As CEO of the $4.9 billion income digital medical information large, Judy Faulkner is likely one of the strongest individuals in healthcare. With no plans to retire, she tells Forbes about her association to make sure Epic stays unbiased and employee-owned in perpetuity.
By Katie Jennings, Forbes Employees
Judy Faulkner takes the stage at Epic System’s annual buyer assembly, trailed by a 6-foot tall plastic swan boat that requires two human handlers. Seven thousand healthcare trade executives titter in befuddled amusement questioning why the founder and CEO of an organization with $4.9 billion in annual income, whose medical information software program is used for 325 million sufferers worldwide, is sporting a wreath of white feathers round her neck and several other extra from a plume atop her head. Faulkner says it’s her trendy spin on one of many world’s nice storytellers: as a substitute of Mom Goose, she calls herself “Girl Swan.”
“I typically really feel slightly foolish popping out right here yearly in a fancy dress,” Faulkner tells the viewers, who’ve all made the annual pilgrimage to Epic’s quirky, book-themed 1,670 acre headquarters in rural Verona, Wisconsin to listen to the newest information in regards to the tech that many rank-and-file medical doctors like to hate. “You must chuckle to study and entertain to coach,” she explains.
Faulkner, a pc programmer who based Epic in a basement in 1979, has bucked conference from day one, beginning with the corporate gown code: “When there are guests, it’s essential to put on garments.” Whereas opponents like Cerner (now Oracle Well being), Allscripts (now Veradigm) and Athenahealth, grew by taking enterprise capital cash, executing mergers and acquisitions, going public after which non-public once more, Faulkner has eschewed any exterior interference. This mentality is enshrined within the first two of Epic’s Ten Commandments, which cling on the wall in a campus lavatory:
- Don’t go public.
- Don’t be acquired.
And she or he intends to maintain it that manner. At 81 years previous, Faulkner is identical age as President Joe Biden, whose disastrous debate efficiency ignited issues about his age, well being and health for workplace and led him to withdraw his bid for a second time period. Faulkner, whose keynote lasted one hour and 24 minutes, tells Forbes in an interview she has no plans to retire. “For those who retire, you do not have a goal in dwelling a lot anymore,” she says. “[Working] retains you alive and going. It is actually good when what you do is greater than your self.”
Over the previous 45 years, Faulkner has change into some of the influential individuals within the $4.5 trillion U.S. healthcare system. Epic’s software program is used for sufferers in additional than half of the 890,000 or so hospital beds within the U.S., in accordance with estimates from the well being IT analysis agency KLAS. The massive unknown is whether or not Epic’s dominance will persist after its exacting, visionary chief is not on the helm. Plus, the hospital market is saturated. Epic’s subsequent stage of progress should come from inroads with new buyer teams, like well being insurers, medical gadgets and laboratories. One such transfer not too long ago prompted an antitrust lawsuit alleging Epic holds a monopoly on digital well being information, costs the corporate dismissed as “baseless.” (Forbes interviewed Faulkner previous to the lawsuit.)
Faulkner says she has already set a plan in movement to make sure that Epic stays non-public, unbiased and employee-owned in perpetuity. She at present owns practically half (“excessive 40s”) of Epic, and Forbes estimates her web value to be round $7.7 billion. The remainder of the corporate is owned by staff and a handful of Faulkner’s relations. She declined to touch upon the corporate’s present valuation or comparable offers on the general public market, like Oracle’s $28 billion acquisition of longtime competitor Cerner in 2022.
Faulkner has retained all of Epic’s voting shares, which, upon her loss of life, management shall be shifted to a belief ruled by 4 of her relations – her husband Gordon, 80, and three kids – and 5 long-time senior supervisor staff at Epic. In keeping with Epic’s Ten Commandments, she says the belief guidelines prohibit an IPO, sale or acquisition, and stipulate that the subsequent CEO “has all the time received to be a long-term Epic worker and a software program developer.” A separate oversight board of as much as three of Epic’s long-time healthcare prospects will function belief protectors and “sue anybody who would not vote in accordance with the foundations.”
