Epic Versus Cerner: Taking Another Look

Vince Ciotti, Principal, HIS Professionals

Vince Ciotti, Principal, HIS Professionals

Elise Ames, Principal, HIS Professionals

Elise Ames, Principal, HIS Professionals

HealthsystemCIO.com has asked us to update a post we wrote back in 2011 on “Breaking Down an Epic versus Cerner Selection.” Seems it’s still getting hundreds of hits per month, so we’re updating it with this version, starting with a review of how both vendors have fared since then.

Epic – Continued strong sales in the large hospital (400+ beds) and multi-IDN markets over the past 4 years, with their only major losses to Cerner being IHC in 2013 and the DoD this year. Epic does not issue the usual PR releases with every win (or we’d be bored to tears reading them all), but they seem to have won every other major sale including NYCHHC and Mayo Clinic. Yes, there have been a few implementation stumbles and cost overruns, but these have been common with all vendors during our mad rush to “meaningful abuse” of EHRs. Further proof of Epic’s sales success can be found in their annual revenue, the barometer of HIS vendor performance: Epic doubled theirs from ≈$800M in FY 2010 to ≈$1.7B in FY 2014.

On the product front, Epic continued its policy of self-development and internal growth, not acquiring any HIS vendors or products. Through their annual “happiness” meetings with clients, they listen to what is needed, then code it, de-bug it (rare with some vendors), and release the next upgrade to their clients. An interesting technical development is the construction of a large data center in Verona in some of the few acres of open ground left — apparently Epic will offer remote hosting for hospitals whose heads are in the “cloud” and would rather pay a vendor to run their servers (odd, since the only decreasing cost in IT these days is hardware…).

Cerner – How did Cerner compare in terms of sales? Check out their revenue figures: in 2010 they were number 2 behind McKesson with $1.85B, and in 2014 they jumped ahead to first place posting $3.4B! And that was before their two biggest coups: acquiring Siemens $1.2B in annual revenue and winning the gazillion dollar DoD contract with Leidos & Accenture (who will get most of our tax dollars). How did Cerner almost double their revenue before these huge deals? First, they sold very well in the mid-size and small hospital market in the US, two segments that Judy avoids out of respect for her early mentor: Meditech’s Neil Pappalardo. Cerner’s “Millennium” system is sold primarily to large and mid-sized hospitals and runs remotely at (highly profitable) hosting fees, while their “Community Works” (CW) shared solution has been sold to over 100 small hospitals and CAH facilities. In addition, Cerner has been very strong in international sales and has entered a number of non-hospital fields such as workplace health, medical devices, pharmacies, etc.

On the product front, Cerner also mainly self-develops, although its acquisition of so many Siemens products (Soarian, Invision, MedSeries, Eagle, etc.) could complicate matters, so Cerner is pushing Siemens clients strongly to its indigenous products. How will it compete against Epic in keeping Siemens clients? Very well, thank you, due to having the biggest and best sales and marketing departments in the industry: ≈1K sales pros in KC versus ≈20 in Verona! In terms of revenue, Cerner will probably lead the HIS market for as many decades as SMS and McKesson did during their prime.

So what do these numbers tell you about choosing between them? Mainly that they are the two biggest and most successful HIS vendors out there, either one being a safe bet for the long haul. Which is best for your hospital? That depends much more on your facility’s size, budget and specific needs, rather than these ever-vacillating Wall Street numbers. A good analogy is buying a car: just how important to you is Honda’s annual revenue in Yen, BMW’s R&D investment in Euros, or Fiat’s acquisition of Chrysler? It’s your many unique needs that count: family size, budget, locale, etc. There are many car-buying analogies with buying an HIS:

  • Family size = bed size: the larger you are in terms of sites and practices, the more likely to go Epic, while mid-size and smaller favors Cerner.
  • Budget = the thinner your wallet, the more likely Cerner will fit, while only well-off buyers can afford all of Epic’s options.
  • Locale = do all your major competitors have one or the other, or is it a mixed bag?
  • Stick shift vs. automatic = Epic only runs in-house (so far…), whereas Cerner has totally “shifted” from in-house to remote.

And of course, before making such a major decision as buying a new car, you should check out several other items beforehand:

  • Owner’s manual —it’s sitting right there in the glove box. For an HIS, check out the user manuals – they’re all on-line today. And unlike RFP feature checklist responses, they contain the truth…
  • Chat with the mechanics — they know what works well, and what breaks the most. For an HIS, ask to meet your implementation project manager before signing, and ask about their staff and (non?) experience…
  • Take a test drive in the model you’re buying, and on the roads you’ll be travelling. For an HIS, make unchaperoned site visits and phone calls to client hospitals of your size and using your apps…
  • Check out the warranty — what’s covered versus what’s not? With an HIS, ask for a boilerplate contract and request changes while you still have some competitive pressure…
  • Negotiate price — don’t tell the Chevy dealer he won, then ask for a discount. Tell him you may buy a Ford unless he gives you a deal… After all, no one pays list price for a mega-buck HIS, do they?

Just how do Epic and Cerner compare in these last critical areas? Only you can find that out.

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