The Epic Epoch, Cont’d

Ya got me. I haven’t updated my story archive in the longest time. But a Wisconsin State Journal story detailing Epic employee unrest related to equity and diversity got me off my keister.

For the October 2020 issue of Madison Magazine, I examined the staff unrest at the Verona-based Electronic Health Record behemoth and considered what the future might hold for Dane County’s largest private employer. You can read the story here. Here’ what I concluded:

I did not speak to a single health care source who felt Epic’s EHR dominance was in danger now or in the immediate future or even 10 years from now.

Epic’s bond with its clients is just too strong. And even if there are unhappy campers, dumping Epic would mean repudiating a huge investment. The Kaiser Permanente consortium spent a reported $4 billion implementing Epic’s software. The Mayo Clinic got in for $1.5 billion. The Duke University Health System for $700 million. Eight- and nine-figure acquisition fees are common for Epic clients.

How do you walk away from that? Especially when no other EHR vendor offers a major hospital “50 different modules for 50 different departments” as good as Epic’s, as Bluetree’s Schwach told me.

Well, it could happen if you follow John Neis’ worried thinking: Failure is an option.

Neis, who has been doing early-stage health care investing since the mid-1980s, quietly argues that Epic is not invulnerable. He says the core problem remains: EHRs are an imperfect solution. Doctors find them “soul crushing.” This dysfunction haunts health care.

“The cost of leaving Epic for something else is enormous,” Neis acknowledges. But “switching does happen.” And sometimes outright revolutions happen in technology, too. Seared in Neis’ memory is a long-ago conversation in Rochester, New York, with a clueless Kodak executive who confidently told him that digital photography would never replace film.

Neis argues that a tech company with unlimited resources could blow up the existing EHR model and build a far better one. He feels “the Three As” — Amazon, Apple and Alphabet’s Google, all well practiced in disrupting entrenched industries — are the most likely Epic challengers.

Could they afford to spend a billion or two devising a “leapfrog” EHR that both pleases doctors and improves their diagnostic skills with data-crunched insights? We both laugh at the absurdity of the question; $2 billion is coffee money for the tech giants.

“The challengers would need to spend serious money,” he says. “It can’t be just for some incremental improvement. It has to be a huge leap forward in both data analysis to help guide the physician to the right decisions and secondly to greatly improve the software’s interface with the physician.”

At this point, Neis offers — practically in a stage whisper over the phone — an unexpected fourth candidate for disrupting the existing EHR hegemony: the Epic team itself. No one is better situated to lead the transformation, he says. They know the customer better than anybody. They understand what the problems are. They get how complex the solution needs to be. And because Epic is private, it doesn’t have to worry about Wall Street freaking out over a bad quarter or two.

Neis’ advice: “Epic should figure out the transformation before someone else does.”

Will the post-Faulkner Epic be agile enough to reimagine its business?

That’s the cosmic question. Northwestern’s Jennifer Pendergast, who directs the John L. Ward Center for Family Enterprises at Kellogg School of Management, knows little about Epic’s operation but is very familiar with strong-willed founders like Faulkner.

“Are they kidding themselves to think they can control the future from the grave? Yes. Often to great detriment,” she says. “The goal is to be flexible, resilient, to be able to pivot given the current environment. What you want is an organization that has the capacity to think and adjust on its own.”

As for an organization that is tightly fit to its market, Pendergast says it “will be really successful until the business environment changes. And then you’ve got a problem.”

 

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