And so, the Epic juggernaut rolls on. This time, by securing a ‘next generation’ EHR contract at Northwell Health, a sizable health system in New York state. Behind the headline confirming Epic’s relentless march across US health systems is an arguably more pertinent narrative: how, when or indeed if other vendors will ever compete. It will take something special, or wholly unexpected, to tilt the power balance.
The Signify View
As much as the Northwell Health deal is another feather in Epic’s well-adorned cap, it is another blow for the slew of vendors clinging to its coat tails.
None more so than Altera Digital Health (formerly part of Allscripts), whose legacy system Epic will replace on the Northwell Health deal. The contract, whose value is undisclosed, will see Epic create a single patient record across ambulatory, emergency, inpatient and post-acute care in 21 hospitals and roughly 900 outpatient facilities across New York state in a phased rollout. Norwell expects the first go-live in 2025.
Losing out to Epic (and there is no great surprise in that given recent trends) nonetheless represents a setback for Altera in the US. At least it is not alone in this: aside from Epic, only MEDITECH is growing its share in the acute hospital market. Given the yawning gulf between them and Epic, the chasing pack might do well to focus on MEDITECH’s methods.
Box of Tricks
The acute/health system hospital market in the US, for both Integrated Delivery Networks (IDNs) and standalone hospitals, is a tough place for most vendors right now given Epic’s continued dominance. In 2021, Epic gained 72 hospitals and 12,000 beds, a trend that has continued in 2022. Success for other vendors is a rare commodity: Oracle Cerner lost hospitals and thousands of beds in 2021 and 2022, as did Altera and CPSI. Medhost has managed to just about keep its head above water.
MEDITECH is the only vendor bucking the trend, and is the only vendor offering Epic ‘serious’ competition at present.
Could peering into MEDITECH’s box of tricks offer hope for other vendors? Possibly. Only four years ago, MEDITECH was also treading water, its revenues flatlining. Around the same time it launched its Expanse EHR solution. That proved well received by its customers, many of whom migrated to the new solution. Expanse has subsequently established an excellent reputation in the market, and steadily gaining market share.
Unlike Epic, MEDITECH’s sweet spot is smaller health systems and individual hospital. Partnerships are key too: great examples being those with Innovaccer for value-based care (VBC) which we explore in this Insight; and with Google to improve search capabilities within its EHR. Having a strong product and partnerships that import innovation go a long way.
MEDITECH’s relatively simple model and sharp product focus contrasts starkly to that of Allscripts. The latter has two EHR products: Sunrise (for large hospital IDNs) and Paragon (for independent community hospitals), with a roughly 50:50 split in terms of business across the two.
Allscripts acquired Paragon (as well as two revenue cycle management solutions (Star and HealthQuest), a lab information system and a content management system) in 2017 from McKesson. Allscripts (which then became Altera) then had to devote time (and money) giving Paragon some much-needed TLC. Furthermore, Paragon’s focus on independent hospitals is a challenge – as IDNs snap up smaller facilities, this is an ever-diminishing market, while Sunrise, which is aimed at IDNs and larger hospitals, has struggled to compete.
Allscripts’ insatiable appetite for acquisitions from several years ago has come back to haunt it, and remains saddled with a disconnected portfolio, and solutions with very different DNA. Very different to Epic, whose principle remains to build its portfolios exclusively in-house rather than acquire.
Even the mid-2022 sale of Allscripts’ inpatient business to Harris (and subsequent rebranding to Altera Digital Health) has failed materially to address legacy problems with a fragmented portfolio. On paper, Altera has some great solutions. Its TouchWorks ambulatory EHR for larger practices is a case in point, and Sunrise has both inpatient and primary/ambulatory care functionality. Alongside its value-based care offerings built around dbMotion it ticks the boxes in terms of the general building blocks that IDNs are looking for from a network-wide EHR vendor. But the fragmented portfolio continues to hamper the vendor, especially when bidding for larger IDN contracts.
There is another strategic complication for Altera. Its owner, Harris Computer Corporation, does not integrate at a business or strategic level the many (good) vendors it acquires. Some of these companies compete with each other, and Harris has an inpatient EHR solution directly up against Altera. Harris owns iMDsoft that has lots of well respected, departmental IT solutions for ICU and anaesthesia, and owns many small, ambulatory EHR vendors, such as Amazing Charts. Harris’ stable may be large, its solutions prized and its global footprint wide, but it is a disparate and disconnected business. And that is a problem when competing with Epic.
For different reasons to Altera, Oracle Cerner’s strategic and product woes are well documented. Globally, it has many issues on its plate that suck up considerable money and brainpower. Rarely a week goes by without reference to its painful, long-delayed, much-blighted multi-billion dollar Millennium EHR contract for the US Veteran’s Association. We have also written (see the Insight here) about long-term doubts over the future of its i.s.h.med solution in Europe. And, like Altera, Oracle Cerner’s portfolio is also fragmented, having bought in much of the technology over the years. Unlike Altera, the big hope for Oracle Cerner is that it has Oracle’s financial heft to bring its solutions (Millennium being the obvious example) up to scratch. However, although there are signs that the benefits of the acquisition are kicking in in some areas, the gap with Epic continues to widen.
In plotting a viable path forward, vendors will do well to consider that IDNs increasingly seek those with a strong VBC IT portfolio element. Epic, Oracle Cerner (HealtheIntent) and Allscripts (dbMotion) all score well on that front, but HealtheIntent and dbMotion are positioned as standalone ‘brand’ solutions divorced from the EHR offering. On the other hand, Epic’s VBC product is simply positioned as an extension of epicCare, making it far easier for customers to engage with.
MEDITECH, which was quite late to the game in terms of VBC solutions, is again well positioned in this respect. Its tie-up with Innovaccer, a best-of-breed VBC vendor, is a prime example of the power of partnerships for MEDITECH.
When Less is More
In many respects, Epic’s rampant success is a salutary lesson to other vendors of the power of keeping things simple. Where others have chosen to acquire technology and expertise, Epic’s single-minded philosophy of developing in-house is clearly paying dividends, such that much of its growth is self-perpetuating. This is especially true as health systems gradually consolidate IT procurement through one vendor. That vendor is increasingly Epic.
This is very attractive to hospitals and IDNs, and those that Signify Research talks to – many of whom have migrated out from the likes of Oracle Cerner – acknowledge that Epic is now the safest (and simplest) pair of hands in the market.