Change of EPIC Proportions

With the passing of the American Recovery and Reinvestment Act in 2009, tens of billions of dollars in federal incentives were made available to spur the transition from paper to electronic records – a process that Epic Systems Corporation was fortuitously prepared to facilitate.

Introduction

On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act into law.[1]  This bill included incentive payments to encourage healthcare providers to use electronic health records to improve care.[2]  The inclusion of this project under the framework of transforming the American economy with science and technology appeared to demonstrate the revolutionary nature of this task.[3]  Although President Obama highlighted the importance of electronic medical records, the technology itself was not a recent innovation.  Instead, the transformative nature of this initiative relates to the adoption rate of the digitization of health records.

Electronic Health Records

Computers were introduced into biomedical research and patient care as early as the 1950s, and the first Electronic Medical Records (EMRs) appeared in the 1960s.[4] [5]  Modern EMRs were developed at the Regestrief Institute in Indianapolis in 1972.[6]  The technology was prohibitively expensive, however, and was therefore not widely adopted by physicians.[7]

In the mid-1980s, the Institute of Medicine performed a substantial analysis of paper health records, and published the results in 1991 in a paper titled “The Computer-Based Patient Record – An Essential Technology for Health Care”.[8]  This paper was subsequently updated and a revised version was published by the institute in 1997.[9]  As suggested by its title, the paper strongly advocated for the digitalization of medical records arguing that “[t]he increasing volume of data collected and the continued growth of medical knowledge have created a dramatic need for information technology appropriate for the task of sorting through all the information available, assessing the strength of the evidence, and bringing it to practitioners whenever they need it, particularly at the time they are making care decisions.”[10]  Despite the research supporting EMRs, adoption rates remained extremely low prior to the signing of the American Recovery and Reinvestment Act in 2009.

Epic Systems

Epic Systems Corporation (“Epic” or the “Company”) was originally founded as Human Services Computing, Inc. by Judith Faulkner in 1979 as a data analysis company.[11]  In 1983, the Company introduced a software program for scheduling patients and was renamed Epic Systems Corporation.[12]  In 1992, the Company introduced EpicCare, the industry’s first Windows-based EMR system.[13]  The introduction of a Windows-based EMR system a decade and a half prior to the passing of the American Recovery and Reinvestment Act fortuitously positioned the Company to take advantage of the U.S. Government’s increased prioritization of digitization of medical records.  With the passing of this act in 2009, tens of billions of dollars in federal incentives were made available to spur the transition from paper to electronic records – a process that Epic was prepared to facilitate.[14]

As of 2008, prior to the passing of the Recovery and Reinvestment Act, only 1.5% of U.S. hospitals had a comprehensive system for EMRs implemented in all major clinical units, and less than 10% had even a basic system in at least one unit.[15]  In contrast, by 2014 75.5% of hospitals had at least a basic electronic records system, many of which utilized Epic technology.[16]  Epic grew substantially as a company in parallel with the growth of the EMR industry.  In 2000, Epic had a workforce of 396 people and revenues of $47 million.  In 2016, Epic employed approximately 9,500 people and earned revenues of approximately $1.8 billion.[17]  Today, 190 million patients have a current electronic record in Epic’s system.[18]

Implementing EMRs has many benefits for both patients and care providers including: (1) improved data accessibility, (2) reduction of human error, (3) increased visibility into patients’ use of hospital resources, and (4) facilitation of communication between medical practices.[19]  Each of these benefits has the ability to improve patient care and may also drive down costs over the long term.

emr[20]

These benefits aren’t without costs, however.  The implementation of EMRs is costly from both time and financial perspectives.  In implementing EMRs, the organization must incur significant setup, maintenance, and training costs.[21]  According to a UC Davis study, initial implementations of EMR systems may also result in significant drops in physician productivity.[22]  As is to be expected, there is a learning curve that initially stifles the productivity of physicians transitioning to EMRs.[23]  In addition to this upfront learning, physicians steady state work load may also become more time-consuming as information entry and documentation related to EMRs is increasingly more robust than paper records.[24] [25]  Additionally, the ease of access that makes EMRs so attractive presents privacy risks that must continually be managed.[26]

Epic has an opportunity to continue to improve its technology to address each of these issues.  By continuing to work towards creating products that are both physician friendly and focused on cyber security, the Company has an opportunity to continue to capitalize on the growing demand for EMRs.  Ultimately, this continual refinement of its products will positively impact the medical community, patients, and the worldwide healthcare industry as a whole. (800 words)

 

[1] Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output in 2014. (2015). Retrieved November 17, 2016, from https://www.cbo.gov/publication/49958; About the Recovery Act. (n.d.). Retrieved November 17, 2016, from https://www.whitehouse.gov/recovery/about

[2] Electronic Medical Record/Electronic Health Record Systems of Office-based Physicians: United States, 2009 and Preliminary 2010 State Estimates. (2010). Retrieved November 17, 2016, from http://www.cdc.gov/nchs/data/hestat/emr_ehr_09/emr_ehr_09.htm

[3] Frequently Asked Questions | The White House. (n.d.). Retrieved November 17, 2016, from https://www.whitehouse.gov/recovery/about/faqs

[4] Early Computerization of Patient Care at Mayo Clinic. (2016). Retrieved November 17, 2016 from http://www.mayoclinicproceedings.org/article/S0025-6196(16)30105-7/fulltext#back-bib7

[5] Earl, Elizabeth. (2015). A history of EHRs: 10 things to know. Retrieved November 17, 2016, from http://www.beckershospitalreview.com/healthcare-information-technology/a-history-of-ehrs-10-things-to-know.html

[6] Ibid.

