Episode 67: Epic Systems

In this episode of Petri Dish Perspectives, we explore the story of Epic Systems, the privately held healthcare technology company that has quietly built much of the digital infrastructure behind American healthcare. From Judy Faulkner founding Epic in a Wisconsin basement to becoming the dominant electronic health record platform, Epic has transformed how hospitals, physicians, and patients interact with medical information.

We'll dive into Epic's founding story, the evolution of its electronic health record, the rise of MyChart and Cosmos, and how Epic built a massive competitive moat through interoperability, data, workflow integration, and switching costs. We'll also explore its growing role in artificial intelligence, how Epic is embedding AI directly into clinical workflows, and the battle with companies like Oracle Health to control the future of healthcare data.

Because the next generation of healthcare won't just be about developing better drugs and devices, it will be about who controls the information infrastructure connecting patients, providers, data, and AI.

🎧 Listen now, stay curious, and don’t forget to subscribe for new episodes every Thursday!

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Transcript

Hello and welcome to Petri Dish Perspectives, the podcast where we geek out about science and the companies shaping the future of healthcare. I’m your host, Manead, and I’m a PhD scientist by training, storyteller by choice. With every new episode released on Thursday, my goal is to deliver digestible pieces of information on healthcare companies under 30 mins. 

Today, we’re going to talk about a company that is very different from most of the companies we cover. It doesn't manufacture a blockbuster drug. It doesn't run clinical trials. It doesn't develop CAR-T therapies or antibody-drug conjugates. And yet, if you have interacted with the American healthcare system, there is a very good chance that Epic has touched your life.

Epic Systems is the company behind one of the world's most widely used electronic health record platforms. Its software sits underneath the clinical workflows of hospitals, physicians, nurses, pharmacists, researchers, and increasingly patients themselves. More than 325 million patients have a current electronic record in Epic, according to the company, and its software is used across thousands of hospitals and tens of thousands of clinics. In the United States, Epic held approximately 43.7% of the acute-care hospital EHR market in 2025.

And that is what makes Epic so fascinating. We often think of healthcare infrastructure as hospitals, pharmaceutical companies, insurance companies, laboratories, and medical-device manufacturers. But there is another layer underneath all of them: information infrastructure.

Quick disclaimer, I give full credit to the original articles cited in the references in the transcript!

Grab a coffee or tea, settle in, and let’s jump in!

The Founder: Judy Faulkner and the Accidental Birth of Epic

The person who made the biggest mark on Epic is unquestionably Judith "Judy" Faulkner. Faulkner trained in mathematics and computer science, and her path into healthcare software was almost accidental. During her time as a graduate student, she became involved in programming for physicians who wanted a better way to manage patient information. The problem seemed straightforward: create software that could help doctors track patients over time.

Faulkner has described the early attitude that shaped Epic as essentially being one of youthful naivety. She didn't necessarily begin with the assumption that building a comprehensive electronic health record would be extraordinarily difficult. The attitude was closer to: here's a problem physicians have, let's see if we can figure it out. That mindset became incredibly important because healthcare software is one of the most complicated software categories in the world. A patient's medical record isn't just a document. It's a constantly changing network of diagnoses, medications, laboratory values, imaging, allergies, procedures, insurance information, clinical notes, family history, and interactions among all of those variables.

Epic began life under the name Human Services Computing before eventually becoming Epic. The company was founded in Madison, Wisconsin, in 1979, and one of the early architectural decisions that became central to Epic's identity was building its own integrated system rather than assembling a collection of acquired software products. Nearly five decades later, Faulkner still describes the philosophy as essentially building one consistent system rather than acquiring a portfolio of disparate technologies.

And this is where Judy Faulkner's story becomes much more interesting from a business perspective. She didn't build Epic according to the standard technology startup playbook. There was no massive venture-backed growth strategy followed by an IPO. There wasn't a series of acquisitions designed to roll up the healthcare IT market. Epic stayed private, focused on its customers, and continuously reinvested in its own technology.

That decision created something unusual: a technology company optimized for a 40- or 50-year horizon rather than a five-year exit.

The Problem Epic Was Trying to Solve

To understand why Epic became so powerful, you have to understand what healthcare looked like before modern electronic health records.

For much of the twentieth century, healthcare was fundamentally a paper-based information system. Your medical history might exist in a folder in one physician's office. Your imaging could be sitting in another hospital. Your medication list might be outdated. If you went to an emergency department in another city, the physician might have little visibility into what had happened to you previously.

