Epic Systems, every mention

Epic Systems (MyChart) · Acquired Apr 21, 2025 · 100 mentions

• ▶ 2:06:25 Ben Gilbert So there's the first and easiest interoperability, which is EPIC to EPIC at a different hospital.
• ▶ 2:06:33 Ben Gilbert They also have EPIC.
• ▶ 2:06:38 Ben Gilbert Two is EPIC to another EMR that's at a different hospital.
• ▶ 2:06:43 Ben Gilbert EPIC to Cerner.
• ▶ 2:06:44 Ben Gilbert EPIC to Meditech.
• ▶ 2:06:45 Ben Gilbert EPIC to Allscripts.
• ▶ 2:06:46 Ben Gilbert EPIC to some Homeworld system.
• ▶ 2:07:13 Ben Gilbert Epic transferring to themselves?
• ▶ 2:07:27 Ben Gilbert Epic to another EMR at another hospital.
• ▶ 2:07:30 Ben Gilbert Well, not only the hospitals maybe don't want that, maybe Epic doesn't love that either.
• ▶ 2:07:38 David Rosenthal Epic doesn't want that, and the hospital doesn't want that.
• ▶ 2:07:40 Ben Gilbert And, you know, they talk about a lot of good reasons why, eh, actually we do want that, but let's just call a spade a spade and say there's no business reason why Epic would love for that to happen.
• ▶ 2:07:59 Ben Gilbert Epic to third-party application that wants to use data from Epic, or sit on top of Epic, or interoperate somehow with Epic.
• ▶ 2:08:10 Ben Gilbert As a company, they have been very, very careful about this one over the years.
• ▶ 2:08:18 Ben Gilbert Epic has publicly referenced the fact that they have never had a Cambridge Analytica situation because they're very, very careful about sharing
• ▶ 2:08:28 Ben Gilbert But the result of this is that it's been much harder to integrate with Epic as an application developer than you would be used to in any other software category.
• ▶ 2:08:42 David Rosenthal But also massively in Epic's interest for that to be the case.
• ▶ 2:09:19 Ben Gilbert All Epic customers, even if they were your local competitor.
• ▶ 2:09:42 Ben Gilbert And Judy described it as pure luck that Epic was actually able to move ahead.
• ▶ 2:09:47 Ben Gilbert And so after that win, they then made it mandatory for all of their customers, and they retrofitted old versions of the software to support Care Everywhere, so every Epic customer in the US has it and can share with every other Epic…
• ▶ 2:10:19 Ben Gilbert So, coming into 2008, that's sort of the historical baggage that you should know about in Epic Land of, they believe they're doing a lot of interoperability in the way that they like to do it.
• ▶ 2:17:18 Ben Gilbert As Rusty France, CEO of EHR vendor NextGen Healthcare put it, and NextGen is one of the top 10 Epic competitors, the industry was like, I've got this check dangling in front of me, and I have to check these boxes to get there, and so,…
• ▶ 2:17:33 Ben Gilbert For everyone that wants to just think this was the most amazing thing ever for Epic,
• ▶ 2:18:00 David Rosenthal It's more nuanced than, this is really good for Epic.
• ▶ 2:18:02 David Rosenthal Of course it was really good for Epic, but really it's the,
• ▶ 2:18:28 Ben Gilbert And also, that Epic one, I think someone told me before that was an expensive one.
• ▶ 2:18:39 Ben Gilbert So, Epic, by being the high price, high value vendor, and the one that you could count on working with the lowest risk, they were gonna win in this situation.
• ▶ 2:19:52 Ben Gilbert I mean, to be an Epic employee at this moment where suddenly your category is just
• ▶ 2:22:46 Ben Gilbert The data interoperability did not really happen, which was very convenient for Epic.
• ▶ 2:23:07 David Rosenthal And there is a fact pattern that opens Epic up certainly to criticism here, which is that Judy was on Obama's Health IT Council through all of this, which was advising
• ▶ 2:26:43 David Rosenthal And related fields to medicine, like IT administrators, you know, EPIC administrators.
• ▶ 2:28:04 David Rosenthal So, back to the epic story here.
• ▶ 2:28:07 Ben Gilbert Yeah, so what did Meaningful Use do for them?
• ▶ 2:28:30 David Rosenthal Epic was going to become the dominant player anyway, absent of meaningful use.
• ▶ 2:28:35 David Rosenthal They were starting to run the table on competition.
