Physicians kept patient information on paper charts or in systems their own institutions had built E01. The commercial software that existed handled one piece of the work, such as a billing transaction or a laboratory result, and each piece held only its own slice of the patient E01. What physicians lacked was a record they could shape to the clinical detail they needed, and that stayed with a patient across years of visits E01. Buying software meant giving up established ways of recording information, so a product had to fit clinical work closely enough to be worth adopting and maintaining.
Epic Systems
Epic gave clinicians a record they could shape around patient care, then grew into the system hospitals would have to reorganize to replace.
How Epic Systems won
- 1 · 1979–2003One clinician-shaped database for care and billingPhysicians define their own fields on one lifelong patient record; care, registration and billing in one suite beat Kaiser's internal build in 2003.Novel Architecture
- 2 · 2003–18Flagship systems as references, not a sales forceKaiser's $4B program live in 2010; 260 customers by 2012 with 1% of staff in sales; Mayo left Cerner in 2015.Lighthouse Customers
- 3 · 2012–25Certified-builder pool: an expertise network around the productCertification only through a sponsoring customer or firm; 45 Epic consulting firms by 2012; over 90% of US medical graduates trained on Epic.Expertise network effects
- 4 · 2005–23Care Everywhere: merging systems join the network's recordExchange mandated for every customer from 2005; 9M exchanges a day by 2022; a fifth of hospital switches since 2014 came from mergers.Protocol network effects
- 5 · 2018–26Switching costs, reinforced by the expertise networkOne customer lost in Epic's history, and it came back; 42.3% of US hospitals and a net gain of 176 in 2024.Switching costs
Versus Cerner (Oracle Health): Cerner built its software department by department and later bought breadth, while Epic put care and billing on one clinician-shaped database and never made an acquisition EPX-4 EPX-6 EPX-2. Epic's flagship customers, certified staff and exchange protocol then made each new hospital cheaper to run on Epic, and Cerner lost Kaiser, then Mayo, then a stream of merging health systems EPX-3 EPX-7 EPX-9.
Arena: Market Conditions Before Epic Systems
How each step happened
Step 1 of 5 · 1979–2003
One clinician-shaped database for care and billing
Epic's innovation was its data model. Hospital software was built department by department, each system holding part of the patient. Judy Faulkner, a programmer working beside physicians, built Epic's database around one continuing patient record whose fields and screens physicians could define themselves E01. Notes, orders, registration and billing all later wrote to that one record, while Cerner had to connect its departmental products after the fact EPX-4 EPX-5.
Kaiser Permanente Northwest bought EpicCare in 1992 and rolled it out across its clinics in 1994–97 for visit notes, orders and visit summaries E06 E03. Visits took about two minutes longer at first, yet at four to six months 85% of clinicians said the record was worth the effort E03. When billing-code descriptions clashed with how clinicians described diagnoses, Kaiser revised its terminology and Epic added a utility that accepted the clinician's wording while keeping the code E04. Learning from one demanding customer kept the product clinical as it took on billing.
Epic got breadth by building, not buying. In 1999 Kaiser chose CIS, a system it had developed with IBM, over EpicCare for national use. A 2002 reassessment found that Epic and Cerner had both surpassed CIS, and in February 2003 Kaiser chose Epic, because it wanted clinical care, registration and billing to work together with fewer interfaces to build E06 E07. Faulkner has kept that rule: Epic has never made an acquisition, and she argues that making each part best does not make the whole system best EPX-2 EPX-12.
Rivals Cerner started with the PathNet laboratory system in 1984, added medicine, radiology and pharmacy systems in 1987–89, and unified them as Millennium only in 1997 EPX-4 EPX-5. It later bought breadth, paying $1.3 billion for Siemens Health Services in 2015 and promising to support Siemens' Soarian platform for at least a decade EPX-6.
Novel ArchitectureEnd-to-End WorkflowVertical SpecializationCustomer Discovery
Step 2 of 5 · 2003–18
Flagship systems as references, not a sales force
Kaiser became a reference that any later buyer could inspect. Its KP HealthConnect program cost about $4 billion, covered 9 million members and was fully running in 2010, after Kaiser had written off $400 million on its previous system EPX-1. The hosts of Acquired argue that an installation of that size changed how other hospital buyers saw Epic E02.
Epic let those installations do its selling. In 2012 it had 260 customers, including Cleveland Clinic, Johns Hopkins and the University of California, while only about 1% of its 5,200 staff worked in sales and marketing EPX-3. HITECH incentives from 2009 enlarged the market for every vendor E14; references decided which one large systems picked.
