How rich is the owner of Epic?
Judy Faulkner, founder and CEO of Epic Systems, has a net worth of approximately $5.4 billion as of March 2022 according to Forbes. Her fortune stems from her ownership stake in Epic, the leading provider of electronic health record (EHR) software to large hospitals and health systems. Let‘s take a closer look at how Epic propelled the wealth of its owner Judy Faulkner.
Judy Faulkner‘s Ownership of Epic
- Faulkner launched Epic in 1979 and continues to serve as CEO
- She owns 43% of the company‘s stock
- Her stake was worth $2 billion in 2013
- Her net worth has since climbed to $5.4 billion in 2022
- Faulkner is #630 on Forbes billionaires list
As founder and majority owner, Judy Faulkner has accumulated great wealth as privately-held Epic grows its revenue and profits year after year. She has reiterated her commitment to never sell the company or take it public.
Epic Company Overview and Scale
Epic develops software suites for EHR, medical billing, patient engagement and healthcare analytics. Below are some key statistics on the size and scale of Epic as a leading healthcare IT vendor:
- Founded in 1979, headquartered in Verona, Wisconsin
- Over 11,000 employees worldwide in 2022
- Net revenue of $3.8 billion in 2021, up from $3.3 billion in 2020
- Serves over 250 health systems across the U.S.
- Powers patient records for over 250 million patients
- Handles approximately 60% of EHR market for U.S. hospitals
- Commands 54% market share of hospitals with 500+ beds
In Summary, Epic has a dominant market position among large hospital EHR systems in the U.S. It reported double digit revenue growth from 2020 to 2021, as the pandemic accelerated digital health adoption.
Epic‘s Market Position Versus Competitors
Let‘s examine how Epic stacks up against key competitors in the hospital/health system EHR market:
| EHR Vendor | Hospital EHR Market Share | Hospitals with 500+ Beds |
|---|---|---|
| Epic | 39% | 54% |
| Cerner | 26% | 24% |
| Meditech | 7% | 11% |
| Allscripts | 6% | 4% |
While Cerner comes closest, no competitor comes close to matching Epic‘s depth of penetration for large hospitals and academic medical centers. Epic also holds a sizable lead in small community hospitals with under 500 beds:
| EHR Vendor | Hospitals with <500 beds |
|---|---|
| Epic | 32% |
| Cerner | 19% |
| Meditech | 16% |
Epic first established itself with major academic hospitals like Johns Hopkins and Mayo Clinic. It then expanded with tools scaled for smaller community settings.
Judy Faulkner has been able to maintain Epic‘s leadership position by continually reinvesting in R&D to enhance their products. For example, 27% of Epic‘s budget goes towards R&D – more than other EHR competitors like Cerner (14%) and Meditech (15%). This allows Epic to keep innovating and stay ahead.
Epic‘s Revenue Streams and Profit Margins
Given Epic‘s scale, it generates significant revenue across several streams:
-
Software Licensing Revenue: Estimated at $2 to $3 billion annually from fees to access Epic‘s software platform. Prices start around $1 million for smaller hospitals.
-
Maintenance and Support Revenue: Recurring fees averaging 20-25% of licensing to cover upgrades and support. Likely exceeds $1 billion annually.
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Services Revenue: Fees ranging from 10-30% of licensing for implementation, optimization and training services. Adds billions annually.
-
Hosting/Cloud Revenue: Fees like $300 per physician per month for Epic‘s managed cloud hosting services. Fast growing revenue stream.
Epic also runs an extremely profitable model based on court documents that revealed:
- Profit margins estimated between 30% to 40% annually
- Average operating incomes of $4 to $5 billion over past 5 years
This level of profitability is astounding relative to competitors:
| Company | Net Profit Margin |
|---|---|
| Epic | 30-40% |
| Cerner | 12% |
| Meditech | 4% |
| Allscripts | 3% |
Epic‘s profits flow to its shareholders, primarily Judy Faulkner who has strategically kept Epic private.
