As Epic Systems soars, Wisconsin economy benefits
Supporters of the incentives promised to Foxconn can only hope that the billions of dollars have the same effect on the state’s economy as Epic Systems in Verona has had.
The company, which writes software for electronic health records, has hired about 3,200 people in the past three years alone.
It now employs 9,700 people companywide, including 9,300 in Verona, and had revenue of $2.5 billion last year — up from 396 people and revenue of $47 million in 2000.
And it has made Madison a center for health information technology, with an array of established companies and startups, among them Nordic, Forward Health, Propeller Health, Wellbe, Redox, Datica, healthfinch, Bluetree Network, Moxe Health and Forte Research Systems.
Former Epic employees can be found at most and maybe all of those companies.
“You don’t see the health technology companies leaving Madison — you see companies moving to Madison,” said Dan Blake, a partner at HealthX Ventures, a venture capital firm that invests in health IT companies.
Blake and several of his partners came from Epic. And he estimates that more than 1,000 people in the Madison area with expertise in health IT or software previously worked at Epic.
“A lot of those folks gained hugely valuable experience at Epic,” he said.
No one company has had a comparable effect on the state’s economy in the past two decades.
But Epic also shows the role of serendipity in economic development.
Bill Gates and Paul Allen, the founders of Microsoft, could have grown up in a city other than Seattle. Jeff Bezos, the founder of Amazon, could have started a company to sell books online in some other city.
And a woman like Epic founder and CEO Judy Faulkner, with an undergraduate degree in math, could have gone to graduate school in computer science somewhere other than the University of Wisconsin-Madison.
She would later go to work for UW Hospital and Clinics, where she was asked to create a database to collect and track patient information and eventually encouraged to start a company.
That company, founded in 1979 with about a dozen other people, most of whom kept their day jobs, would one day become one of the nation’s largest and most respected companies for electronic health records.
Today, more than 200 million people in the United States have at least one medical record in an Epic system. Epic has almost a quarter of the U.S. hospital market for electronic health records.
Aurora Health Care, Froedtert Health, ProHealth Care and most of the other large health systems in Wisconsin use the company’s software. So, too, do most of most of the country’s top academic medical centers, including the Cleveland Clinic and Mayo Clinic. Almost twothirds of medical students and residents receive their training at academic medical centers that have Epic systems.
Epic’s annual gathering of customers each September brings 9,000 people to the Madison area. Another gathering of experts brings thousands more each spring.
That indirectly benefits other companies in the Madison area.
“There’s the value of just having an aware-
ness of Madison,” Blake said.
Epic also continues to gain market share.
New contracts for health systems are about evenly split between Epic and Cerner Corp., based in North Kansas City, Mo., said Dan Czech, an analyst with KLAS Research, whose reports on the industry are widely followed.
In January, Epic was named the No. 1 overall software suite for the seventh
consecutive year by KLAS Research.
Faulker and her family controlled about 43% of Epic as of early 2016. Forbes estimates her net worth at $2.4 billion. But based on the market value of two Epic competitors — Cerner and athenahealth — her family’s stake in Epic would be worth more than $5 billion.
Not that it matters to Faulkner. By all appearances, from the hours she works to the car she drives to her home, Faulkner is indifferent to the lifestyles that great wealth can bring. And she has pledged to give 99% of her family’s wealth to a nonprofit foundation.
“Judy at heart is a developer,” Sean Bina, an Epic vice president, said in 2015.
“She wants to develop stuff.”
Almost all the company’s profits are reinvested.
“We basically are spending everything we can to produce great software,” Bina said.
That includes the roughly $1 billion it has spent on its Verona campus.
Almost all hospitals and most physician practices now have electronic health records. That is transforming health care, lessening the variation in medicine and improving the coordination of care. But it also is no more than a start.
Work remains on making electronic health records easier to use and easier to
exchange. And Epic — as well as its competitors and other companies — is working on tools to help manage people’s health, to help identify patients at risk for certain medical conditions and to track the effectiveness of new drugs and treatments.
“Epic has had some of the leading thinking across the health technology landscape,” Blake said.
In all likelihood, some of that work will lead to more spin-offs in the Madison area — the same economic phenomenon that it is hoped will result from Foxconn if it follows through with its plan to build a $10 billion flat-panel display plant in Racine County.