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20 April 2025

Epic Systems (MyChart)

6Frameworks
14Insights

Frameworks in this episode

Leadership5 steps

Epic's Ten Commandments

A one-page cultural constitution posted in every bathroom to keep 14,000 employees rowing in the same direction.

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Strategy5 steps

Hill-Climbing Growth Strategy

Focus on the next achievable hill instead of mapping the whole mountain, and let each solved problem reveal the next opportunity.

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Sales5 steps

The BFF Dedicated Customer Success Model

Give every customer one dedicated owner and an annual report card benchmarked against their peers.

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Strategy5 steps

The One-Database Platform Strategy

Build every application on one shared database instead of stitching systems together through acquisitions.

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Strategy7 steps

The Seven Powers Competitive Advantage Scorecard

Test any company against seven distinct sources of durable competitive advantage to explain why it earns above-average returns.

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Productivity5 steps

Zero-Bug, Fresh-Context Bug-Fix Methodology

Minimize the hours between writing a line of code and testing it, so the person who wrote a bug is still the best person to fix it.

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Insights & moments

The myth-busts, hot takes, explainers, and tools worth keeping.

Myth Buster· 1

Myth Buster2:33:30

Digitization Without Transformation: The Meaningful Use Paradox

Despite widespread praise for digitizing US healthcare records, meaningful use is criticized for burying doctors in mandatory clicks and paperwork without actually transforming how care is delivered or reducing costs.

  • A hospital CIO argued meaningful use digitized the industry but did nothing for digital transformation
  • President Obama himself later said the legislation fell short of his hopes
  • Studies show doctors spend roughly two hours on EHR data entry for every hour of patient care
  • Legislated 'meaningful use' checkboxes increased regulatory and administrative burden industry-wide

“meaningful use and the high-tech act wildly succeeded at digitization of the industry. It did absolutely nothing on digital transformation of the industry.”

2:33:45
#meaningful use critique#doctor burnout#health policy

Hot Take· 2

Hot Take1:26:30

Judy Turns Down Equity for the Biggest Deal in Company History

When Kaiser asked both finalists for warrants in exchange for its record-setting contract, Cerner reportedly agreed to give up 10% of its company — Judy refused outright, even at risk of losing the deal.

  • Kaiser asked for equity warrants from both Epic and Cerner as a condition of the deal
  • Cerner reportedly agreed to give Kaiser 10% of the company
  • Judy declined, saying granting it would set a bad precedent with every other large customer
  • Epic won the deal anyway without giving up equity

“No, we're not going to do it. We're not going to do it for you. We're not going to do it for anybody.”

1:27:00
#negotiation#company values#Kaiser Permanente
Hot Take3:40:00

Could Ambient AI Make the EHR Disappear?

With ambient AI scribes already reducing physician screen time, one hospital CIO speculates that AI could eventually absorb most of the administrative overhead an EHR exists to manage, potentially fading the user-facing software itself into the background.

  • Ambient AI scribe products from Microsoft/Nuance, Abridge, and Suki already integrate with Epic and reduce doctor documentation time
  • A hospital CIO speculates AI could eventually handle most clinical and billing administrative work directly
  • This could shift Epic's core value from user-facing software to an underlying 'AI operating system'
  • The hosts remain skeptical that administrative bloat in healthcare will actually disappear

“is there a version of the future where the EHR quote unquote itself just kind of fades into the background and this all just becomes…”

3:40:45
#ambient AI#future of healthcare IT#AI in medicine

Explainer· 4

Explainer20:30

How WWII Wage Controls Created America's Employer-Based Health Insurance

A walk through how 1940s wage controls, tax deductibility, and later Medicare/Medicaid produced the employer-based health insurance system that still defines US healthcare economics today.

  • Only 10% of Americans had health insurance before WWII wage controls
  • Employers began offering health insurance as a workaround to wage caps
  • Tax-deductibility for employers and tax-free status for employees cemented employer-based insurance
  • Medicare and Medicaid were created in 1965 to cover those without employer coverage

“the vast majority of patients do not feel the cost of their healthare directly in the United States.”

