Epic Systems: Madison Healthtech’s “Unwitting” Anchor Company

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run independently of electronic health records software made by Epic and its competitors. But if a hospital or clinic wants to integrate a vendor’s software product with Epic’s software in some way, Epic often charges fees to open a portal to its systems—essentially setting up an API, the former Epic employee says. And if the hospital doesn’t have in-house IT staff with the skills to set up that link, it might need to hire expensive consultants who are certified by Epic to handle such work.

“A client can quickly be in over $100,000 before they have even spent a dime on the third-party product itself,” this person says. “This is a big reason why many startups with product ideas in the healthcare IT space fail to roll their product out.”

It’s worth noting, however, that it’s not a death sentence for a healthtech company if it doesn’t integrate its products with Epic. Wellbe’s software, for example, is capable of interacting with electronic health records software, but it can also operate independently, Dias says. His company has raised about $4 million from investors since it was founded in 2008, and its software is used by 12 hospitals nationwide and nearly 5,000 patients annually. “A third of our customers use Epic and are driving the promised full value from our platform without the integration,” he adds.

Still, Epic isn’t afraid to throw its weight around to thwart software companies that don’t play by its rules. Another former Epic employee, now an executive with a healthtech consulting company located outside of Wisconsin, recalls an example in which he was attempting to help implement a third-party software product in several client hospitals. The product required access to Epic’s software, but the developer hadn’t signed an agreement with Epic to do that. Epic got wind of it, and one of its executives called the hospitals and pressured them not to buy the product, this person says.

The healthtech exec says he “had to scrap the whole” project. “In hindsight, it was not a smart move,” he admits.

But he still chastises Epic for acting like a “bully,” and he doesn’t understand why Epic sees these smaller software companies as threats. “The only guess I can come up with is they want to control everything. They want to make sure they can develop it in the future. But they don’t have time to develop it. There’s so many government regulations coming up, they can barely keep up with those things.”

Instead, Epic should make it easier for other companies to develop software products on top of Epic’s platform, he argues. “The point for Epic is either get out of the way, or assist their innovation,” he says.

There’s some cautious hope that Epic is starting to open up its platform more.

Earlier this year, Epic confirmed it was launching an “App Exchange” that theoretically should make it easier for third-party software companies and hospital systems to create apps that work with Epic’s software products. Epic hasn’t released details about the exchange, so there are still a lot of questions about how it will function.

“Only time will tell how open they actually are,” says the former Epic employee who lives outside Wisconsin.

Brandon, the chamber of commerce president, defends the caution by Epic to completely open up its platform, pointing out that “there’s too much at risk when it comes to healthcare records.” But Epic is becoming more open, Brandon insists, citing both the App Exchange and Epic’s partnership with Apple on the Silicon Valley company’s new HealthKit software tool that ties together consumer health and fitness apps. “Maybe that’s not moving as fast as everybody wants, but you have to acknowledge it’s happening,” Brandon adds. And as this gradually increasing openness continues, it could bring more opportunities for the local healthtech sector.

Meanwhile, there’s at least one recent instance of Epic getting more involved in the Madison business community. Epic is now a member of the local chamber, and Epic chief administrative officer Steve Dickmann joined the chamber’s board last year—the first time Epic has participated in the organization’s leadership, Brandon says. “You’re seeing them get more involved and understanding the value that they’re contributing and the responsibility that comes with it,” he adds.

Even without explicit support from Epic, the local healthtech sector is growing and thriving, with more than a dozen startups and established companies that employ more than 700 people and generated more than $139 million in revenue last year. And they’re not waiting for Epic’s help to promote Madison as a healthtech hub.

To date, Madison’s healthtech startups have primarily collaborated via a casual networking and events group that has been organized without any outside funding, Moxe Health’s Wilson says.

Now, Madison’s smaller healthtech companies are starting to team up in more prominent ways. Last month, 13 of them issued a joint press release touting their recent growth and highlighting the local scene, which advocate and investor Mark Bakken is trying to brand as “Med-ison.” The press release was timed to coincide with the industry’s top annual conference, hosted by the Healthcare Information and Management Systems Society (HIMSS) and held in Chicago this year.

Several of Madison’s healthtech startups have also been in talks with the chamber of commerce about partnering to launch a more formal initiative to promote the region’s healthtech cluster. The details are still being worked out, but an announcement should be made by the end of the summer, Brandon says.

“They need to band together, create density, and also celebrate their accomplishments—but also Epic’s accomplishments,” Brandon says.

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Jeff Engel is Deputy Editor, Tech at Xconomy. Email: jengel@xconomy.com Follow @JeffEngelXcon

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