How GoHealth disrupted the health insurance industry
By: Adam Burroughs
When Brandon Cruz graduated college, his parents insisted he get health insurance. He found the process unpleasant, as it meant speaking with multiple agents, each selling one brand. Frustrated with the experience, Cruz decided he could do better.
In 2001, he approached his college roommate and fraternity brother, Clint Jones. While at Miami University, the two had started a business called cheapshotz, and he was confident Jones could help him accomplish this incredible challenge.
The conversations with health insurance agents provided insight into the challenges the pair would face trying to innovate in an extremely traditional industry.
“We knew there were other brands out there, but we didn’t have any way to look them up,” Cruz says. “Being young guys working on the internet, we said, ‘Can we go on a website and look this up?’ He said, ‘Well, not yet, but soon I’ll have a website and you can do all that.’ And that made us realize that there are a couple hundred thousand people out there talking with insurance agents with no tools. Maybe we should build the tools make them more efficient.”
Cruz says being naïve about the way the health insurance industry worked actually benefited them. In setting out to do what made sense for consumers — make buying health insurance a transparent and wholly digital experience — they had no idea of the resistance they would face from an intractable industry that was seemingly convinced that the process of buying insurance wouldn’t change.
A challenger was born
The early days of GoHealth were characterized by hustle.
“We were looking for any kind of revenue we could get,” says Cruz, president and co-founder of GoHealth.
Cruz and Jones worked to convince insurers to partner with them and refer them to their tens of thousands of brokers so they could build out websites and drive consumers to shop with them.
“It was just a lot of hustle,” Cruz says. “That was the way to get the quickest possible revenue that we could.”
At the time, insurance companies didn’t want consumers to compare rates side by side. In fact, the people Cruz spoke with in the industry said the entrepreneurial pair was fighting an impossible battle; the insurance companies would never allow it.
“In our mind, we said, ‘Why wouldn’t they?’” says Cruz.
To Cruz, the best thing the industry could do was to put the process online, invite more transparency and make it easy for consumers to buy insurance. But the industry was resistant to change.
“The industry had been doing its own thing for a very long time. It was successful with the way it was working, and there was no incentive for them to change,” he says.
A creative solution
Cruz and Jones found another way forward; they began to entice health insurers with incentives.
“We did more than just compare their rates,” Cruz says. “We said, ‘If you refer us to the insurance agents, you’re not going to spend a single dollar, but we’re going to get you more sales. We’re going to go to your agents, we’re going to help them sell more, and it’s going to cost you nothing other than your referral to us. So it’s all paid for by the independent agents, and it benefited all the insurance companies.”
Slowly but surely, he says, GoHealth won relationships with the major insurers. And soon the growth began.
Over the hump
When Cruz and Jones paid off their personal credit cards — which they used as the sole funding source to get their idea off the ground — it was a landmark moment. About three years in, they signed a few large deals simultaneously and paid off more than $70,000 in debt. It was a relief to Cruz, who says it signaled that they had cleared a major obstacle in the growth and development of their company.
In 2004, GoHealth was building websites for brokers who were happy with their work, but customers still struggled to find them.
“The insurance agents were saying the technology is amazing and my website is beautiful, but I don’t have any customers, so what do I do with it?” Cruz says.
So GoHealth pivoted to a model in which it would not only build the website, but also help brokers find customers and be paid per lead that it generated. Cruz says he knew this new model would be lucrative, and while it took time, three months after the new service model launched, GoHealth was earning $10,000 per day from leads alone.
“When we hit that milestone where we were making $10,000 per day — that’s peanuts compared to now — we realized massive potential growth,” he says.
Today, the business’s compound annual growth rate over the past 10 years has been 65 percent. Cruz says this past year the company grew its revenue 50 percent.
“And we’ve had all the fun and pain that comes with growing that fast,” he says.
The company has matured in stages. First it moved out of Cruz’s home to its first office in 2002, and gained its first employee. There was a big growth spurt when the company grew from five to 50 employees, then again to a few hundred. Then, in what Cruz says felt like happened overnight, it grew to the more than 1,000 employees it has today.
“Each stage had its own challenges, whether it’s people, systems, processes, communication — all of it becomes a challenge as you grow rapidly,” he says.
“We still have challenges with growth. It’s never easy.”
Cruz manages an oscillating workforce that swings seasonally between a base level of 1,000 to as many as 1,600 at peak enrollment periods, a workforce that’s stationed among a cluster of buildings in Chicago’s River North, an office in Charlotte, North Carolina, and another office which the company hopes to open later this year.
The company has also grown its lines of business. At its core, GoHealth is still a marketplace in the health insurance space, helping people find insurance and insurance companies find people who want to buy it. But its key focuses have expanded to include individuals under age 65, over age 65 and receiving Medicare, small group and life insurance.
The key to managing all the incredible changes is having the ear of strategic advisers and board members, giving Cruz and Jones perspective and advice.
Bigger and better
Cruz says he’s most proud that the company is a place where so many people can show up, day in and day out, to support their lives and their families.
“It feels great that so many people’s livelihoods are happening because of what we’re doing in the business,” Cruz says.He sees the company as a small fraction of an enormous market, a position that provides an outlook for significant growth potential.
“We’re projecting massive growth for the next several years,” Cruz says. “It’s up to us to execute, to keep doing things bigger and better.”
The most useful connection
GoHealth’s relationship with Huntington has been invaluable, Cruz says. He approached his banker Ken Hardy, senior vice president of Corporate Banking at Huntington when he was looking for a solution to aggressively fuel his company’s growth. Ultimately, the entire Huntington team came together to build an unconventional loan that GoHealth paid off in full in just a few months.
“Huntington was tremendously flexible in helping us do that,” Cruz says.
Since then, bank executives have reached out to the company to open up the relationship and build on its momentum. Cruz says Huntington asked how it could do more for the company, and help it grow.
“Our relationship with Huntington has been the most useful one we’ve had,” Cruz says.
For more information, visit www.gohealth.com.