Another CIO Weighs In• Thanks to Daniel J. Barchi, CIO at Yale-New HavenHealth System for sharing another “epic” tale (whichMr. HIS-talk also found & published just last week!)• Seems Epic wasn’t the only small start-up firm in thatsame little brick building in Madison back in the 1980s:another young lady entrepreneur (appropriately?)named Pleasant Rowland had a small office there too.• Pleasant’s product wasn’t an HIS, but somethingalmost as finely detailed and costly: dolls, thewildly popular “American Girl” dolls to be exact• As another personal anecdote in this HIS-tory, mywife has been a major fan of these artifacts foryears (to my credit cards’ chagrin) – that’s herpictured on the left with one of her AmericanGirl Xmas presents (my wife is the doll on theright).
Slow Start In The Early Days…• It didn’t all happen overnight: Epic took several decades to growto the market dominance in large AMCs and IDNS it enjoys today.But it was not by the usual heavy-handed sales & marketingtechniques followed by most vendors; Epic slowly built up steamfor its eventual sprint to the top (like the Miami Heatthis week!).• This chart on the right shows thenumber of clients Epic had foreach of its first 25 year in business:• Yes, it actually dropped a few yearsas Epic gradually developeditsproduct portfolio over time,adding all the applications neededfor both hospitals and practices.We’ll show the full chart later aftertracing some early milestones…
Some Early Landmarks• 1983 = Cadence Enterprise Scheduling – for access/scheduling.• 1985 = Human Services Computing changed its name to Epic.• 1987 = Resolute Professional Billing – released for practices.• 1989 = Cambridge, Mass. Harvard Community Health Plan – ahuge HMO with 12 medical centers, joined other large clients likethe Ontario Ministry of Health and a 490-bed hospital in Brunei.• 1990 = Moved its 30 workers from the red bricks of 5609 MedicalCircle to a former elementary school at 5301 Tokay Boulevard.• 1992 = introduced the Windows-based EMR called EpicCare.• 1993/5 – the # of employees grew from 49 to 125, as customersincluded even more healthcare major players, including: KaiserPermanente, Johns Hopkins University, and Prudential Insurance.• 1997 = 200 FTEs generating $31M in revenue and $6M in profit,about half of that revenue in EpicCare sales to 18,000 licensees.
Amazing Growth• So how did Epic grow from 1.5 to 6,500 FTEs, and 4th place in ourannual ranking of HIS vendors by revenue, per the chart below?• Surely it was through an ‘epic’ marketing campaign, right? Wrong!
“Marketing Sucks…Epic Systems”• Believe it or not, that slogan was actually run on a billboard (orppt, depending on which source you read) by Epic as one of theirfew formal ads, and Yale’s Daniel Barchishared this inside story:• When he was searching for a new system years ago, his choicecame down to Epic and another leading vendor, that will go un-named. Dan took his C-Suite to visit the 2 finalist vendors’ HQs:• The un-named firm pulled the usual “Dog & Pony”routine, with sumptuous meals, lavish hotelsuites, personal intros by their executives, etc.• At Epic, they sat around a homey meeting roomquestioning actual young front-line programmers,while Judy wandered in and out periodically...• Dan remembers one young, casually-dressed guy the most for hisknowledge and ability to explain complex technical subjects: helearned later it was Carl Dvorak, Epic’s #2 then, and president today,who never formally introduced himself nor gave his impressive title!
“Anti-Marketing” Strategy• This low-key, non-marketing approach was one of the main reasonsfor many of Epic’s sales successes, including the huge Kaiser deal:– John Mattison, Kaiser’s CMIO for S. California described thefinal stages in their system search in 2003 in a Forbes article:“A team of MDs, RNs and IT specialists visited hospitals that usedEpic and Cerner. Only one small hospital in Waco, Texas was ontheir Epic itinerary. Cerner minders selected who the Kaiserteam could talk to, while Epic didn’t interfere. When the teamtried to break away from the scripted presentation, Mattisonand his colleagues heard less than flattering comments aboutCerner - Mattison called them ‘suits’ - while customers praisedEpic. ‘For me that was major, to be free to talk,’ says Mattison.‘They treated you like a colleague, not a customer,’ says JackCochran, who heads the Permanente Federation, whichrepresents Kaiser’s physicians. ‘They don’t sell you.’”
Vive la Différence!• As the former Director of Marketing Services at McAuto (ads,brochures, proposals, etc) and VP of Sales at HIS Inc and MicroHealthSystem (the former my great success, the latter my flop), Iam just amazed by Epic’s marketing approach (or lack of same):compared below so hospital CIOs who might never have workedfor a vendor can appreciate the contrasting approaches:EPIC• Only a handful of sales reps(out of 6,500 employees)• Paid primarily on salary(some year-end bonuses)• Never any ads in magazinesor blogs, nor paper mailers• No regional sales offices, allUS FTEs work in Verona,speaking “Wisconson-ese”Typical HIS Vendor• Huge sales staff (Meditech =≈135 out of 6,000 FTEs)• Small salary, high commission(3-5%), with large sales quotas.• Huge ad budgetsand incessantmailers & emails to prospects.• Dozens of sales offices aroundthe US staffed with “locals”who know the turf/dialect
RFP Responses vs. “Applications”• Most HIS vendors also have large proposal departments at theirvendor HQ whose job it is to answer “yes” (through work-flowengines, screen painters, etc.) to the thousands of detailed andsometimes inane questions (eg: “Is the system user friendly?”) inreams of “RFP Feature Checklists” they receive. By contrast Epiccarefully selects those (few) RFPS it chooses to responds to.• Frank Poggio shared this story about Epic’s sales philosophy:– He was a panel moderator at the 2002 HIMSS conference withleading vendor CEOs: Harvey Wilson (Eclipsys), Rich Tarrant(IDX), Neal Paterson (Cerner), Pam Pure (McKesson), etc., andasked each CEO how they market their products. Each CEOgave an impressive answer about how they have the “best &brightest” in their sales org, and invest so heavily in R & D,etc., etc. When it was Judy Faulkner’s turn to speak, she said:"Our clients don’t select us, we select each other”
Did it Work?• Here’s the full chart of Epic’s client growth from 1979 to today,showing how well this radically new approach to S & M paid off:4 5 6 7 9 1217212324283128323136424244556569859198111126145157174190230260280294020406080100120140160180200220240260280300