• ▶ 2:28:38 Ben Gilbert They were starting to.
• ▶ 2:29:35 David Rosenthal And the majority of them chose Epic, which they probably would have anyway, but a lot of those processes would have happened in the future at which point in time other competitors may have emerged.
• ▶ 2:30:11 Ben Gilbert I don't think the folks at Epic loved it either.
• ▶ 2:30:14 Ben Gilbert My impression is they felt like they were going to take this market, and now they had to do it in sort of this Frankenstein-style way.
• ▶ 2:30:28 Ben Gilbert You know, it made it more sure that they were gonna win the market, because if something's gonna happen five years from now where it could happen now, you'd rather it happen now, and it be certain.
• ▶ 2:30:37 David Rosenthal But they certainly don't love it that doctors have to check 57 boxes on every patient visit.
• ▶ 2:30:52 David Rosenthal Which to be clear isn't just Epic, it's all of them.
• ▶ 2:34:27 David Rosenthal So on the back of all of this, Epic continues to win epically.
• ▶ 2:34:34 David Rosenthal In 2011, they hit a billion dollars in revenue.
• ▶ 2:34:37 David Rosenthal They keep winning all the big systems that come up for RFP.
• ▶ 2:34:47 David Rosenthal For Epic's competitors, they had always been merging, and consolidation had always been happening, but now with meaningful use being in place, consolidation really picks up.
• ▶ 2:34:59 David Rosenthal Which again, all of which is just gonna accrue to Epic's advantage, because consolidation in this space means the products get more complex, they don't work as well altogether as a suite, and Epic's advantage just becomes all the more…
• ▶ 2:39:54 David Rosenthal Now, Epic, of course,
• ▶ 2:39:55 David Rosenthal Bids on both of these contracts, and as you would expect, just like with Kaiser, it comes down to Epic and Cerner.
• ▶ 2:43:29 Ben Gilbert Do you think Epic is glad they didn't win?
• ▶ 2:43:33 David Rosenthal Epic, of course, was part of this process.
• ▶ 2:43:40 Ben Gilbert Initial price tag before the overruns is twice Epic's revenue today.
• ▶ 2:43:49 David Rosenthal Kind of like Kaiser was transformative for Epic back in the day.
• ▶ 2:43:53 David Rosenthal That said, talking to Epic customers and CIOs in the research, they are like down on their hands and knees, thankful that Epic did not win this deal.
• ▶ 2:44:40 David Rosenthal And meanwhile, Epic, kind of unburdened by this DoD and VA shitshow, for lack of a better word, and they just keep winning deal after deal in the large system providers.
• ▶ 2:45:20 David Rosenthal So after the DoD deal, Epic wins Partners Healthcare in Boston, which is the sort of new entity of Harvard and Mass General, MGH, and like the original.
• ▶ 2:45:46 David Rosenthal 2018, Epic hits 2.7 billion in revenue.
• ▶ 2:46:08 David Rosenthal Epic.
• ▶ 2:46:27 Ben Gilbert And I think now, 90% of med school students train on Epic.
• ▶ 2:46:33 David Rosenthal 2019, Epic hits 3.2 billion in revenue.
• ▶ 2:47:46 David Rosenthal Great for Epic and totally reinforces Judy's whole thesis of company building in this space and her whole story to customers of one single integrated platform that is hardcore about software development, that is 100% customer focused, that…
• ▶ 2:48:56 David Rosenthal And I was trying to square in my mind earlier when we were telling the Meaningful Use story how, on the one hand, it really was obviously good for Epic and an accelerant, and it further cemented the market dynamics where they were already…
• ▶ 2:49:11 David Rosenthal On the other hand, when you talk to people within Epic, they're very mixed on meaningful use.
• ▶ 2:50:43 Ben Gilbert You know, there's another big tailwind that's happening for them, and like you've probably been hearing from me over the course of this whole episode, there are tailwinds that don't make you feel good, but they're still tailwinds for…
• ▶ 2:51:35 Ben Gilbert And what that means, if you play it out, is all healthcare or most healthcare gets provided by these mega-giant hospital systems rather than community clinics, which really benefits Epic, because their strategy from 30 years ago of going…
• ▶ 2:53:03 David Rosenthal So that brings us to the other big, I think, potential growth vector for Epic going forward that they're absolutely pursuing is they have enough scale on the provider side now that they can start going to the other big players in the…
• ▶ 2:53:32 David Rosenthal So they call this the system of connectedness or the quote unquote grid of care that you might sometimes hear from Epic, but this is building products for and working with payers, the insurers and pharma companies and other stuff like home…
• ▶ 2:54:21 David Rosenthal Epic now has enough data and enough scale on the hospital side that they can go to the payers and say, hey, prior auth, our customers don't like it.