The problem wasn't simply inconvenience. Fragmented information can create clinical risk.

A physician prescribing a medication may not know about another medication a patient is taking. An emergency physician may not immediately know about a previous diagnosis. A specialist may have to wait for records to be faxed. And a patient may become the person responsible for remembering their own medical history.

Epic's fundamental proposition was that healthcare should have a longitudinal digital record—a continuously evolving representation of a patient's health journey.

That philosophy is embedded in the company's name. Epic says the name refers to an "epic" as a comprehensive story of events, essentially the idea that the electronic record should chronicle the patient's healthcare over time.

This sounds obvious today.

In 1979, it wasn't.

Chronicles: The Technical Foundation

One of the most important decisions in Epic's history was the development of Chronicles, its underlying database architecture. Rather than simply building a conventional application layer over a conventional database, Epic developed an architecture specifically designed around healthcare data and clinical workflows.

That matters because healthcare data is extraordinarily messy.

A physician doesn't interact with healthcare as a clean spreadsheet. A patient can have multiple diagnoses, medications, allergies, procedures, encounters, laboratory results, images, notes, and communications, all connected to one another and changing over time. The system has to accommodate structured and unstructured information while remaining fast enough for a physician who is sitting in an exam room with a patient.

Epic's approach was to build an integrated ecosystem rather than a collection of disconnected applications. That became one of its greatest advantages.

And it also became one of its greatest criticisms.

Because when one company controls such a large portion of the healthcare information infrastructure, the question becomes: is this simply an excellent product, or is it becoming too powerful?

We'll come back to that.

The Rise of the Electronic Health Record

The transformation of American healthcare from paper records to electronic records accelerated dramatically in the 2000s. Government policy, including incentives associated with the HITECH Act and the broader "Meaningful Use" program, pushed hospitals and physicians toward electronic health records.

This was an enormous opportunity for Epic.

But selling software to a hospital is nothing like selling software to a consumer.

A hospital can't simply download an app and start using it on Monday. Implementing an enterprise EHR can affect virtually every department in a health system. Physicians have to be trained. Nurses have to be trained. Pharmacy workflows have to be integrated. Laboratory systems have to connect. Billing has to work. Scheduling has to work. Emergency departments have to work. Operating rooms have to work.

And once a health system makes the decision to implement an EHR, it becomes deeply embedded in the organization's operations.

This creates one of Epic's strongest competitive moats: switching costs.

Once a major hospital has spent years implementing Epic, training thousands of employees, migrating data, customizing workflows, and integrating surrounding systems, replacing Epic isn't like replacing Slack or Microsoft Office. It's closer to rebuilding part of the hospital's nervous system.

That's why EHR competition is so different from conventional software competition.

The winner doesn't necessarily need the cheapest product.

The winner needs the product that healthcare organizations believe they can trust for the next decade.

Epic vs. Cerner: The Battle for the Healthcare Operating System

For years, Epic's most important competitor was Cerner, which became one of the other dominant EHR vendors in the United States.

Cerner represented a very different corporate story. It eventually became a major publicly traded healthcare technology company before being acquired by Oracle in 2022 for approximately $28.3 billion. Oracle renamed the business Oracle Health and attempted to modernize its technology infrastructure and bring it into the broader Oracle cloud ecosystem. 

The result has been striking.

According to KLAS, Epic controlled 43.7% of the U.S. acute-care EHR market in 2025, compared with 21.9% for Oracle Health and 14.7% for MEDITECH. Epic added 77 acute-care hospitals during 2025, while Oracle Health experienced a net loss of 56. 

And this tells you something important about Epic's strategy.

Epic didn't win by acquiring Cerner.

It won by continuing to build its own system.

The MyChart Revolution: Giving the Patient a Login

But Epic's biggest transformation wasn't simply what happened inside the hospital.

It was what happened when Epic gave the patient access to the system.

That product became MyChart.

For decades, healthcare was fundamentally provider-centric. The hospital had the medical record. The physician had the information. The patient received whatever information the healthcare system decided to provide.

MyChart changed the relationship.

Suddenly, patients could log in and see test results, medications, appointments, clinical notes, messages, billing information, and other parts of their healthcare record from a computer or smartphone.

And this was strategically brilliant because it transformed Epic from a product used by physicians into a product experienced directly by patients.

That creates an enormous network effect.

