Epic Systems Corporation Business Information, Profile, and History

Company Perspectives:

Throughout our 25-year history, we have focused on providing applications and services for large, multi-specialty organizations, giving us a deep understanding of both the challenges faced by these groups and the strategies that lead to long-term success.

History of Epic Systems Corporation

Based in Madison, Wisconsin, Epic Systems Corporation is one of the healthcare industry's leading information technology companies, serving many of the world's largest hospitals and healthcare systems. The company's software applications fall into a number of broad categories, including e-health and handhelds, enterprise foundation, clinical, decision support, access, revenue cycle, health plan, and connectivity. Epic's product trademarks include Analyst, Bridges, Cadence, Chronicles, Clarity, Cohort, EpicCare, Epicenter, EpicLink, EpicOnHand, EpicRx, EpicWeb, Identifier, Identity, MyChart, MyEpic, OpTime, Prelude, Resolute, Revenue Guardian, SmartForms, and Tapestry. According to Epic, its software applications help healthcare providers to "improve the patient experience, provide more effective care, streamline administrative tasks, and strengthen their financial health." Epic puts a premium on remaining independent. To maintain its focus and organic culture, the company has avoided public stock offerings, mergers, and the acquisition of other firms. Some 90 percent of Epic's staff is devoted to customer service or research and development initiatives.

A Healthy Start: 1979-89

Epic owes its start to Judith Faulkner, a computer programmer who came to Madison, Wisconsin in the 1970s to pursue graduate studies in computer science after earning a mathematics degree in her native Pennsylvania. Following graduate school, Faulkner worked as a consultant and taught computer science at the University of Wisconsin-Madison during the 1970s and early 1980s.

In the August 1998 issue of Health Data Management, Dan Balaban wrote of Faulkner: "During this time, she led the design of clinical records systems for various departments serving the university's hospital and for the Milwaukee County mental health department. To commercialize the systems, Faulkner and about a dozen other programmers and information managers at the university and other institutions pooled about $70,000 in 1979 to start Epic."

Initially known as Human Services Computing, Inc., Faulkner's new database and time-sharing firm "mostly did number crunching for medical researchers and state and government agencies," according to the March 7, 1990 issue of the Capital Times. During the 1970s, Faulkner developed what eventually became an Epic database product called Chronicles. Unlike competing products, Chronicles incorporated proprietary technology and was written in a 30-year-old programming language called "M" (formerly called MUMPS).

In Epic Systems Corporation: A Brief History, the company described its Chronicles data repository, explaining: "Based on the single, longitudinal patient record and designed to handle enterprise-wide data from inpatient, ambulatory, and payer environments, this database became the foundation of Epic's integrated application suite. Our earliest development efforts focused on fine-tuning this infrastructure, ensuring that all of our applications would provide organizations with the scalability, rapid response times, and seamless data-level integration required to manage large volumes of enterprise information in a single system. Building from the central data repository, we developed an integrated suite of clinical, patient access, revenue cycle, and e-health products to cover every point in the care process."

During its first decade, Epic found a considerable market for its practice management software. Cadence Enterprise Scheduling was first released in 1983. The application helped clients to improve the efficiency of resource utilization and manage patient access. Cadence eventually became one of the industry's leading scheduling applications.

In the mid-1980s, Human Services Computing changed its name to Epic. It was at this time that the company's focus shifted toward software applications used to track inventory and medical labor costs. In 1987, Epic released another new application called Resolute Professional Billing, which also evolved into an industry-leading program. According to Epic, Resolute helped users to connect patient access and scheduling functions on the front end with billing functions on the back end.

Epic ended the decade by securing a deal with Cambridge, Massachusetts-based Harvard Community Health Plan in 1989. Epic beat a large sea of competitors to provide the Harvard HMO, which operated 12 medical centers, with its Cadence system. By this time, the company had other large clients, including the Ontario Ministry of Health in Canada and a 490-bed hospital constructed by the Sultan of Brunei. In fact, Epic's bookkeeping software was used by approximately 100 hospitals in Asia, Canada, and the United States.