Mayo Clinic followed in 2015. A long-time Cerner customer, it chose Epic for one integrated record across all its organizations and for better revenue-cycle management EPX-7. By October 2018 about 52,000 Mayo staff shared one clinical and billing system E09. Each flagship made the next purchase less risky, and the growing number of installations created demand for people who could run them.
Rivals Cerner had more than three times Epic's revenue by 2003 and spent 4% of its expenses on sales and marketing, yet lost Kaiser to Epic that year EPX-3. In 2015 it lost Mayo, whose CIO said that after a difficult comparison Epic was clearly the better fit EPX-7.
Step 3 of 5 · 2012–25
Certified-builder pool: an expertise network around the product
As installations multiplied, Epic controlled who could learn to build them. Certification is open only to people sponsored by a hospital implementing Epic or by a consulting firm serving Epic customers, with training at Epic's campus in Verona, Wisconsin EPX-17. A certified analyst can find work almost anywhere in the United States EPX-17. By 2012 KLAS had verified 45 firms offering Epic consulting, and demand for Epic consultants was at an all-time high because implementations were too large to staff alone EPX-18.
Epic then reached people before they were hired. Its Lyceum program puts a teaching version of the record into nursing schools, starting with Marquette University in 2023, so graduates arrive able to use it EPX-19. Acquired reports that over 90% of graduating doctors, nurses and administrative staff from American medical schools are trained on Epic E02. Each hospital that runs Epic makes the skill more worth learning, and each trained analyst or clinician makes Epic cheaper for the next hospital to install and staff.
Rivals KLAS found in 2019 that more than half of clients using Cerner's own implementation services were dissatisfied, many citing poorly trained consultants fresh out of college; the better outside firms hired former Cerner employees instead EPX-20.
Step 4 of 5 · 2005–23
Care Everywhere: merging systems join the network's record
Care Everywhere began in 2004–05, before the certified pool, but it shaped purchases only after 2014, when hospital mergers accelerated. Epic built it as a standard way for its customers to exchange patient records, and when some customers resisted, Faulkner made it mandatory for all of them EPX-16 EPX-2. Volume grew from 18.5 million records in one month of 2015 to 9 million exchanges a day in 2022 EPX-2 EPX-16.
The protocol turned mergers into Epic expansions. Since 2014 a fifth of hospital record-system switches have come from mergers and acquisitions; KLAS found many buyers prefer the same system as the hospitals in their network EPX-8. Advocate moved to a single platform after its merger plans, Trinity Health consolidated a mix of Cerner and Epic, and Alice Peck Day switched to match its affiliate Dartmouth-Hitchcock EPX-9.
Epic later opened the protocol. About half of exchanges ran with non-Epic systems by 2020, and in December 2023 Epic became one of the first national exchange networks under TEFCA, the federal framework EPX-10 EPX-16 E11. Exchange now helps every provider; the lasting advantage sits in the installed record and its staff.
Rivals Faulkner said in 2022 that Cerner exchanged documents rather than whole patient records and could not connect its own sites across distances EPX-16. Cerner lost 65 Millennium hospitals in the private sector in 2018, and 11 systems replaced Cerner with Epic between 2015 and 2020, several after mergers EPX-8 EPX-9.
Step 5 of 5 · 2018–26
Switching costs, reinforced by the expertise network
Once a health system runs care, billing and scheduling on one Epic record, leaving means moving every patient's history and retraining every role at the same time. Mayo's move to Epic cost $1.5 billion and covered about 52,000 staff EPX-9 E09; leaving Epic means a bill of the same kind.
The expertise network from step 3 raises that cost. Hospitals staff Epic with certified analysts they can hire from other Epic systems, and Faulkner credits retention partly to physicians who already know Epic from earlier jobs EPX-17 EPX-15. A rival must replace the software and retrain the people too.
Faulkner says Epic has lost one customer in its history, and it came back a year later EPX-15 EPX-13. In 2024 Epic ran 42.3% of US hospitals and 54.9% of hospital beds, with a record net gain of 176 hospitals; KLAS credited its stability, interoperability and partnership EPX-11. The single database from step 1 is what makes an Epic system hard to take apart.
Rivals Cerner customers did leave, AdventHealth after 18 years in 2020 EPX-9. Under Oracle, which bought Cerner for about $28.3 billion in 2022, Oracle Health had a net loss of 74 hospitals and only 9 new wins in 2024, and KLAS cited poor partnership EPX-5 EPX-11.