25:00
#health policy history#Medicare#Medicaid#health insurance
Explainer29:30

MUMPS: The Odd Programming Language Still Running Healthcare

The origin of MUMPS (Massachusetts General Hospital Utility Multi-Programming System), the integrated language-and-database created at MGH that Epic still relies on today via its modern descendant, Caché.

  • MGH programmers created MUMPS because existing languages couldn't handle high-concurrency medical transactions
  • MUMPS integrates the programming language and database into one system
  • It was designed for multiple simultaneous users updating the same patient record
  • Epic still uses MUMPS's modern descendant, Caché, today

“the Massachusetts General Hospital utility multi-programming system or MS which is amazing that there's a medical oriented programming language called MS.”

30:00
#MUMPS#technology history#Epic architecture
Explainer1:33:30

Inside Epic's Verona Campus: A Whimsical Software Factory

A tour of Epic's 1,700-acre Verona, Wisconsin campus — modeled partly on Microsoft's Redmond campus and designed with Alice in Wonderland, Harry Potter, and Wizard of Oz theming — and why Judy calls the company a 'software factory.'

  • Judy modeled the campus after touring Microsoft's Redmond headquarters
  • The same firms behind Disney California Adventure and Microsoft's campus designed Epic's buildings
  • The campus includes an 11,400-seat underground auditorium, the largest subsurface auditorium in the world
  • Judy calls Epic a 'software factory' that turns developers into medical applications

“It's Alice and Wonderland stuff. It's Harry Potter inspired stuff. It's Wizard of Oz inspired stuff.”

1:37:15

“Judy refers to it as a software factory.”

1:40:15
#Epic campus#company culture#recruiting
Explainer2:14:00

Meaningful Use: How $36 Billion in Stimulus Digitized US Healthcare

The 2009 HITECH Act, folded into the American Recovery and Reinvestment Act, offered up to $36 billion in incentive payments for hospitals to adopt and meaningfully use electronic health records, taking EHR penetration from 9% to 95% of hospitals in five years.

  • The 2009 financial crisis stimulus included EHR adoption as a 'shovel-ready' project
  • Hospitals could earn $44,000-$64,000 per physician for adopting and meaningfully using EHRs
  • EHR adoption jumped from 9% of hospitals in 2009 to 95% by 2014
  • The incentive rewarded reliability over innovation, benefiting the most trusted vendor, Epic

“market penetration of electronic healthcare records went from 9% of hospitals in 2009 to 95% by 2014.”

2:19:15

“there is $27 billion available in direct incentive payments to hospitals that implemented electronic medical records”

2:15:00
#HITECH Act#meaningful use#health policy#stimulus

Story· 4

Story33:30

The Kitchen-Table Epiphany That Became Chronicles

Judy Faulner describes the moment in her living room in the mid-1970s when the design for Epic's single integrated patient database, Chronicles, came to her all at once.

  • Judy learned MUMPS through her connection to Warner Slack and Metatech
  • She had a sudden, complete insight for an integrated single-database system
  • She immediately wrote code that became Chronicles, still Epic's core database today

“The sun was shining. I was disattentive. I was just sitting there and suddenly it all came to me. Here's how you build it. The…”

Judith Faulner (quoted) · 33:30
#origin story#Judy Faulner#Chronicles database
Story07:00

Judy Faulner's Mother Won a Share of the Nobel Peace Prize

An overlooked detail from Judy Faulner's family history: her mother Dell Greenfield became a peace advocate and, through Oregon Physicians for Social Responsibility, was part of a group that won the 1985 Nobel Peace Prize.

  • Discovered via her mother's obituary during research for the episode
  • Dell Greenfield became director of Oregon Physicians for Social Responsibility
  • That group's parent organization won the Nobel Peace Prize in 1985

“Judy Faulner's mom was part of a group that won the Nobel Peace Prize in 1985.”