Explosive Growth: 1990 and Beyond

In 1990, Epic was conducting business from a site at 5609 Medical Circle in Madison. However, it soon relocated to a former elementary school at 5301 Tokay Boulevard. At this time, the company employed approximately 30 workers. While Epic specialized in general database, public health, and scheduling applications, it offered clients more than 50 different products, ranging in price from about $10,000 to several million dollars.

Epic reached a milestone in 1992 when it introduced a Windows-based electronic medical record (EMR) product called EpicCare. An industry first, the application quickly found acceptance among healthcare organizations and would go on to receive high marks from independent raters. EpicCare helped the company to complete its suite of ambulatory practice management software.

As the 1990s progressed, Epic continued to prosper and grow. The company's employee base, which numbered 49 in 1993, mushroomed to 125 in 1995. By this time, Epic's customer base included even more of the healthcare industry's major players, including Kaiser Permanente, Johns Hopkins University, and Prudential.

By early 1997, Epic's employee base was 200 and rising. The company, which devoted approximately 40 percent of its annual budget to research and development, soon began bringing in scores of college seniors to identify prospective new employees. To accommodate this explosive growth, Epic needed more space. Construction was soon underway on a $10 million, 72,000-square-foot addition to its Tokay Boulevard headquarters. Epic's addition to the 40,000-square-foot building included an underground parking garage for 200 cars.

In 1997, Epic earned net income of $6.6 million on sales of $30.9 million. Its offerings had grown to include software applications in the areas of scheduling, billing and accounts receivable, managed care, and computerized medical records. By this time, the company's EpicCare product had evolved into the nation's largest EMR system, with some 18,000 licenses sold. In fact, Epic attributed more than half of its revenues to EpicCare in 1997.

It also was in 1997 that Epic introduced its first e-health product. Called EpicWeb, the new application became the foundation for an entire suite of Web-based healthcare IT systems. At first, EpicWeb allowed a client's healthcare professionals to access documentation, scheduling, and other information from any Internet-connected PC. However, this Web-based access eventually extended to both affiliated caregivers and patients.

Epic ended the 1990s with another new product introduction when it released the first EpicCare Inpatient Clinical System modules in 1999. By doing so, the company explained that it allowed healthcare providers "to integrate their inpatient and ambulatory care facilities, combining full EMR access with special features for inpatient providers." Epic also announced that it planned to integrate speech recognition technology into EpicCare. It also was in 1999 that Epic sued competitor MedicaLogic, claiming the company copied a key component of its software, known as a text expander, used for physician notation.

In 2000, Epic's sales reached $50 million and employees numbered 550--up from 370 in 1999. This growth came on the heels of more new product introductions. In 2001, the company introduced Hyperspace, which it described as "an intuitive, role-based GUI that improves enterprise wide workflows by integrating features from your entire Epic suite and presenting them as a single, comprehensive system. Users no longer have to move from application to application to perform tasks, and organizations have the opportunity to streamline workflows as opposed to simply automating manual tasks." It also introduced MyChart, which allowed patients to access their medical records, schedule appointments, request prescription refills, and more via the Internet.

By the early 2000s, Epic was receiving recognition for outstanding customer service. In 2001, KLAS Enterprises, an independent medical software rater, named Epic the industry's top vendor in the area of healthcare IT performance. In addition, KLAS also gave Epic an award for being the leading outpatient software vendor. These awards were evidence of the premium Epic put on its relationships with customers. In fact, the firm played "The Wedding March" over its PA system after securing a new client.

Epic soon outgrew its headquarters on Tokay Boulevard. In September 2001, the company announced plans to build a new headquarters in nearby Verona when it was unable to find a suitable site in the city of Madison. With an estimated price tag of $100 million, the new campus was expected to include 500,000 square feet of space and 1,200 offices spread across six buildings. According to Epic, its new 340-acre campus would support the local economy and preserve the natural beauty of the land while accommodating the company's explosive growth. However, critics argued that Epic's move would have a negative impact on the environment by increasing traffic-related pollution at the rural site.

As the 2000s progressed, growth and success at Epic continued to unfold at an unprecedented pace. The company projected that it would double its employee base by 2005 and have as many as 2,000 workers by 2011. By this time, more healthcare industry heavyweights were among Epic's client base, including the Cleveland Clinic Foundation, Sutter Health, Northwestern Memorial Hospital, and the Sloan-Kettering Cancer Center.

