Who will disrupt Epic’s stronghold in the electronic medical records space?

It’s important to understand that there’s no single electronic medical records (EHR) market (or market) There are at least two There are at least two Hospital and Ambulatory. And they’re monitored and measured in a different way.

The hospital market is actually more of an enterprise software purchase. Big iron and large-ticket software and services = millions of dollars. This is the same as Oracle Financials or SAP for manufacturing. For instance, the cost to Kaiser Permenente (with 9 million members) to set up Epic (over the course of 10 years) was around $4 billion. In this particular market, Epic is at the top with close to 20 percent market share.

The second market is the “ambulatory” market – which is pretty much everything outside of the hospital. In this market – Epic owns (once again) about 20% of the market:

The other thing to keep in mind is that this is a mature – and relatively static market. There are about 5,700 registered hospitals in the U.S. That number doesn’t change significantly year-over-year. While the number of ambulatory facilities is much larger – it too doesn’t change significantly year-over-year.

The software will never stop producing turnover, but as with all enterprise software, it comes with an expensive cost to replace and rip software at this point.

Footnote A: One of the highest most rated EHR software options is licensed free, and it is located under the “other” category in both charts.

The Most Popular Digital Health Record Software Is Free

In terms of revenue per year The chart changes little – however Epic is still in a comfortable place (and is one of the few privately-owned software companies of its size).

I don’t think Epic, Cerner, Allscripts, NextGen, athenahealth, GE or McKesson are at much risk of losing big market share to a “disruptive” startup anytime soon.

One more likely scenario is one of industry consolidation in which Epic, Cerner, Allscripts, NextGen, athenahealth, GE and McKesson acquire other vendors to broaden (or ensure) market coverage. Two instances of this are the recent purchases by athenahealth.

Athenahealth Purchases Hospital-Focused Electronic Health Record Firm RazorInsights Boston Business Journal – January 2015.

AthenaHealth acquires Epocrates The Angry Birds of Health – January 2013, 2013.

Leave a Comment