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GoHealth's remedy for health-plan headaches

Brandon Cruz and Clint Jones were just a couple of recent college graduates who didn't know much about health insurance when they plunked down $5,000 each on a startup to help agents do a better job.

Today their investment has ballooned into GoHealth LLC, a $50 million-plus health-technology firm that offers a Web portal where consumers can compare thousands of combinations of health care plans and buy insurance. Since launching in 2001, the two have gone from a Lincoln Park coach house that doubled as their home and company headquarters to a trendy River North office, an adjacent building and a third office in the West Loop to house their 450 employees.

Bigger things are in store. In June, GoHealth, originally Norvax Inc., snagged a $50 million equity investment from Minneapolis-based Norwest Equity Partners.

Messrs. Cruz and Jones, both 35, plan to use the money to get set for an influx of would-be customers who will gain coverage in 2014 under the federal health care overhaul. “There's a massive flow of people that are going to be going into the individual insurance market, and we're going to spend the money to make sure we're kind of the on-ramp for them,” Mr. Jones says. They plan to hire an additional 150 employees by spring.

Scott Lingle, Indianapolis-based chief of sales at Health Insurance Innovations, who has worked with GoHealth since its early years, credits the company's success to poaching “the rock stars” of the technology and health care sales industries.

Messrs. Jones and Cruz first teamed up as roommates at Miami University in Oxford, Ohio, studying management information systems. Before everyone was tethered to smartphones and Facebook, they founded CheapShotz.com during their senior year. They snapped photos at frat parties, posted them online and sold them for $9 apiece. The business lasted two years before the friends were overwhelmed with orders (hand-printed and mailed) and closed up shop.

“What do you do when you have too much business?” Mr. Cruz says with a laugh. “You shut down, right?”

About a year after their 1999 graduation, they developed websites and software for small businesses. Meanwhile, their parents insisted that they get health insurance. The two met with a broker, but even though websites that enabled comparison shopping were popping up then, the broker was unable to compare insurers' rates. Messrs. Jones and Cruz had found an unmet need.

What started out as building customized websites and software for brokers to better manage clients and leads has grown into layers of products and revenue streams. Agents pay a match fee for GoHealth customer referrals, and if they have too many leads to keep up with, GoHealth buys and resells them to others.

At GoHealthInsurance.com, which began four years ago, individuals can compare rates or talk to a customer service agent, then buy a plan. Since the shopping tool was created, revenue has tripled, says Mr. Jones, who declines to be more specific.

GoHealth works with about 125 insurance companies, including Blue Cross & Blue Shield of Illinois, the state's largest, and close to 20,000 agents, most independent.

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