Forbes.com Puts Some Numbers to the Epic Systems Success Story

I have a special and continuing interest in the corporate culture of Epic Systems, one of the most successful hospital EMR companies. Because its founder and CEO, Judith Faulkner, does not allow interviews and the company is privately held, hard facts about it can be hard to acquire. However, a recent story in Forbes.com about Epic (see; Wired Medicine's Silent Giant) provides much new information and analysis, all of which rings true to me. Below is an excerpt from it:

...[T]he hottest company in the electronic medical records industry is a secretive Wisconsin outfit called Epic Systems. It does little marketing or advertising, shuns acquisitions, never issues press releases and tries to stay out of the headlines....Yet with a reputation for customer service and software that is more user-friendly than most, Epic has snagged contracts with famous places like the Cleveland Clinic and University of Chicago Medical Center, the big HMO Kaiser Permanente and Group Health Cooperative in Seattle. Epic has recently been winning about 40% of the new contracts for electronic records systems at major hospitals--far ahead of its competitors....In 2008, Epic won 24 big-hospital contracts, versus 12 for McKesson ... and 10 for Siemens....A contract to install medical records software at a 400-bed hospital might be worth $20 to $30 million over several years....Epic had $600 million in revenue last year, up from $500 million in 2007. It does not disclose its profits. The company focuses exclusively on larger hospitals and health systems--it has just 180 customers--allowing it to get business by word of mouth without much marketing....Computer programmer Judith Faulkner founded Epic in 1979 with three part-time employees and is still chief executive....[S]he is known for her liberal politics and buying quirky artwork for headquarters, according to local newspaper reports....Epic has a reputation for relatively high prices and high levels of service to ensure software is installed on time with as few snafus as possible...The fact that Epic is private is also viewed as an advantage by some hospitals....Installing medical records can take a year or more, and hospitals don't want a vendor that will be distracted every three months with earnings reports. Drexel University medical computing expert Scot Silverstein is a harsh critic of most medical records systems, which he says are confusing, glitch-prone and hard to use. But he gives Epic some grudging respect. "It is not terrible. Epic has the advantage of having been around for a long time, and they have been steadily improving the quality of their product. It is much simpler in its appearance to end users than some of the competing products. The user is not presented with a massively complex set of screens." ....Epic, of course, was unavailable for comment [on this article].

I found it interesting that Epic's privately-held status is put forth in the article as an advantage by health system clients because the company does not need to "dress up' quarterly earnings or court financial analysts. It would be more worrisome for me, as in the case of Kaiser Permanente, to have spent a king's ransom ("The Kaiser project will cost $4.2 billion by the time the final updates are completed in 2013.") on an EMR provided by a company micro-managed on a daily basis by a single individual. Perhaps plans have been made for Judith Faulkner's succession and the hospitals hold the system source code to ostensibly protect their institutions, but I very much doubt it.

For me, here's one of the paradoxes of the Epic success story. As noted above, Epic only sells to large health systems. These, of course, are the very organizations with the largest numbers of talented IT professionals. One of the secrets of the Epic success is that the company has a "take it or leave it" approach to its software products. In other words, the company does not allow local hospital IT personnel to modify the product -- only install and maintain it. The result of this arrangement is a "not terrible" EMR product, referred to by me in a previous note in a more charitable way as vanilla (see: Some Additional Insights into the Epic Corporate Culture). There are probably few other segments of the global IT industry where the most successful company in an industry would provide a product requiring a multi-billion dollar investment that is described as "not terrible."

Comments

[srf]

the company does not allow local hospital IT personnel to modify the product --

Yes it does, hence the reason those people get certified in the various Epic modules.

[S Silverstein]

I'm less charitable with other HIT.

See my eight part series at http://www.tinyurl.com/hostileuserexper . This was originally entitled "Are Health IT Designers, Testers and Purchasers Trying to Kill Patients?"

-- SS