If a patient uses MyChart at one hospital and then visits another health system that also uses Epic, the experience becomes familiar. The patient already understands the interface. The physician can potentially access information from previous encounters. The healthcare system becomes more connected.

Epic today says its software supports patients not just inside healthcare facilities but in their homes and on their phones. 

The EHR stopped being merely an electronic filing cabinet.

It started becoming a consumer healthcare platform.

But there was still a major problem.

What happens when your doctor uses Epic and the other hospital uses something else?

This is where Epic's Care Everywhere became strategically important.

Care Everywhere allows healthcare organizations to exchange patient information across systems. Epic says organizations using Care Everywhere exchange more than 20 million patient records per day, with roughly half of those exchanges involving organizations using a different interoperable EHR. 

This is an important distinction.

Epic's dominance could theoretically make healthcare more fragmented if Epic simply created a closed ecosystem where Epic customers could communicate only with other Epic customers.

Instead, interoperability became part of the strategy.

The more Epic connects healthcare organizations, the more valuable the platform becomes.

And that creates an interesting paradox: the company with the largest footprint can potentially become one of the most important forces for interoperability precisely because it has enough scale to make interoperability useful.

But scale also creates power.

And that brings us to the uncomfortable side of Epic.

The Controversy: Is Epic Too Powerful?

When a company controls roughly 44% of the acute-care hospital EHR market, questions about market power are inevitable.

Critics have raised concerns around interoperability, data access, pricing, competition, and the influence Epic has over healthcare organizations and third-party developers.

In 2024, healthcare data company Particle Health filed an antitrust lawsuit against Epic, alleging that Epic used its market position to restrict competition in healthcare data exchange. Epic rejected the allegations as baseless.

Whether or not those allegations ultimately succeed legally, the broader strategic question is fascinating.

Epic isn't just selling software.

Its platform increasingly determines how information flows through the healthcare system.

That gives Epic enormous influence over what clinicians see, what patients can access, what third-party companies can build, and increasingly, what artificial intelligence systems can learn.

And that last point is where the Epic story gets particularly interesting.

Because the next chapter isn't really about electronic health records.

It's about AI.

AI companies need three things: computing power, algorithms, and data.

Healthcare AI has a particularly difficult data problem because medical data is fragmented, sensitive, highly regulated, and incredibly complex.

Epic has something that many AI startups would love to have: an enormous longitudinal dataset generated through real clinical care.

This is where Cosmos comes into the story.

Cosmos is Epic's de-identified data network built in collaboration with participating health systems. As of 2026, Epic says the Cosmos community includes roughly 2,198 hospitals, 49,300 clinics, and 310 million patients.

That is an extraordinary scale.

Imagine being able to study patterns across hundreds of millions of patient records rather than thousands of patients in a traditional clinical study.

You can start asking different questions.

Which patients are likely to develop a complication?

Which treatments are associated with better outcomes?

Which patients are likely to respond to a particular intervention?

Can we identify a disease earlier?

Can we predict who will be readmitted?

Can we identify a patient at risk before the clinical event occurs?

This is the transition from the EHR as a record of what happened to the EHR as a system that helps predict what happens next.

Epic has explicitly described this direction through its Curiosity family of generative AI models, which it says are trained using Cosmos data to help predict patient trajectories and support clinical decision-making.

Why Epic's Data Could Be More Valuable Than Its Software

This brings us to perhaps the most interesting thesis of the entire episode.

Epic's greatest asset may eventually stop being the EHR itself.

It may be the data network created by the EHR.

Think about what pharmaceutical companies spend billions of dollars trying to understand.

They want to know how diseases progress in the real world. They want to understand treatment patterns. They want to identify patient populations. They want to monitor safety. They want to understand which patients respond to which therapies.

Traditionally, that information comes from clinical trials, claims databases, registries, academic studies, and fragmented real-world evidence datasets.

Epic sits much closer to the point of care.

That doesn't mean Epic can simply hand pharmaceutical companies a giant database of patient information. Privacy, governance, consent, de-identification, security, and regulatory requirements matter enormously.

But the strategic opportunity is enormous.

Epic could become part of the infrastructure connecting patients, providers, payers, researchers, pharmaceutical companies, diagnostics companies, and AI developers.

And suddenly, Epic isn't merely an EHR vendor.

It's a healthcare data platform.

The Business Model: Why Epic Doesn't Need to Be Public

One of the most unusual parts of Epic is that it has remained private for almost five decades.

