempotency keys for write operations, exponential backoff with jitter for transient failures, and circuit breakers to prevent cascading failures. Emphasize that retries should only be applied to idempotent or safe operations.

5. Ensure observability and testing

Mention the need for detailed logging, metrics (e.g., retry counts, latency), and chaos testing to validate retry logic and failure scenarios.

Key Points to Mention

  • Idempotency keys for POST/PUT operations to safely retry without duplicating side effects
  • Exponential backoff with jitter to avoid thundering herd problems
  • Circuit breaker pattern to stop retries when a service is down
  • Separation of concerns via BFF or API gateway for provider vs. payer
  • Compliance and security differences (HIPAA, PII handling) between interfaces
  • Monitoring and alerting on retry rates to detect issues early

AI-generated suggestions, not part of the candidate's original notes. May be inaccurate — verify before relying on them.

Q4

Walk through the state machine for a preauthorization case from submission to resolution.

System DesignTechnical Trade-offs
Author's notes

Submitted, pending documents, under review, then approved or denied with an appeal path off denied.

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AI HintsAI Generated

Suggested Approach

Start by clarifying the scope and actors involved in the preauthorization process, then describe the state machine with clear states, transitions, and events. Emphasize how the design handles real-world complexities like partial approvals, denials, and timeouts, and discuss trade-offs in state persistence and concurrency.

Pro tip: Show maturity by discussing how you would handle idempotency and exactly-once processing for state transitions, since healthcare systems often deal with duplicate submissions and network retries. Also, mention the importance of audit trails and compliance (e.g., HIPAA) in state transitions.

1. Clarify requirements and scope

Ask clarifying questions to understand the actors (provider, payer, patient), the expected volume, and any regulatory constraints. Define what 'submission' and 'resolution' mean in this context.

2. Identify states and transitions

List the core states (e.g., Draft, Submitted, PendingReview, Approved, Denied, Expired) and the events that trigger transitions (e.g., submit, approve, deny, timeout). Consider sub-states for partial approvals or requests for additional information.

3. Design the state machine

Define the state machine formally, including guards, actions, and side effects (e.g., notifications, persistence). Discuss how to handle invalid transitions and error states.

4. Address concurrency and consistency

Explain how to handle concurrent updates (e.g., optimistic locking, versioning) and ensure idempotency for transitions. Discuss persistence choices (e.g., event sourcing vs. state storage) and their trade-offs.

5. Discuss edge cases and trade-offs

Cover scenarios like timeouts, retries, partial approvals, and manual overrides. Highlight trade-offs between simplicity, flexibility, and compliance.

Key Points to Mention

  • Idempotency and exactly-once processing for state transitions to handle duplicate submissions
  • Audit logging and compliance with healthcare regulations (e.g., HIPAA) for each state change
  • Handling of partial approvals and denials, including sub-states or reason codes
  • Timeouts and expiration policies, and how they trigger transitions (e.g., auto-expire after X days)
  • Concurrency control mechanisms (e.g., optimistic locking) to prevent race conditions
  • Trade-offs between event sourcing and state-based persistence for auditability and performance

AI-generated suggestions, not part of the candidate's original notes. May be inaccurate — verify before relying on them.

Q5

How do you handle translation between FHIR, HL7, and X12 formats in this system?

API & IntegrationsSystem Design
Author's notes

I positioned this as a translation layer at the ingest boundary so the internal system only ever works with a canonical format.

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AI HintsAI Generated

Suggested Approach

Start by acknowledging that FHIR, HL7 v2, and X12 serve different purposes and have distinct data models, so translation requires a canonical intermediate representation. Then describe a layered architecture with format-specific adapters, a mapping engine, and validation at each boundary, emphasizing configurability and auditability.

Pro tip: Mention that you would use a canonical model (like FHIR resources or a custom internal schema) as the hub for all translations, and that you would leverage existing libraries (e.g., HAPI FHIR, NHapi, pyx12) rather than building parsers from scratch. Also highlight the importance of logging and replay for debugging in healthcare integrations.

1. Clarify the use case and data flow

Ask which systems produce and consume each format and whether translations are real-time or batch. This determines latency, throughput, and error-handling requirements.

2. Define a canonical data model

Choose an internal representation (e.g., FHIR resources or a custom schema) to decouple format-specific logic. This reduces the number of direct mappings from N×M to N+M.

3. Implement format-specific adapters

Build parsers and serializers for each format using robust libraries, and map to/from the canonical model. Handle version differences (e.g., HL7 v2.5 vs v2.8, FHIR R4 vs STU3).

4. Add validation and error handling

Validate incoming messages against schemas and business rules, and provide clear error reporting. Use dead-letter queues and retries for failed translations.

5. Ensure observability and maintainability

Log translation events with correlation IDs, monitor performance, and make mappings configurable (e.g., via a rules engine) to adapt to changing requirements without code changes.

