Why Epic's market dominance could stifle EHR and health IT innovation

Epic has attracted several notable critics, who warn that its market dominance could have harmful effects on the future of health information technology, EHRs and even patient care. Worse, these critics warn, Epic has achieved much of its market dominance on the backs of taxpayers.

Epic is the nearly undisputed king of the electronic health records world.

About 40% of the U.S. population has its medical information stored in an Epic electronic health record (EHR), and the company often sits atop research firm KLAS' rankings of best-available EHR systems.

Epic has plenty of big-name clients who've spent tons of money installing its expensive systems: $700 million from Duke University Health System; $700 million from Boston's Partners Healthcare; $150 million from the University of California, San Francisco; and $80 million from Dartmouth-Hitchcock Medical Center in New Hampshire, Forbes reported last year.

So it's not surprising that such a high-profile company has attracted several notable critics, who warn that its market dominance could have harmful effects on the future of health information technology, EHRs and even patient care. Worse, these critics warn, Epic has achieved much of its market dominance on the backs of taxpayers - courtesy of $35 billion in federal subsidies paid to hospitals and doctors to purchase EHR systems.

"As a country we get nervous when any company in any sector has a market share in the range of 40% because we know that companies will use their market dominance to limit consumer options and hold back technological advancement," wrote Paul Levy, former CEO of Beth Israel Deaconess Medical Center in Boston, on his "Not Running a Hospital" blog.

Levy, perhaps Epic's most boisterous critic, made waves (in health IT circles, at least) last year when he compared the customer experience with Epic to Stockholm Syndrome, which occurs when hostages begin to empathize with and have positive feelings for their captors.

Aside from the taxpayer subsidies Epic has indirectly received, what really rankles the company's critics is Epic's lack of interoperability with other EHR systems, meaning that's it's a "closed" system that doesn't share patient data particularly well with doctors or hospitals who don't use Epic's software.

"If Epic (already based on an antiquated technology – MUMPS) decides to maintain an essentially closed system, and to drive all innovation internally, this could prove stultifying, limiting the development of novel ideas, and forcing the many high-profile adopters of Epic to accept stagnation or pay the staggering costs of switching," wrote physician-scientist David Shaywitz in Forbes.

In other words, the "closed" nature of Epic's systems - coupled with its dominant market position - could mean that Epic ends up setting the defacto standards for EHR systems, effectively stifling innovations that its competitors might develop in the EHR market. That, in turn, could lead to Epic's big hospital customers - and those hospitals' patients - being frozen out from advances in EHR technology.

Health IT analyst John Moore of Chilmark Research predicts that's exactly what'll happen. Writing at The Health Care Blog, Moore said Epic is operating on a model that "will ultimately hinder healthcare organizations’ ability to rapidly innovate and respond to market changes. Epic simply will not be able to move fast enough and their customers will struggle as a result."

Because such a large portion of the country's patients have their records stored in an Epic system, those patients could feel the pain of Epic and its customer's struggles.

Then there's the question of to what extent American taxpayers are helping to subsidize Epic's market grab, courtesy of EHR incentive payments outlined in the Obama administration's 2009 stimulus bill. It's not a coincidence that the privately held company's sales have been skyrocketing in recent years, up to $1.2 billion in 2011, double what they were four years prior, according to Forbes.

It's also no coincidence that Epic and other major EHR players lobbied the federal government hard for the subsidies, and those companies "have reaped enormous awards because of the legislation they pushed for," The New York Times reported earlier this year.

Executives at smaller EHR companies say the legislation cemented the established companies’ leading positions in the field, making it difficult for others to break into the business and innovate, according to The Times.

That doesn't sit well with Levy.

"We need to consider whether it is appropriate that an EHR company that is making its money in great measure on contracts paid directly or indirectly by federal funds should be able to engage in practices that support long-term market dominance," he wrote.

An Epic spokeswoman wasn't available for comment. Levy didn't respond to a Twitter message seeking comment.

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