Health system executives often sell Epic to their boards as an investment that will earn its money back, and some attach a timeline.
Washington, D.C.-based Children’s National Hospital expects to recoup its upfront cost in about five years, while West Burlington, Iowa-based Great River Health is weighing its $35 million investment over 10 years, bracing for two or three tougher years first.
For a few systems, the deadline has already passed. When Worcester, Mass.-based UMass Memorial Health went live on its $700 million Epic system in 2017, leaders said it would pay for itself if it improved efficiency by 2% a year over five years. San Antonio-based University Health projected in 2019 that its $170 million Epic investment would save $12 million a year by retiring redundant applications.
Leaders at both systems told Becker’s that Epic paid off. Neither can point to the day it happened, because the biggest returns showed up in places the original business cases never tried to count.
At UMass Memorial, the 2% gain materialized, according to Sergio Melgar, executive vice president and CFO, who is set to retire in January. The complication is everything else that happened at once. Epic was part of a plan to grow volume, not just prices, and Mr. Melgar estimated the system has grown from roughly $2 billion in revenue around go-live to about $5.5 billion today.
“We ended up with a basket of fruit,” Mr. Melgar said. “Essentially, we were hoping to get better. We got significantly better because operationally and strategically, I think we did execute tremendously well.”
The cleaner test came later. UMass Memorial has since brought in UMass Memorial Health – Harrington in Southbridge, Mass., and UMass Memorial Health – Milford (Mass.) Regional, and moving onto Epic was a condition of joining. Both hospitals saw revenue rise after their own go-lives.
“There’s a lot of missed revenue when your systems are fragmented. When you unify your system, you capture everything,” Mr. Melgar said.
His rule of thumb is about $20 million in new revenue for every $1 billion a system brings in. For Milford, which he described as roughly a $400 million operation, he estimated a lift of $8 million to $20 million a year against an implementation bill of $40 million to $50 million, which he said should pay for itself within five years. Most of that bill never reaches Epic; hardware, security and pulling staff offline for training cost more.
“The majority of putting in Epic is not what you’re paying Epic. The majority is everything else you have to do,” Mr. Melgar said.
Not every health system recoups that quickly. Bethlehem, Pa.-based St. Luke’s University Health Network, which went live in 2016, took nearly seven years to earn back its initial spending, CIO Chad Brisendine told Becker’s in June.
UMass Memorial’s own slow spot was physicians. Leaders hoped clinicians would be fully on board within a year; it took closer to three, with physicians later in their careers having the hardest time adapting to Epic’s standardized workflows. The timing paid off: By the time COVID-19 arrived in 2020, the switch was complete, and UMass Memorial stood up a field hospital at Worcester’s DCU Center, live on Epic, in under two weeks. Mr. Melgar said that would not have been possible on the fragmented setup Epic replaced.
University Health went live in the middle of the pandemic and had to rewrite the playbook to do it. Bill Phillips, now executive vice president and COO, led the implementation as the system’s CIO. With face-to-face provider training off the table, he persuaded Epic to let University Health record its own training videos. He had planned on roughly 100 support staffers on-site for go-live and ended up with about seven. The mall the system rented for training became one of the country’s larger mass COVID-19 vaccination sites.
The improvisation saved money. University Health finished about $50 million under its $170 million budget, in part by limiting outside consultants to five, each paired with a University Health employee on a module, an approach Mr. Phillips calls “two in the box.”
But the return Mr. Phillips points to first is uptime. University Health’s previous EHR was down more than it was up, he said, and every upgrade brought three to six months of fixes. At $5,000 to $7,000 a minute in downtime costs, citing industry estimates, those outages added up quickly.
“So that downtime alone paid for itself,” he said.
The $12 million in annual savings University Health projected in 2019 came from collapsing hundreds of interfaces and redundant applications into one platform, cutting maintenance fees and the staff needed to support each system.
“It was accurate at that point in time. And if we wouldn’t have done that by now, that number would have tripled or quadrupled,” Mr. Phillips said.
He didn’t have an exact payback date on hand but said the system recouped its initial investment “way ahead of schedule, way ahead.” University Health is now preparing to open two greenfield hospitals on the same Epic platform.
Elsewhere, Epic is starting to show up in financial statements. Boone, N.C.-based UNC Health Appalachian credited its rollout in part for erasing a projected $45 million loss.
The ledger cuts the other way, too. Cleveland-based University Hospitals projected more than $100 million a year in benefits from its $400 million Epic project, then cited the install as a factor in operating losses in 2022 and 2023. Burlington, Vt.-based UVM Health blamed its $151.7 million implementation for part of a $10 million operating loss in early fiscal 2020. Neither responded to Becker’s requests for comment, nor did NYC Health + Hospitals, which projected in 2017 that its $289 million Epic revenue cycle investment would capture up to $142 million in additional revenue a year.
Mullica Hill, N.J.-based Inspira Health, which expected its $120 million Epic investment to lift revenue 1% to 7%, said it was too soon to share results.
Mr. Melgar, whose system reached level 10 in Epic’s Gold Stars program, said the difference between those outcomes comes down to execution.
“If you don’t implement it well, then you’re not going to see it. … If it was easy, everybody would do it,” he said.
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