Key dates
- 1979Epic founded around a clinician-configured patient record
- 1994EpicCare live in two Kaiser Northwest clinics E03
- 1997Cerner unifies its departmental products as Millennium EPX-5
- 1999Kaiser picks its internal CIS over Epic
- 2003-02Kaiser selects Epic's integrated suite
- 2005Care Everywhere mandated for every Epic customer EPX-16 EPX-2
- 2009HITECH incentives for certified records
- 2010Kaiser's $4B KP HealthConnect fully running EPX-1
- 2012-04260 customers About 1% of staff in sales and marketing EPX-3
- 2012-05KLAS counts 45 Epic consulting firms EPX-18
- 2015-02Mayo leaves Cerner for Epic; Cerner closes Siemens purchase EPX-7 EPX-6
- 2018-10Mayo's enterprise rollout complete
- 2019-0528% of US acute care hospitals Cerner 26%; Epic 58% of large hospitals EPX-8
- 2020-02AdventHealth leaves Cerner after 18 years EPX-9
- 2022-039M record exchanges a day, half with non-Epic systems EPX-16
- 2023-10Lyceum brings Epic into nursing school EPX-19
- 2023-12Epic among the first TEFCA networks E11
- 202442.3% of US acute care hospitals 54.9% of beds; net gain of 176 hospitals EPX-11
- 2026-04Faulkner: one customer lost, and it came back EPX-15
Sources
Oldest first.
- E03 Acceptance and performance by clinicians using an ambulatory electronic medical record in an HMO. Contemporaneous customer study
- E04 Improving clinician acceptance and use of computerized documentation of coded diagnosis. Customer-authored product adaptation study
- E05 The Comprehensive Computer-Based Patient Record (CPR). Customer implementation and use account
- E06 Transitions of Clinical Information Systems. Contemporaneous customer procurement explanation
- E07 Kaiser Permanente's experience of implementing an electronic medical record: a qualitative study. Qualitative research with customer participants
- EPX-3 Epic Systems' Tough Billionaire. Trade profile with founder access
- EPX-18 Navigating the Sea of Epic Consulting Firms 2012. Independent industry research, public summary
- E08 An integrated EHR at Northern California Kaiser Permanente: Pitfalls, challenges, and benefits experienced in transitioning. Deployment leader case report
- E14 A Record of Progress on Health Information Technology. Government program account
- EPX-1 How Kaiser bet $4 billion on electronic health records -- and won. Trade report with customer executive quotes
- R4 An Interview With The Most Powerful Woman In Health Care. Founder interview
- EPX-6 Cerner Completes Acquisition of Siemens Health Services. Company press release
- EPX-7 Mayo Clinic CIO explains switch from Cerner to Epic. Trade report with customer executive quotes
- EPX-2 Judy Faulkner: Epic interview. Founder interview
- E01 An Epic Viewpoint: An Interview with Judy Faulkner, CEO of Epic Systems. Founder interview
- E09 Mayo Clinic completes installation of Epic electronic health record. Customer deployment announcement
- EPX-17 How To Get Epic Certified; Certification, Proficiency, Accreditation. Practitioner career guide
- EPX-8 Epic, Cerner control 85% of large hospital EHR space, KLAS reports. Trade report of independent industry research
- EPX-20 Consulting for Cerner 2019: Consultant Expertise Is the Measure of Success. Independent industry research, public summary
- EPX-9 11 hospitals, health systems that replaced Cerner with Epic in the past 5 years. Trade list
- EPX-10 Epic's Care Everywhere interoperability platform shows big jump in data exchange. Trade report with company and customer quotes
- EPX-16 Epic CEO at exclusive sit-down at ViVE: 'We are now interoperable with the world'. Trade report of founder interview
- E10 Joined-up healthcare for patients through digital technology. Regulator case study
- EPX-19 Epic and Marquette collaborate on EHR training for nursing students. Trade report with company and customer quotes
- E11 Epic Providers Approved Among First TEFCA Participants. Company exchange-network announcement
- EPX-13 Epic says it rarely loses customers. Trade report with company quotes
- E02 Epic Systems (MyChart). Retrospective company analysis and podcast transcript
- E12 US Acute Care EHR Market Share 2025: Strength of Partnership Is Key in Decisions. Independent industry research, public overview
- EPX-11 KLAS: Epic Dominates 2024 EHR Market Share, Oracle Health Sees Losses. Trade report of independent industry research
- E13 How Epic Ended the EHR Wars and Became Healthcare’s Operating System. User-supplied strategic commentary
- EPX-15 Judy Faulkner: Why Epic has lost only 1 customer. Trade report of founder interview
- EPX-12 What Makes Judy Faulkner Run? (Episode 672). Founder interview (podcast)
- EPX-5 Oracle Health. Encyclopedia
- EPX-14 Epic Didn't Win the EHR Wars. Its Competitors Lost Them.. Practitioner analysis
- EPX-4 Cerner Corporation. Company history reference