Is Epic's dominance good for healthcare?

Epic is the biggest name in health IT and, by all accounts, only getting bigger.

The EHR vendor controls nearly a third of the U.S. hospital market share and continues to add large health systems to its portfolio.

But is the Verona, Wis.-based company's reign a positive or negative for healthcare? Becker's asked hospital and health system CIOs how they feel about Epic's command of the business.

"Epic's dominance is neither good or bad — it just is," said Saad Chaudhry, CIO of Annapolis, Md.-based Luminis Health. "Healthcare's EHR marketplace today is an oligopoly — there are a small number of dominant companies in the market."

Epic has 32.9 percent of the U.S. hospital business, but Oracle Cerner isn't far behind at 24.4 percent, with Meditech sitting at 16.7 percent and several smaller players in the single digits, according to the latest data from KLAS Research. In 2022, Epic is continuing its trend of gaining larger hospitals and health systems, while Cerner keeps picking up smaller facilities, a KLAS researcher recently told Becker's.

It goes back to the meaningful use rules that encouraged hospitals and health systems to adopt EHRs, Mr. Chaudhry said. At the time, CIOs often juggled hundreds of different systems and applications to cover their IT operations. Epic and other vendors evolved to simplify this landscape, developing "mega-suite" EHRs that could handle many of these functions in a fell swoop (which, in turn, led to higher prices for these software products).

EHRs are now typically the single largest operating expense on health IT budgets, ranging from 15 percent to 20 percent of the total (or higher if the system is hosted by the vendor), Mr. Chaudhry estimated. Still, CIOs justify the cost because of the simplifications these new integrated EHR solutions provide.

"The concern over Epic would be the same for any potential monopoly," said Doug Copley, the founder and CEO of IT consulting firm Data Protection Partners, who serves as chief information security officer for two health systems. "With greater control over the market, comes less competition, higher prices, potentially less focus on customer satisfaction or even innovation."

He said Epic is already expensive and "borderline" unaffordable for most nonprofit health systems. And as they get bigger, they could become less responsive to the needs of patients and customers.

Mr. Copley said he hoped to see companies like Cerner parent Oracle, Amazon or Google provide more competition to Epic — or even a nonprofit competitor pop up — but he doesn't believe that will happen anytime soon.

Cost, innovation concerns

Randy Davis, vice president and CIO of CGH Medical Center in Sterling, Ill., said he has no doubt that Epic's preeminence is bad for healthcare. He said to imagine if cars were so expensive you could only afford to buy one every few decades. At that point, he asked, do you own the car, or does it own you?

"Entrepreneurialism is dead with EHRs today," he said. "Sure, they try to talk like they are, but the only thing that truly pushes positive change forward is competition. We effectively have no competition in this space as the purchase decision is so profound, once made, the vendor owns you. The advent of meaningful use regs have given us EHRs having no incentive to respond to anything but the beat of their own drum."

The prices for most of Epic's products have stayed the same for the past 20 years, a company spokesperson emailed Becker's.

"If making a lot of money had been our focus, we would have gone public and we would be run by finance people, not software developers," the spokesperson said. "Epic devotes more than 30 percent to research and development every year, a much higher number than other EHR vendors we’ve looked at."

"Fortunately, after putting in our software, health systems typically find that they are more profitable and that patients get better care," the spokesperson added.

Scott Arnold, executive vice president and CIO of Tampa (Fla.) General Hospital, said this question is similar to asking whether Amazon or Walmart are good for retail. He said health systems choose partners that best meet their needs, and Epic has done that for his hospital.

"One could argue that antitrust is a concern at some point, but you can also argue the current variation of technology providers in healthcare is driving unnecessary cost into the system," he said. "I support lowering the cost of healthcare, best patient outcomes and best patient experience — Epic does it best."

Depends on 'lens you're looking through'

Keith Perry, senior vice president and CIO of Roanoke, Va.-based Carilion Clinic, said the way you view Epic's rule "depends entirely upon the lens you're looking through."

"Anytime you have limited competition around a product or service, you’re going to see the potential for higher costs associated with it," he said. "In general, competition helps to keep prices in check. Given the limited competition in the EHR space, I think you’re going to see continuing upward movement in cost structures for acquiring and maintaining EHR technology."

But he said the more health systems use Epic, the easier it is for patients to view their medical records in one place, increasing interoperability.

Dennis Sutterfield, vice president and CIO of Brooklyn, N.Y.-based SUNY Downstate Medical Center, said he doesn't believe Epic's lead is a bad thing. After all, health systems are picking the company for a reason.

He said health IT has other "borderline monopolies" that aren't easy to deal with, citing Nuance, the voice dictation company acquired by Microsoft in 2021, as one example. However, he said, 3M's M*Modal is "grinding to improve their position."

"In almost all settings, someone is chasing a market leader and that chase often drives improvement and innovation in an effort to sustain or survive," Mr. Sutterfield said. "This process of change is good for the customer and consumer."

Will Epic evolve?

Other executives said Epic's continued ascendancy will depend on how it adapts to the changing digital healthcare landscape.

Bradd Busick, senior vice president and CIO of Tacoma, Wash.-based MultiCare Health System, said he and many of his peers are watching to see how Epic quickly adopts new features while learning from niche competitors.

"Ranging from [customer relationship management], unified messaging or a 'lightweight' retail health offering for urgent care, we would love to see additional investment and speed to market to replace many healthcare systems' best-of-breed or one-off point solutions," he said.

Epic has a "long history of innovation," the company spokesperson said.

"For example, we invented interoperability with minimal effort (Care Everywhere). And MyChart — the patient portal with data from the EHR," the spokesperson said. "Because we are software developers and love our products, we focus on customer happiness to make sure our customers love the products too."

Tony Ambrozie, senior vice president and chief digital officer of Coral Gables-based Baptist Health South Florida, said he doesn't view Epic's market share as dominant, just the largest at the moment.

And he said it can all change if a company opts to "extract supernormal rents from its position" and doesn't continue innovating.

He said successful EHR vendors must be open and interoperable, protecting customers from "exclusive and comprehensive lock-in." They'll also have to compete with all the new digital, artificial intelligence, machine learning and sensor technologies arriving in healthcare.

"In the '70s and into the '80's in IT, the closed dominant platform was the IBM mainframe while Unix (and later derivatives) were open," he said. "We know how that turned out."

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