Faulkner has began promoting parts of her non-voting shares again to Epic with the proceeds going to her household basis Roots & Wings, which was established in 2020. Her philanthropic efforts are centered on early childhood improvement, together with well being, schooling, security and fundamental wants for teenagers and households. As soon as offered, Faulkner’s non-voting shares are provided to Epic staff, she says: “Ultimately it will be just about all owned by staff and my household.”
A slide transports staff between flooring in an Alice-in-Wonderland-themed constructing on Epic’s campus.
Jamel Toppin/The Forbes Assortment
To be certainly one of Epic’s 14,000 staff is to be a part of an elite group extra selective than any Ivy League college. Faulkner says greater than 370,000 individuals utilized for jobs at Epic final 12 months and the corporate employed round 2,000 of them – round half of 1 %. Each worker at Epic will get their very own workplace on a campus that options an array of fantastical buildings — an homage to Jules Verne’s 20,000 Leagues Underneath the Sea has large squid tentacles bursting out of the ground; an Alice in Wonderland-themed constructing has a slide that transports staff to an the wrong way up world the place chandeliers and staircases appear to defy gravity; the gathering of buildings often known as Wizards Academy boasts a reproduction King’s Cross practice station, a nod to the Harry Potter collection. Faulkner claims Epic’s amenities account for round 8% of its working prices, whereas the most important value by far at 82% goes towards staff.
The whimsical environs are supposed to spark artistic options to real-world technical challenges. “You do not know what nifty adjustments – like AI, just like the web, like utilizing the telephone for a lot – you do not know what is going on to return subsequent,” she says. It’s for that purpose that Faulkner delegates a lot of the longer term product improvement to the workers who oversee every of Epic’s enterprise strains – new options are nearly all the time constructed in-house.
This in-house, full management mentality is central to what Faulkner says units Epic other than its opponents: Since Epic has by no means acquired one other firm, it hasn’t needed to construct bridges to interface from one kind of software program to a different. Tree diagrams mapping consolidation within the digital well being information market from 1992 to 2024 underscore Faulkner’s level. Whereas Allscripts, Cerner and Athenahealth are a multitude of branches – every representing a merger or acquisition, Epic is a single straight line. “That is loads of the explanation individuals come to us,” she says. “Theoretically you suppose these are simply interfaces that may all work collectively, nevertheless it would not work that effectively.”
Epic prospects flying into southern Wisconsin’s Milwaukee airport for the corporate’s August annual assembly arrived to a snarky welcome from a formidable rival: digital advertisements from Austin, Texas-based tech large Oracle flashed on screens down the trail to baggage declare. “Knowledge that flows freely?” learn one. “Now that might be epic. Make the transfer to Oracle Well being.”
For a lot of the previous decade, the digital well being information market has been described as a duopoly between Epic and Cerner, which was acquired by Oracle in 2022. However not too long ago Epic has been rising, whereas Cerner — now known as Oracle Well being — has been shrinking, in accordance with knowledge from the well being IT analysis agency KLAS. In 2023, Epic was the one digital well being information firm within the U.S. “to attain a web enhance in market share,” including 153 hospitals (many a part of bigger methods) and 28,788 hospital beds, per KLAS. Oracle Well being, the most important loser, noticed a web lack of 71 hospitals and 15,392 beds over the identical interval. Faulkner says Epic additionally achieved this with solely eight gross sales individuals out of 14,000 staff. “We do reactive gross sales. We do not do proactive gross sales,” she says. “Our salespeople don’t have any commissions, they don’t have any quotas, they do not make chilly calls.”
Seema Verma, an govt vice chairman at Oracle and the previous administrator of the Facilities for Medicare and Medicaid Providers below President Donald Trump, disputed the KLAS numbers. “It takes greater than an EHR by itself to resolve the total scope of issues that healthcare networks face, which embrace all the pieces from staffing, provide chain points, funds, affected person engagement, and safety,” Verma stated in a press release. “Epic won’t ever be within the enterprise of fixing these issues, and KLAS’s short-sighted analysis doesn’t take these challenges into consideration. It’s like counting yards run in soccer with out accounting for touchdowns.”
