Startups, Payers

There and back again: Ex UH CEO shares perspective of leading a healthcare startup

"Consumers will play an increasingly important role in healthcare plan coverage and consumers, in most parts of the country, don't have good choices," Bright Health CEO and Co-founder Bob Sheehy said.

In my initial post on Bright Health’s launch, I thought it was interesting for the CEO and co-founder of a startup to have once led what’s now the largest insurance business in the country. But in a phone interview with Bob Sheehy, he noted that before he led UnitedHealthcare, he was once an entrepreneur.

He was one of the early employees of Peak Health Plan, a Colorado based company with a four-state HMO network of 104,000 enrollees, before UnitedHealth Group acquired it in 1986 for a cool $86 million. He served in several roles at UnitedHealthcare over the next 20 years. He became CEO in 2001 and was in that role through 2006. From 2007-2008, he was senior vice president for UnitedHealth Group. Prior to Bright Health he served as a director at Netsmart Technologies and as a healthcare adviser at private equity firm Genstar Capital.

Asked about the contrasting worlds of leading a startup and a huge company, he said as a startup he said it’s able to be much more nimble and quick to expedite solutions, and yet it’s led by a team with deep health insurance experience and knowledge of how to use technology to simplify processes and connect people.

It currently has a staff of 25 and expects to double that by the end of the year, Sheehy said.

The company came together last summer. Sheehy said he met Bright Health‘s president Kyle Rolfing when UnitedHealth acquired Definity Health, which he founded. Dr. Tom Valdivia, the chief medical officer of Bright, also was chief health consumer officer of Definity Health. Valdivia was also a co-founder and president of Carol, a package-based direct to consumer care marketplace that also helped consumers calculate their out-of-pocket financial liability with Minnesota health plans. Optum acquired Carol in 2011.

“We were thinking of health plan opportunities. We came to the realization that consumers will play an increasingly important role in healthcare plan coverage and consumers, in most parts of the country, don’t have good choices.”

Sheehy added that the health plan space offered a huge market opportunity in the realm of the consumer insurance marketplace.

He contrasted his team’s experience with healthcare plans with the technology background of Oscar’s. He said that although it is targeting the individuals who are driven by the Affordable Care Act to pick their own plans rather than employers, it’s also working with large health systems who are interested in more integrated healthcare. It wants to use technology to connect these groups.

Sheehy added that his experience at UnitedHealthcare has taught him how to scale a company from a few million to tens of millions as well as what it takes to run a company in several markets.

“What I try to bring to whatever I do is a fundamental understanding of what happens in care settings. It is really about understanding what happens at that personal level.”

Bessemer Ventures Partners led the Series A round for Bright Health. Stephen Kraus, a partner with the firm who oversees healthcare investments, said one goal is to eliminate the divide between payers and providers.

“There’s a lot of inertia because of the fracture that exists between those areas,” he said. Hospital system execs will take Bright Health’s calls because they are its partners. “It’s no longer payer versus provider — that’s key to its model.”

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