Talk About The Benefits
The only thing certain amidst the latest budgetary showdown and government shutdown ruckus in Washington is that the implementation of the Affordable Care Act and the changing face of health benefits will remain hazardous territory for some time to come. What sane business would go near this mess? Well, I can name at least one ready to roll up its sleeves, get to work, and make a lot of money. A lot of money.
Benefitfocus is a cloud-based software solution for managing benefits. Serving employers, insurance carriers and brokers, and consumers alike, Benefitfocus develops an array of products with the aim of allowing its customers to manage all their benefit packages in one place. This means that clients can shop, enroll, administer and manage different benefits (medical, dental, voluntary plans, wellness programs, etc.) using one service.
Given the wide net of the benefits market – in terms of both types of benefits in play and the numerous individuals and business involved, Benefitfocus has something to offer over 20 million consumers.
Hell, yeah. With the Affordable Care Act (ACA) about to take effect, (maybe), employers and insurance providers alike are turning to the cloud to meet the challenges that accompany change. What’s more, the Gartner research firm pegs worldwide SaaS revenues to reach $22.1 billion by 2015. Timing is right for conquering this space.
Such conditions set the stage for Benefitfocus to enjoy a smashing success with their initial public offering in September, its share prices doubling within the first 24 hrs, raising $131 million. Soon after, the company also received the Trailblazer Award from the Charleston Metro Chamber of Commerce.
Maybe you’re wondering why you haven’t heard of Benefitfocus before? Not that they minded grinding along relatively unknown to begin. In an interview with Venturebeat, CEO Shawn Jenkins noted, “We didn’t have the option to take venture financing in our early years. But looking back, it was a good thing. Our management team stayed very disciplined.”
It seems that not only is bootstrapping a business possible, it sounds totally simple, right?
Did I Say Cha-Ching?
If only it were that easy. The niche market for simplifying health insurance and managing benefits has its perils. Employer benefits change state to state, which means there’s no one-size-fits-all solution to provide. The Benefitfocus platform juggles over 100 types of benefits. Work will not grow any easier as everyone tries to make sense of the ACA’s new rules and regulations.
Benefitfocus needs partnerships to survive. Data exchange demands such, helping insurers develop apps to make life easier for consumers is essential. HR management looks different for each company. Complexity isn’t the only culprit, but it is one of the main reasons Benefitfocus has yet to see a profit despite revenues increasing in 2012 by $12.9 million (up to $81.7 million). Last year, the company operated at a loss of close to $15 million.
Obviously, harsh reality hasn’t dampened optimism. Do you have innovations to bring to health insurance or benefit management? The road will not be easy, (when is it ever?) but money and opportunity await skillful teams and imperturbable entrepreneurs.