[7] Ibid.

[8] Atherton, Jim MD, Development of the Electronic Health Record. AMA Journal of Ethics. Retrieved November 17, 2016, from http://journalofethics.ama-assn.org/2011/03/mhst1-1103.html

[9] Dick, Richard S., Steen, Elaine B., and Detmer, Don E., “The Computer Based Patient Record Revised Edition An Essential Technology for Health Care” National Academy Press Washington D.C., dated 1997.

[10] Dick, Richard S., Steen, Elaine B., and Detmer, Don E., “The Computer Based Patient Record Revised Edition An Essential Technology for Health Care” National Academy Press Washington D.C., dated 1997, page vi.

[11] Eisen, Marc, “Epic Systems: An Epic Timeline”, Isthmus dated June 20, 2008.

[12] Ibid.

[13] Ibid.

[14] Boulton, Guy, Epic Systems soars with transition to electronic health records (2016). Milwaukee Journal Sentinel.  Retrieved November 17, 2016, from http://archive.jsonline.com/business/epic-systems-soars-with-transition-to-electronic-health-records-b99642837z1-366328781.html

[15] Ibid.

[16] Ibid.

[17] Ibid.

[18] Epic About Us. Retrieved November 17, 2016, from http://www.epic.com/about

[19] Palma, George MD, Electronic Health Records: The Good, the Bad and the Ugly (2013). Retrieved November 17, 2016, from http://www.beckershospitalreview.com/healthcare-information-technology/electronic-health-records-the-good-the-bad-and-the-ugly.html

[20] Electronic Health Records Infographic, HealthIT.gov. Retrieved November 17, 2016, from https://www.healthit.gov/patients-families/electronic-health-records-infographic

[21] Palma, George MD, Electronic Health Records: The Good, the Bad and the Ugly (2013). Retrieved November 17, 2016, from http://www.beckershospitalreview.com/healthcare-information-technology/electronic-health-records-the-good-the-bad-and-the-ugly.html

[22] UC Davis study finds e-medical records have varying effects on productivity (2010). Retrieved November 17, 2016, from https://www.ucdavis.edu/news/uc-davis-study-finds-e-medical-records-have-varying-effects-productivity

[23] Ibid.

[24] Ibid.

[25] Palma, George MD, Electronic Health Records: The Good, the Bad and the Ugly (2013). Retrieved November 17, 2016, from http://www.beckershospitalreview.com/healthcare-information-technology/electronic-health-records-the-good-the-bad-and-the-ugly.html

[26] Ibid.

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3 thoughts on “Change of EPIC Proportions

  1. Thanks for your post kc2018, I did not know how big this business was.

    It sounds like they got the first mover’s advantage in the US and that is great. however I wonder:

    1) Why haven’t they moved internationally. I am certain that there are many in countries where EPIC could have the same first mover’s advantage

    2) What are they doing to maintain their positions, browsing their web page I found that they spend 50% of their operating expenses on r&d. I am really curious about the results of that investment

    Sources: http://www.epic.com/about

  2. This is a very interesting business model and company, loved learning more about it. I am curious how their operating model has changed over time – I would imagine the growth to a 1B+ dollar business has been difficult for them to maintain. It could be interesting to understand how their products have had to change, and how they have had to adapt pricing/sales as technologies have changed as well as how their operating model has had to be adjusted. For example, I would imagine the privacy concerns for patients when they had only a small number of hospitals is significantly different than it is today.

  3. As a medical student pre- and post-Epic rollout at Mass General Hospital last year, I can say with full certainty that productivity dropped significantly in the beginning, even though the interface is reasonably user-friendly. With that said, what I find most puzzling is that Epic actually tailors its software to each hospital system — for example, within a hospital network of a smaller community based hospital, larger tertiary/quarternary care hospital, and outpatient facility, professionals may use 3 different versions of Epic for their operations. This means that healthcare workers who work across settings may find themselves learning three different systems at once. That certainly creates room for error and slowing of processes.

    Another limitation of Epic is also one of its strenghts. Epic is great at tagging ICD-9 & 10 codes (symptom/situtational and/or diagnosis codes) to the patient record, which can make billing much easier. However, in some instances, practitioners may feel the pressure to assign these labels to ensure that their documentation is “complete” and “billable,” despite the label being overly narrow or not comprehensive enough. Epic has certainly enjoyed its first movers’ advantage, but this is a big weakness of Epic (and other EMRs).

    As a final point, the Epic rollout at Partners Healthcare last year cost $1.2B dollars, and also involved hiring 600 new employees and hundreds of consultants to work with Epic to build the system and then train thousands of doctors, nurses, physician assistants, and other workers to use it. [1] I think that’s one of the main reasons why they haven’t moved globally — Epic is still figuring out how to work at big institutions, and is still uniquely tailoring its platform to each individual client. While there is significant overlap between different versions, this process is extremely costly and may not actually show improved outcomes or profitable retunrs until the learning curve stabilizes. Plus, more fundamentally, other healthcare systems may not be able to sustain these types of costs as easily as institutions that Epic has actually chosen to pair with.

    [1] https://www.bostonglobe.com/business/2015/05/31/partners-launches-billion-electronic-health-records-system/oo4nJJW2rQyfWUWQlvydkK/story.html

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