Requested how a lot Oracle spent on the advert buys on Epic’s dwelling turf, Verma stated: “Quite a bit lower than prospects spend implementing Epic.” Epic installations throughout giant well being methods can value a whole bunch of thousands and thousands of {dollars}, which can also be why it’s putting that two Oracle prospects: Salt Lake Metropolis-based Intermountain Well being and Pittsburgh-based UPMC, each are within the strategy of switching to Epic.
“I do not suppose we have ever actually centered on competitors,” says Faulkner. Nonetheless, round six minutes of Epic’s annual assembly was devoted to slip exhibits of latest buyer wins that included the names of the rival corporations who had been being displaced.
True to Faulkner’s edicts to by no means promote or purchase different corporations, Epic has a fame that it doesn’t play good with others and makes it arduous, significantly for healthcare startups, to get entry to knowledge. Faulkner disputes this. “We share knowledge with loads of corporations,” she says, pointing to the 707 corporations which have a reside knowledge reference to at the very least one Epic web site. “We comply with the foundations to place in all of the stuff that’s required so that individuals can go there and get the info, however typically they need stuff past that.”
Brendan Keeler, a former Epic worker who now leads the info sharing apply on the well being IT consultancy HTD Well being, tells Forbes the true distinction between Epic and Oracle has to do with how the businesses deal with sure app builders who need entry to the underlying database infrastructure. Oracle presents a sandbox setting with much more freedom for builders, says Keeler, who blogs about these points below the moniker “Well being API Man.” Epic, then again, is “obsessive about mental property” and doesn’t need different corporations to have the ability to run analytics on its databases, he says. Whereas Epic will get dinged by builders, Keeler says the corporate is the farthest alongside by way of publicly committing to have all of its prospects reside on the brand new nationwide well being data trade often known as TEFCA by the top of 2025.
Whereas Epic’s tightly built-in system has received out in giant well being methods, the brand new battle for market share shall be fought over adjoining healthcare organizations: well being insurers, medical machine corporations, laboratories and pharmaceutical corporations. Epic’s going after them with a product known as “Well being Grid” that hyperlinks these completely different gamers collectively for a smoother switch of affected person knowledge, moderately than the present system of faxes, emails, CD-ROMs and PDFs. However that’s no straightforward process – hospitals and well being insurers have a very fraught relationship in terms of sharing knowledge, stemming from a long time of bitter contracting fights over reimbursement charges and the byzantine prescription and surgical procedure pre-approval processes.
Either side have been attempting to make use of synthetic intelligence to hurry up these telephone, paper and fax-heavy processes, however there’s concern that if either side construct separate admin bots, it is going to result in a robotic logjam moderately than a human one. “I feel we’re headed for a battle of AI versus AI except we modify course,” Sumit Rana, Epic’s president stated in the course of the firm’s annual assembly whereas dressed because the Belgian comedian ebook character Tin-Tin.
Epic says it at present has greater than 100 completely different AI instruments in numerous levels of improvement. One reside demo concerned a back-and-forth between a affected person and bot about restoration from hand surgical procedure, together with a real-time evaluation of wrist rotation utilizing a telephone digicam. Seth Hain, Epic’s senior vice chairman of analysis and improvement, harassed that the bot was an unreleased prototype, nevertheless it means that Epic is considering deploying AI bots to present sufferers’ recommendation in between visits with medical doctors and nurses.
“There’s lots I do not know what they’re doing,” Faulkner says when requested what she considered the demo and what it meant for the way forward for Epic’s function in affected person care. “A part of the explanation that Epic has been profitable is that these guys personal what they’re doing.”
Within the convention room that connects to Faulkner’s workplace in Andromeda, the primary constructing that was constructed on Epic’s campus, dozens and dozens of inspirational quotes are tacked onto the partitions. Requested to select her favourite, she first zeroes in on one attributed to Newt Gingrich after which shortly remembers one other. “Certainly one of my favorites is somebody asking his accountant if he may retire and reside comfortably for the remainder of his life,” says Faulkner. “And the accountant says, ‘sure, for those who die subsequent week.’”
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