Charleston, S.C.-based Benefitfocus, founded by Mason Holland Jr. and Shawn Jenkins in 2000, thinks it can help employers make that transition.

Benefitfocus offers its clients – some of the nation's largest carriers, among them – a cloud-based subscription service to help them manage their benefits plans, and in so doing, has become one of the largest benefits software companies in the U.S., the company says.

Its IPO was no small event. When Jenkins and Holland took the company public in September, they killed it; shares nearly doubled, to $53.55, that first day.

Trading as BNFT, the company has yet to fly that high since. The trends that drove the stock to its heights in its first day have also bounced the price around since. The low came Oct. 9, at $38.31. In the last month, as the pieces of Obamacare have been flying about the halls of Congress, the stock has climbed as high as $52.76 and dropped to as low as around $40 again. Still, with nearly $71 million in the bank from the IPO, the company has a cushion for any bumpy rides ahead.

Jenkins serves as president and CEO and, outside the executive suite, serves on the boards of two universities. He also has his pilot's license and loves to soar above the clouds. Holland, who runs several other companies in Charleston, including an aviation firm, is executive chairman of the board.

The company deals in two basic product categories, those for employers and those for insurance carriers.

For the former, its offers:

• Streamlining of benefit enrollment;
• employee communications tools;
• support of defined contribution plans;
• plan design evaluation;
• cost forecasting;
• employee education;
• a private exchange with defined contributions benefits plans.

For carriers, Benefitfocus offers:

• Enrollment process streamlining;
• decision support tools;
• online invoicing;
• synchronized billing;
• administrative efficiency tools.

Holland and Jenkins met at American Pensions Inc., one of the many companies that Holland has either founded or turned around.

Working together, they hit upon the idea to build a cloud-based platform in 1997 to handle the 401(k) plans that American Pensions administered. The solution worked so well that Holland and Jenkins left to launch Benefitfocus, with the intent to provide benefits management tools to a broad corporate clientele.

BenefitFocus was part of the cloud-based solutions boom that occurred around the beginning of the century. Holland and Jenkins were ready to unveil their baby when the tech bubble burst. They went ahead with it anyway.

Whereas once it would have been unthinkable that employee benefits information might be stored on the (then unnamed) cloud, time has proved the skeptics wrong. Holland and Jenkins assumed that other companies would love to have help on the admin end of the benefits business, regardless of where the information was managed.

First, they offered an enrollment product to ease the stress of getting everyone to sign up every year for a plan option. They landed a large client – Piggly Wiggly, a signature Southern grocery chain – and were off and running.

Through Piggly Wiggly, the company's services came to the attention of BlueCross BlueShield of South Carolina. Soon, the entrepreneurs were selling directly to insurance carriers, letting them make the corporate connections for them.

By 2007, Benefitfocus had amassed an impressive list of BlueCross partners.

It continued to build the business in part by offering what it could legitimately claim were cutting-edge products and services. Among them:

• It introduced a media studio that pumped out explanatory videos for company presentations and websites — the kind of communications tool taken for granted today, but seen as revolutionary at the time.
• It launched an iPhone app in 2010 so users could download health insurance-related videos, and began building password-protected web portals so employers could safely share data on their health packages.
• It formed an alliance with the legendary Mayo clinic that gave its customers access to much of the clinic's medical resources, including wellness programs, health assessment tools and a 3,500-article medical library.

Having survived the recession, the company, operating at a revenue clip of about $80 million annually, entered 2013 determined to go public. 

The IPO did not go forward without some misgivings on Wall Street. Benefitfocus had clients and plenty of revenue. But one analyst worried about its ability to turn a profit. In early 2011, the company adjusted its process for recording deferred revenue by extending the time period for recognizing this stream. This, according to analyst Carl Mercurio, of the Corporate Research Group, had the effect of  "forcing it to spread its deferred revenues out over a longer period.  The upshot: lower-than-expected recognized revenues and higher-than-expected losses in 2011 and 2012."

Focusing on its lack of profitability, Mercurio dug deeper. He reported that Benefitfocus's insurer segment — accounting for 60 percent of revenue — was essentially profitable. But the employer segment, which was growing rapidly, was bleeding profusely.

"Clearly, this is a company that needs to sell investors on its growth potential," he wrote. "On the bright side, Benefitfocus has very little debt. But all in all, this is an IPO that's hard to get excited about."

Other analysts did get excited about it. Christina Farr of Venturebeat had this to say shortly after the IPO:

Benefitfocus "is poised to rake in revenues, as the Affordable Care Act health care law takes effect and large enterprises increasingly shift to cloud-based technologies. The insurance industry spent an estimated $55 billion last year on software services.  … BenefitFocus pulled in $68.8 million in 2011, with revenues jumping to $81.7 million in 2012. The company serves businesses (these enterprise contracts are particularly lucrative) and over 20 million consumers, helping them more efficiently shop and manage benefits, including life and dental insurance and health care."

Jenkins discussed the challenges his company faces with Venturebeat, allowing that they were substantial.

"We operate in a very complex environment, as employer benefits are regulated state-by-state. The challenge on the engineering side is to solve the big implementations of the Affordable Care Act and all these new rules and requirements. We have to stay current at a time when employer benefits are changing."

Whether Benefitfocus's approach will find the wind under its sails as employees increasingly take control of the benefits packages remains to be seen.

But given Holland and Jenkins' knack to date for spotting opportunities before the rest of the pack, the company appears to be as well positioned as any to survive the rollercoaster ride of health insurance in America.