Key Points to Mention

  • Differences between FHIR (RESTful, resource-based), HL7 v2 (segment-based, pipe-delimited), and X12 (EDI, transaction sets like 837/835).
  • Use of a canonical model to avoid point-to-point mappings and simplify maintenance.
  • Leveraging existing open-source libraries (HAPI FHIR, NHapi, pyx12, etc.) to accelerate development and ensure compliance.
  • Handling versioning and backward compatibility, especially for HL7 v2 and FHIR releases.
  • Validation at each stage: syntax, semantics, and business rules.
  • Security and compliance considerations (HIPAA, PHI handling) in translation pipelines.

AI-generated suggestions, not part of the candidate's original notes. May be inaccurate — verify before relying on them.

Q6

What are the key non-functional requirements for this system and how do you design for them?

System DesignTechnical Trade-offs
Author's notes

HIPAA compliance, auditability, high availability, and SLA on response times.

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AI HintsAI Generated

Suggested Approach

Start by clarifying the system's purpose and context, then identify the most critical non-functional requirements (NFRs) based on business goals and user needs. For each NFR, explain how you would design for it, discussing trade-offs and how you would measure success.

Pro tip: Prioritize NFRs by business impact and explicitly state the trade-offs you're making—this shows you understand that you can't optimize everything at once. Also, mention how you would validate each NFR with metrics and monitoring.

1. Clarify the System and Context

Ask questions to understand the system's purpose, users, scale, and business goals. This helps identify which NFRs are most important.

2. Identify Key NFRs

List the relevant NFRs such as performance, scalability, availability, security, and maintainability. Prioritize them based on the context.

3. Design for Each NFR

For each prioritized NFR, describe specific design strategies, technologies, and patterns you would use to meet it.

4. Discuss Trade-offs

Explain the trade-offs between different NFRs (e.g., consistency vs. availability) and how you would make decisions.

5. Measure and Validate

Describe how you would measure each NFR (e.g., SLIs, SLOs) and validate that the system meets them through testing and monitoring.

Key Points to Mention

  • Performance: latency, throughput, and response time targets
  • Scalability: horizontal vs. vertical scaling, partitioning, and load balancing
  • Availability and reliability: redundancy, failover, and disaster recovery
  • Security and privacy: authentication, authorization, encryption, and compliance (e.g., HIPAA for health tech)
  • Maintainability and operability: logging, monitoring, deployment, and CI/CD
  • Cost efficiency: resource utilization and cloud cost management

AI-generated suggestions, not part of the candidate's original notes. May be inaccurate — verify before relying on them.

Q7

How would you make this system reliable in the face of downstream failures, including handling retries, failed messages, and data consistency?

System DesignTechnical Trade-offs
Author's notes

Retries with exponential backoff, dead-letter queues for messages that exhaust retries, and a reconciliation job that periodically checks for cases stuck in intermediate states.

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AI HintsAI Generated

Suggested Approach

Start by clarifying the system's requirements and constraints, then systematically address reliability patterns for each failure mode: retries, failed messages, and data consistency. Emphasize trade-offs and how you would monitor and test the solution.

Pro tip: Show maturity by discussing idempotency and exactly-once processing as the gold standard, but acknowledge that in practice, at-least-once with idempotent consumers is often more feasible. Also, mention the importance of observability and alerting to detect and respond to failures quickly.

1. Clarify requirements and constraints

Ask about the system's expected load, latency requirements, consistency needs (strong vs eventual), and the criticality of different operations. This ensures your answer is tailored to the context.

2. Design for retries with backoff and jitter

Explain how to implement retries with exponential backoff and jitter to avoid thundering herd problems. Discuss the importance of idempotency keys to prevent duplicate processing.

3. Handle failed messages with dead-letter queues and alerting

Describe using dead-letter queues (DLQs) to capture messages that fail after retries, and setting up alerts for manual intervention. Mention the need for a process to inspect and reprocess DLQ messages.

4. Ensure data consistency with transactions and sagas

Discuss using distributed transactions where possible, or sagas with compensating actions for eventual consistency. Highlight the trade-offs between consistency and availability.

5. Monitor, test, and iterate

Emphasize the importance of monitoring key metrics (e.g., retry counts, DLQ size, latency), chaos testing, and load testing to validate reliability. Mention continuous improvement based on observed failures.

Key Points to Mention

  • Idempotency: ensuring operations can be safely retried without side effects.
  • Exponential backoff with jitter to manage retry storms.
  • Dead-letter queues for handling poison messages and enabling manual recovery.
  • Saga pattern and compensating transactions for maintaining data consistency across services.
  • Circuit breakers to prevent cascading failures and allow downstream services to recover.
  • Observability: logging, metrics, tracing, and alerting to detect and diagnose failures.

AI-generated suggestions, not part of the candidate's original notes. May be inaccurate — verify before relying on them.