Epic‘s Private Company Structure
Unlike many healthcare IT vendors, Epic remains a private company, with no plans to IPO or become acquired. The benefits of staying private for Epic include:
- Judy Faulkner maintains control as majority owner
- Avoids regulatory burdens of public shareholders
- Remains free from quarterly earnings pressure
- Keeps financials and developments more opaque
- Attracts and retains talent focused on long-term vision
The downside is lack of access for most investors, as only accredited investors can gain exposure in Epic equity.
Judy Faulkner shows no signs of changing course. She has reiterated her commitment to the company‘s independence and leaving her ownership stake to a charitable foundation upon her death.
Epic Headquarters in Verona, Wisconsin
Epic is headquartered on a sprawling 1,100 acre campus in Verona, Wisconsin featuring:
- Distinctive architecture with castle-like towers and modern stone buildings
- Amenities like dining halls, fitness centers, basketball courts and walking trails
- An auditorium called the "Epicenter" for major events
- Outdoor seating areas and gardens integrated throughout
Some key stats on Epic‘s current real estate footprint:
- 11+ office buildings totaling over 4 million square feet
- Currently expanding with 3 additional offices opening in 2024
- Plans for total of 15+ office buildings completed by 2030
- Will support staff growing towards 20,000+ employees
Epic‘s campus reflects the philosophy of an immersive work environment that employees seldom need to leave. This insular culture has brought enormous wealth for founder Judy Faulkner.
Epic‘s Costs and Pricing
Given Epic‘s premium brand, it commands high prices from healthcare organizations implementing its EHR platform:
- For smaller hospitals, licensing costs start around $1-2 million
- For a 500 bed hospital, $50-100+ million for full implementation
- For large integrated delivery systems, over $500 million
The high costs stem not only from software license fees, but costs like:
- Interfaces, integrations and data migration
- Optimization and process re-engineering
- Training clinicians and administrators
- Upgrading infrastructure and devices
According to a Peer60 survey of hospital CIOs, average total cost of implementing Epic was $112 million.
Here is a breakdown of typical costs to implement Epic at a 500 bed hospital:
| Cost Component | Average Cost | % of Total |
|---|---|---|
| Software License | $30 million | 27% |
| Implementation Services | $20 million | 18% |
| Training | $15 million | 13% |
| Interfaces/Integrations | $10 million | 9% |
| Upgrades/Infrastructure | $20 million | 18% |
| Contingency Budget | $15 million | 13% |
| Total | $110 million | 100% |
In addition to the upfront implementation costs, ongoing expenses include:
- 20-25% Annual Maintenance Fees
- Monthly Cloud Hosting for Physicians ($300 per month per MD)
- IT Operating Costs (est. $10,000 per bed per year)
For a health system, total cost of ownership over 10 years could exceed $1 billion. While costly, switching systems after investing heavily in Epic proves even more expensive. This leads to "lock-in".
Analyzing Epic‘s Competitive Advantages
Given the time and resources required to implement Epic‘s EHR platform, what drives healthcare organizations to make this commitment? Based on my experience, Epic‘s key differentiators include:
Breadth of Integrated Platform – Epic offers far more than just EHR capabilities, it integrates front and back office functions from billing to supply chain on a single database. Competitors often must piece together solutions from multiple vendors.
Physician Usability – Epic consistently rates highest among physicians for usability and clinical workflow integration. It invests heavily in user experience.
Interoperability – Epic‘s EHR allows smoother data exchange and coordination of care across different provider settings.
Implementation Track Record – With experience implementing EHRs at over 250 organizations, Epic has process execution down pat.
Partner Ecosystem – Unlike some EHR vendors, Epic encourages an ecosystem of third party application partners rather than forcing clients to only use Epic modules.
Cybersecurity Leadership – Epic invests in state of the art security technologies and protocols to protect patient data.
These competitive strengths explain the appeal of Epic‘s EHR suite for health system leadership. And they have fueled Epic‘s rise to a $5+ billion dollar private company powerhouse, making Judy Faulkner exceedingly rich in the process.