08:00
#Judy Faulner biography#family history
Story1:24:00

The Kaiser Bake-Off: An All-Nighter Beats a Billion-Dollar Rival

The dramatic story of how Epic, then a roughly $50M company, won the largest EHR contract of its era over billion-dollar rival Cerner by building an overnight Excel model proving its system could handle Kaiser Permanente's transaction volume.

  • Kaiser ran a technical bake-off pitting Epic against Cerner in adjacent conference rooms
  • Epic president Carl Dvorak had the team pull an all-nighter to build a real transaction-load model instead of a theoretical one
  • Cerner couldn't prove its system could handle the load
  • Epic won the deal, roughly tripling its revenue

“it becomes really clear that Cerner has not done a similar level of modeling and can't actually prove to Kaiser that their system is going…”

1:25:45
#Kaiser Permanente#Cerner#competitive deal story
Story2:39:00

The DoD and VA Contracts That Became a Decade-Long Disaster

Cerner won the Department of Defense and VA's massive EHR contracts (worth billions) as a subcontractor, but both implementations spiraled into years of delays — the VA project reportedly won't be complete until as early as 2031.

  • The DoD EHR contract was $4.3B; the VA contract was $10B, both won by Cerner as subcontractor
  • The DoD system didn't go fully live until 2024, nine years after the 2015 award
  • The VA system may not be live at all sites until as early as 2031
  • Industry insiders believe Epic is relieved it didn't win, given the government contracting morass

“The latest announcement from the VA about this project is that it will be live at all VA sites by, this is a direct quote,…”

2:41:15

“there's an old saying that you make more money on failed government contracts than successful ones.”

2:42:15
#government contracts#Cerner#Department of Defense#VA

Q&A· 1

Q&A3:06:00

What Is Epic Actually Worth?

Since Epic will never have a liquidity event, the hosts work through several valuation approaches — Forbes' likely-too-low estimate, comparable EBITDA multiples from Cerner's Oracle sale, and public software revenue multiples — landing on a plausible valuation around $100 billion.

  • Forbes estimated Judy's net worth implies a $15B company valuation, which the hosts call far too low
  • Using Cerner's 30x EBITDA acquisition multiple and a 30% margin assumption implies roughly $51B
  • A 9x revenue multiple also lands near $50B, but likely understates Epic's durability
  • The hosts estimate a plausible real value near $100 billion given Epic's durability and strategic value

“My guess is if this is public, which it never will be, investors would value it somewhere in the hundred billion neighborhood”

3:07:15
#valuation#Epic financials#Judy Faulner net worth

Tool· 1

Tool2:56:00

Cosmos: Turning 295 Million Patient Records Into a Research Engine

Epic's Cosmos platform aggregates anonymized data from 295 million patients and 15 billion patient encounters across its customer base, letting doctors query for 'lookalike' cases and enabling research at a scale impossible with paper or siloed records.

  • Cosmos anonymizes and centralizes patient data from across Epic's entire customer base
  • 295 million patients and 15 billion patient encounters are represented
  • Doctors can query for anonymized 'lookalike' patients to inform rare or unusual cases
  • The tool is currently offered free to customers who opt in

“Cosmos has 295 million patients worth of data in it. All anonymized.”

2:56:15

“across those 295 million patients, there's data from 15 billion individual patient encounters.”

2:56:45
#Cosmos#healthcare data#research

Takeaway· 1

Takeaway3:09:00

Judy's Succession Plan: A Purpose Trust That Locks In Independence Forever

At 81, Judy Faulner has structured her voting shares to pass into a 'purpose trust' upon her death, governed by family, longtime senior managers, and customer CEOs, with bylaws requiring the next CEO to be a longtime Epic employee and a software developer.

  • Judy has been transferring non-voting shares into her Roots & Wings foundation, funded via share buybacks
  • Her voting shares will transfer into a purpose trust upon her death, ensuring the company can never be sold or taken public
  • The trust will be administered by family, five longtime senior Epic managers, and three customer CEOs
  • Bylaws require the next CEO to be both a longtime Epic employee and a software developer
#succession planning#founder legacy#trust structure