In an industry where companies typically raise venture capital, pursue IPOs, acquire competitors, and eventually sell themselves, Epic has done almost none of that.

Judy Faulkner has deliberately kept Epic private, and the company says it remains employee-owned and developer-led. It also emphasizes that it does not pursue acquisitions as part of its operating model. 

Why does this matter?

Because private ownership changes the time horizon.

A public company is constantly balancing quarterly earnings, analyst expectations, shareholder returns, and market sentiment.

Epic can theoretically take a much longer view.

If a major architectural investment takes ten years to pay off, that's acceptable.

If a product requires five years of development before customers see the value, that's acceptable.

If the company wants to reinvest a large portion of operating expenses into R&D rather than maximize short-term margins, it can do that.

Epic says approximately 35% of operating expenses go toward R&D.

That is a very different philosophy from traditional enterprise software.

Lessons From Epic

The first lesson from Epic is that infrastructure can be more valuable than the application built on top of it.

Everyone wants to build the next breakthrough healthcare app. But Epic focused on the underlying infrastructure through which thousands of other healthcare activities occur. Once you control the infrastructure, you have an incredibly powerful position.

The second lesson is that patience can become a competitive advantage.

Epic has spent nearly fifty years building its platform. There was no need to create an overnight success story. The company could make decisions based on what it believed healthcare would need five, ten, or twenty years later.

The third lesson is that data becomes exponentially more valuable when it is connected to workflow.

A standalone healthcare dataset can be useful. But data generated directly from clinical workflows—diagnoses, medications, laboratory results, procedures, outcomes, and longitudinal patient histories—can potentially become much more powerful when analyzed responsibly.

And the fourth lesson may be the most important.

You don't always need to invent the newest technology if you control the place where that technology gets deployed.

Epic didn't invent artificial intelligence.

It didn't invent smartphones.

It didn't invent cloud computing.

It didn't invent clinical research.

But if Epic becomes the layer through which AI interacts with physicians, patients, hospitals, researchers, and healthcare data, it could capture enormous value from all of those technological revolutions.

What’s Next?

The first generation of healthcare software digitized the medical record.

The second generation connected the medical record.

The third generation made the medical record accessible to the patient.

The fourth generation is going to make the medical record intelligent.

Imagine a future where a physician opens a patient's chart and the system doesn't simply display the patient's past.

It summarizes the patient's history, identifies the most important changes, flags potential drug interactions, predicts which patients are at highest risk, recommends evidence-supported next steps, automatically generates documentation, communicates with the patient, schedules follow-up, and continuously monitors whether preventive care is being completed.

That's not science fiction.

Pieces of that system are already being built.

Epic's Curiosity models are designed around predicting patient trajectories using Cosmos data, while its AI tools are being embedded across clinician, patient, and operational workflows. 

The ultimate vision isn't simply an electronic medical record.

It's something closer to a clinical operating system.

Outro: The Operating System for Human Health

So when you hear the name Epic, don't just think about the software your doctor uses.

Think about the architecture underneath modern healthcare.

A company that began in a basement in Wisconsin in 1979 has spent nearly five decades building a digital representation of the patient's healthcare journey. It survived the transition from paper to electronic records. It built one of the most widely used patient portals in the world. It connected healthcare organizations through interoperability. It created a massive de-identified data network through Cosmos. And now, it is attempting to turn that infrastructure into an AI-powered healthcare platform.

The extraordinary thing about Epic isn't that it became the largest EHR company.

It's that it may have built something much bigger than an EHR.

If pharmaceutical companies are the companies that create medicines, hospitals are the places where those medicines are delivered, and insurers are the organizations that pay for them, Epic increasingly sits in the middle—connecting the information generated across the entire system.

And that is the lesson I would take from Judy Faulkner and Epic: sometimes the biggest companies in an industry aren't the ones producing the most visible product. They're the ones quietly building the infrastructure that everyone else eventually depends on.

For fifty years, Epic has been building the digital nervous system of healthcare.

The next question is whether AI turns that nervous system into something capable of not just remembering what happened to us—but helping predict what happens next.

This has been Petri Dish Perspectives. I’m Manead. Thanks for listening. See you next Thursday. Good bye.

References

1. https://www.epic.com/ 
2. www.wikipedia.org
3. https://endpoints.news/ 
4. https://pitchbook.com/ 
5. https://finance.yahoo.com/ 

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