I had not heard anything about this before but Mr. HIStalk alerts us to a new strategic initiative on the part of Epic's CEO and founder, Judith Faulkner (see: News 3/2/11). Below is a Q and A exchange posted recently:
From HISJunkie: “Re: Texas Health Resources offering HIT consulting services (see: Texas Health Resources offering HIT consulting services). Epic is doing what IBM did 35 years ago, turning every client into a hosting site (see SHAS circa 1975). Epic is allowing / encouraging the large medical centers to distribute its app on a host basis to almost any remote client (particularly if they are under 150 beds) without incurring a new acquisition or license fee. Just add more work stations and pay a small seat license increment and you can buy them in ‘bulk’. I spoke to several CIOs at HIMSS that are doing this for owned, managed, and non-affiliated facilities. All other vendors require you to pay a sizable new facility license fee. Epic says … not necessary. Oh, but along with the seat charge, they bump up your monthly support fee. How can Epic do this? If you’re a private company, cash is king, not revenue recognition. That’s why you do not see Cerner, McK, Allscripts, etc, do this — Wall Street wants the rev NOW! Epic can wait. Why would Epic forego a possible meaty license fee? They view this as incremental revenue that they would otherwise never see since it’s too costly to sell and support the small or mid-sized facility. (Watch out Healthland, CPSI, HMS, et al.) I predict in the next year you will see many IDNs that are running Epic do the very same as THR. Only trouble is, running a software / service operation is very different than running a facility-focused HIT department. I know, I’ve done both, and the balancing act can make you pull your hair out!”
Mr. HIStalk response: Even Judy critics have to admit she’s brilliant in turning high-paying customers into dealers who can make a little of their money back selling their services to small sites, and in doing so, spread Epic’s reach wider. It’s like creating an Amway sales downline – let someone else do all the sales work on your behalf. I bet the number they watch isn’t revenue or profit, but rather the number of beds or encounters covered – if that number keeps ramping up, the company has endless ways to monetize it down the road. It’s like viral marketing with high switching costs, not to mention that customers aren’t likely to complain publicly about Epic’s solutions when they’re trying to sell them themselves, either internally or externally.
Judy Faulkner is certainly the best business mind operating today in HIT and probably in an even a wider sphere. I don't see any restraints on this juggernaut, at least in the near future. A recent post about Cerner pricing may now make more sense (see: Is Cerner Modifying Its EMR Business Model?).