• ▶ 2:54:35 Ben Gilbert I would argue this is an area where you are seeing one of Epic's favorite business strategies, which is we sell the main thing to a hospital system.
• ▶ 2:54:55 Ben Gilbert Sometimes just being a single vendor with the same offering is enough, but then they try to figure out if they can
• ▶ 2:55:04 Ben Gilbert They want to sell everything to the hospital and be the single IT vendor.
• ▶ 2:55:14 Ben Gilbert So the epic playbook is go from selling a hospital one thing to figure out how to then sell the hospital everything.
• ▶ 2:55:26 Ben Gilbert Why they're looking into payers, and that's why they're looking into pharma companies.
• ▶ 2:55:42 Ben Gilbert If you're in this ecosystem, you're going to say, there's 50 things that Epic does that you didn't talk about.
• ▶ 2:55:48 Ben Gilbert There's no chance that we could talk about all of that on this episode, but there is one really cool, interesting thing that they are doing right now that we do want to talk about.
• ▶ 2:56:02 Ben Gilbert They launched something a few years ago called Cosmos.
• ▶ 2:56:09 Ben Gilbert So, they've realized, okay, there is data on patients that is owned by patients in hospitals, not by us, that lives on a bunch of different servers.
• ▶ 2:56:30 Ben Gilbert Can we anonymize that and get it all in an Epic hosted instance of something very queryable and very useful for a bunch of activities?
• ▶ 2:56:43 Ben Gilbert They did it.
• ▶ 2:57:34 Ben Gilbert Epic has a stat in 23, its system prevented sixty-six million potential adverse drug interactions and 250,000 potential surgical errors.
• ▶ 2:58:10 David Rosenthal Epic is finally doing it.
• ▶ 2:59:09 Ben Gilbert So of all the Epic customers,
• ▶ 2:59:26 David Rosenthal They've productized this and made it free that any of their customers can just turn it on.
• ▶ 2:59:47 David Rosenthal Yeah, lookalike patients throughout the history of everybody that's ever been on Epic.
• ▶ 3:00:11 Ben Gilbert We'll have to see how they price and package it in the coming years.
• ▶ 3:01:05 David Rosenthal So basically almost all of America gets seen in some part of their healthcare by a epic system.
• ▶ 3:01:59 Ben Gilbert I talked to someone in a mid-sized health system that said there's a hundred full-time employees administering Epic at her hospital system, but Epic actually only captures about ten million dollars a year
• ▶ 3:02:14 Ben Gilbert So there's this sort of interesting dichotomy of, yes, it's a lot of spend, but the minority of it actually goes to Epic.
• ▶ 3:03:07 Ben Gilbert Epic actually just doesn't capture that much of it.
• ▶ 3:04:04 David Rosenthal I think they want it to be an irrational and irresponsible decision for a healthcare system not to use Epic.
• ▶ 3:04:45 Ben Gilbert United Healthcare's profit dollars are six times Epic's entire revenues.
• ▶ 3:04:50 Ben Gilbert So Epic has become this incredibly important and powerful linchpin in the system, despite not actually having that big of a profit pool in the industry.
• ▶ 3:05:32 Ben Gilbert 58% of ambulatory physicians now use Epic.
• ▶ 3:05:35 Ben Gilbert 79% of the US ends up using Epic in one way or another.
• ▶ 3:05:54 Ben Gilbert So, then that kind of brings us to what is Epic worth?
• ▶ 3:06:39 Ben Gilbert That is a ludicrous valuation for Epic.
• ▶ 3:06:43 Ben Gilbert If you do the very conservative thing of looking at Cerner's EBITDA multiple of 30 times when Oracle bought them, and you assume conservatively, again, a 30% EBITDA margin at Epic, that would give you
• ▶ 3:06:58 Ben Gilbert Valuing Epic at fifty-one billion.
• ▶ 3:07:01 Ben Gilbert But come on, Epic's revenue streams are way more durable than Cerner's.
• ▶ 3:07:05 Ben Gilbert And Epic is growing, while Cerner was going through a hard time.