As Epic grew, the company continued to keep its workforce happy by offering an environment that, by most standards, was both progressive and unconventional. In the June 8, 2003 issue of the Wisconsin State Journal, Judy Newman described Epic's facility this way: "There are giraffe sculptures 'nibbling' at indoor trees; sculptures of dancing figures; frog tables; a bust of Star Wars' Yoda. There are kites of butterflies, bats, and pterodactyls hanging from a skylit ceiling--the favorite of Epic founder Judith Faulkner. It's that touch of whimsy that helps define Epic as a non-traditional place to work--along with extras like free coffee, milk, juice, and popcorn and Candinas chocolates for employees on their birthdays and a welcome mat for pets on weekends. Employees can dress as they please; most wear jeans."

In 2002, sales reached $105 million and Epic's employee base swelled to 850. The company received good news in October when it settled a legal battle that had been in progress with competitor IDX Systems Corporation and the University of Wisconsin Medical Foundation for 19 months. The suit against Epic, the foundation, and two foundation employees involved the theft of trade secrets (a charge that had been dismissed earlier) and the improper sharing of proprietary information. IDX claimed that an improper disclosure made it possible for the foundation to revoke a new contract it had awarded to IDX and give it to Epic instead.

Other good news at Epic in 2002 came in the form of more awards. At the Medical Records Institute's annual conference that year, the company received top honors in the Clinical Documentation Challenge and also won five other awards in a competition against 145 other firms. In January of the following year, Epic outdistanced 200 competitors to receive KLAS Enterprises' designation as "best overall vendor of healthcare information technology" for the seventh year in a row.

In 2003, Epic secured a $1.8 billion deal with Kaiser Permanente that promised to catapult the company to new heights. Beating competitor Cerner Corporation, Epic secured a contract "to implement within three years a full electronic medical records system--supported by physician order entry, clinical decision support, scheduling, billing and Web portal software, along with a data repository--at 29 hospitals and 423 offices employing some 11,000 physicians," according to the April 2003 issue of Health Data Management.

Kaiser reportedly chose Epic over Cerner due to Epic's track record with seamless implementations and because the company's products were better in the areas of user friendliness and workflow functionality. In the February 10, 2003 issue of Computerworld, Bob Brewin said the new system "would be the largest healthcare IT system ever developed outside the federal government in terms of cost, scale, and scope."

In the February 5, 2003 issue of the Capital Times, Epic CEO Judith Faulkner said that because of Kaiser's size and the fact that it involved 8.4 million patients, the project could have a major impact on moving the larger healthcare industry toward electronic medical records. The deal also received praise from Dr. Carolyn Clancy, acting director of the Agency for Healthcare Research and Quality, U.S. Department of Human Services, who said: "This new initiative is a wonderful example of how the power of information technology can be harnessed to make the kind of achievable improvements in healthcare quality that the American people want and deserve."

By June of 2003, Epic's employee base had grown to 910, up from 850 the previous month. As ground was broken on the company's new headquarters, Epic prepared itself for a new era in its history--one in which it would likely make significant impacts on healthcare information technology. One example was the company's Care Everywhere technology, which would allow patients to essentially take their medical records with them to different healthcare providers. According to the company, "Independent healthcare organizations will not only be able to view patient information, but update it as well. This will create a secure 'virtual' electronic record, and insure that patients receive the best possible care no matter where they're seen."

Principal Competitors: Cerner Corporation; GE Medical Systems; Information Technologies; IDX Systems Corporation.

Chronology

• Key Dates:
• 1979: Judith Faulkner and others establish Human Services Computing, Inc., which becomes Epic.
• 1990: With 30 employees, Epic offers clients more than 50 different products.
• 1992: Epic introduces a Windows-based electronic medical record (EMR) product called EpicCare.
• 1997: EpicWeb, the company's first e-health product, is released.
• 2000: Sales reach $50 million and employees number 550.
• 2002: KLAS Enterprises names Epic the "best overall vendor of healthcare information technology" for the seventh straight year.