The rumour mill was in full flow at DMEA 2023 in Berlin this week as talk revolved around Epic’s ‘imminent’ debut at a prestigious academic hospital in the German capital.
There is plenty of substance behind the rumours. German Health Minister Dr Karl Lauterbach has, in recent weeks (including at DMEA), publicly stated his view that German hospital IT is much inferior to US hospital IT. And Dr Peter Gocke, Chief Digital Officer at Charite – Universitatsmedizin Berlin, the hospital in question, recently referred to ‘upcoming Epic upheavals in the German HIS landscape’, talking glowingly of the ability of highly integrated systems such as that offered by Epic to contribute significantly to digitisation. These words will resonate strongly in a country in the midst of a multi-billion dollar hospital digitisation programme.
If rumours of Epic’s impending entry – which would see it replace Oracle Cerner at the Berlin hospital – are true, what will it mean for incumbent vendors in the country? And what are Epic‘s chances of success?
The Signify View
That one of global EHR’s biggest names is allegedly poised to debut in one of Europe’s larger hospital IT markets would always attract attention. But Epic will not suddenly start rampaging through the 2,000-plus German hospitals in the market. There are many forces at play in German hospital IT, few of them in Epic’s favour at present.
With vendor attention trained on the German Hospital Futures Act (KHZG), the more interesting angle here is not Epic, but rather Oracle Cerner’s increasingly precarious position in Germany, and the threat it faces from vendors ready to exploit any chinks in its armour.
Chickens Come Home
Oracle Cerner’s German predicament goes back to SAP’s decision last year to withdraw support for i.s.h.med in 2030. We wrote in this Insight in late 2022 how the decision would cause widespread concern among Oracle Cerner’s i.s.h.med customers about the future of the solution. We also stated how, unless Oracle Cerner moved quickly to reassure its customers that it had a contingency plan for i.s.h.med, then other vendors would swoop to fill the vacuum.
Remarkably, Oracle Cerner has still not publicly stated (and DMEA would have been an ideal opportunity to do so) its intentions for i.s.h.med (although awkward private conversations will be happening with customers on possible long-term visions that would provide a solution). And, in light of this, and as Signify Research predicted, vendors are now moving in on some of Oracle Cerner’s 250-strong hospital customer base.
But Epic, Oracle Cerner’s nemesis in the US and so many international markets, will not be a big player in this.
There are a number of reasons for this. Firstly, despite being held up by German healthcare leaders as something of a ‘poster child’ of hospital IT, Epic is expensive. A survey conducted by DigitalRadar shows German hospitals allocate just 2.4% of their annual operating costs for IT spending, compared with around 8% in the US.
Epic is therefore an extravagance afforded by a select few in Germany – prestige facilities like Charite – Universitatsmedizin Berlin for example – and very large hospitals and associations. In time, market leaders like Dedalus and Oracle Cerner might lose the occasional bigger, better-resourced academic hospital to Epic, and likely must also begrudgingly accept losing sites that make up the long-tail of their customer bases.
The Health Minister’s recent comments about German hospital IT infrastructure did not go down well among vendors in the country, however. They argue that they would love to be able to sell more sophisticated solutions like Epic’s into German hospitals if only the hospitals had the budgets of their American counterparts.
Another reason why Epic will struggle to make headway in Germany is the fact that KHZG has been such a strong focus of German hospital IT development and investment over the past few years. Vendors have spent years aligning with the various technical criteria needed to fulfil the 11 IT pillars around which KHZG funding is allocated. Much KHZG money will be spent in the next two years, and Epic has missed the boat.
Commentators often also refer to the fact that Epic already has one, and soon to be two, German-language customers via contracts in Switzerland, and that it would therefore be a relatively quick step to localise EpicCare for Germany. However, the regulatory environment in Germany is vastly different to that in Switzerland and the localisation effort to achieve a workable solution should not be underestimated. Epic will be cognisant of this, having rushed localisation in other European countries (e g Denmark and the UK) over the last 10 years, and subsequently faced significant backlash from those local customers.
As stated, the incumbent vendors (see Figure below) will be concerned less about Epic and will be more interested in how they can capture some of the 250 i.s.h.med contracts from Oracle Cerner. Some are manoeuvering into position. CompuGroup Medical (CGM), which acquired parts of Cerner’s (pre-Oracle acquisition) healthcare IT business in early 2020, has some 550 hospitals across its Clinical and Medico (ex-Cerner) product lines. At DMEA this week it launched the third-generation iteration of its Clinical product line. One component specifically targets workforce management and billing (the SAP element of i.s.h.med) and will be targeted at existing i.s.h.med customers.
Dedalus (the market’s dominant player), Meierhofer, Telekom and others also offer competitively-priced EHR solutions that will interest a customer base rapidly losing faith in i.s.h.med.
Cerner Clock Ticking
Oracle Cerner’s response has been two-fold. One, it promises that the clinical elements of i.s.h.med will be able to operate with third-party elements that could replace the functionality offered via SAP. Two, it has also a longer-term vision for its i.s.h.med, Soarian and Millennium EHR products under the broader Oracle Cloud Infrastructure (OCI) umbrella.
According to the company, OCI is ‘a set of complementary cloud services that can run a range of applications and services in a highly available hosted environment’. But it is unclear when this more modular solution will launch. Elements of this solution will start to be available over the next 12 months, but at what point a solution that could be leveraged by its i.s.h.med customers becomes available is still unclear. And time is not on Oracle Cerner’s side in this market – its i.s.h.med customers are looking for clear guidance now.
Nor is Epic’s timing necessarily good in Germany should the Berlin contract come to pass. Given vendors’ positioning around KHZG, Epic will not be able to disrupt such an established ecosystem. It could be years before it can.
Despite relative success on large regional contracts in various geographies, Epic’s track record on one-off deployments isn’t great either. There are several examples of Epic deployments that have run into dead ends as the firm struggled to localise workflows.
Charite – Universitatsmedizin Berlin is not yet a done deal – no formal tender has been issued – but the signs are that Epic is in the box seat. According to insiders, preliminary documents (where vendors register interest in tendering) include specifications weighted in Epic’s favour, and exclude specification that would rule Epic out
Any Berlin contract, then, would be quite valuable for Epic financially, as well as being good PR. While the optics are far less positive for Oracle Cerner, at least KHZG funding rules dictate that providers cannot use the money to strip out and replace legacy EHR systems, and so i.s.h.med at least has a stay of execution.
But over the next 12 to 24 months the potential move away from i.s.h.med will be watched closely, and it remains to be seen the extent to which OCI will be Oracle Cerner’s saviour in German IT.