H.I.S.-tory – by Vince Ciotti

© 2013 by H.I.S. Professionals, LLC, all rights reserved.

Episode #97:

EpicPart 3

Another CIO Weighs In• Thanks to Daniel J. Barchi, CIO at Yale-New Haven

Health System for sharing another “epic” tale (which Mr. HIS-talk also found & published just last week!)

• Seems Epic wasn’t the only small start-up firm in that same 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 something almost as finely detailed and costly: dolls, the wildly popular “American Girl” dolls to be exact

• As another personal anecdote in this HIS-tory, my wife has been a major fan of these artifacts for years (to my credit cards’ chagrin) – that’s her pictured on the left with one of her American Girl Xmas presents (my wife is the doll on the right).

Slow Start In The Early Days…• It didn’t all happen overnight: Epic took several decades to grow

to the market dominance in large AMCs and IDNS it enjoys today. But it was not by the usual heavy-handed sales & marketing techniques followed by most vendors; Epic slowly built up steam for its eventual sprint to the top (like the Miami Heat this week!).

• This chart on the right shows the number of clients Epic had for each of its first 25 year in business:

• Yes, it actually dropped a few years as Epic gradually developed its product portfolio over time, adding all the applications needed for both hospitals and practices. We’ll show the full chart later after tracing 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 – a

huge HMO with 12 medical centers, joined other large clients like the Ontario Ministry of Health and a 490-bed hospital in Brunei.

• 1990 = Moved its 30 workers from the red bricks of 5609 Medical Circle 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 customers

included even more healthcare major players, including: Kaiser Permanente, 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 our

annual 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 (or

ppt, depending on which source you read) by Epic as one of their few formal ads, and Yale’s Daniel Barchi shared this inside story:

• When he was searching for a new system years ago, his choice came 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 hotel suites, personal intros by their executives, etc.

• At Epic, they sat around a homey meeting room questioning actual young front-line programmers, while Judy wandered in and out periodically...

• Dan remembers one young, casually-dressed guy the most for his knowledge and ability to explain complex technical subjects: he learned 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 reasons

for many of Epic’s sales successes, including the huge Kaiser deal:– John Mattison, Kaiser’s CMIO for S. California described the

final stages in their system search in 2003 in a Forbes article: “A team of MDs, RNs and IT specialists visited hospitals that used Epic and Cerner. Only one small hospital in Waco, Texas was on their Epic itinerary. Cerner minders selected who the Kaiser team could talk to, while Epic didn’t interfere. When the team tried to break away from the scripted presentation, Mattison and his colleagues heard less than flattering comments about Cerner - Mattison called them ‘suits’ - while customers praised Epic. ‘For me that was major, to be free to talk,’ says Mattison. ‘They treated you like a colleague, not a customer,’ says Jack Cochran, who heads the Permanente Federation, which represents 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 Micro HealthSystem (the former my great success, the latter my flop), I am just amazed by Epic’s marketing approach (or lack of same): compared below so hospital CIOs who might never have worked for 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 magazines

or blogs, nor paper mailers• No regional sales offices, all

US 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 budgets and incessant

mailers & emails to prospects.• Dozens of sales offices around

the US staffed with “locals” who know the turf/dialect

RFP Responses vs. “Applications”• Most HIS vendors also have large proposal departments at their

vendor HQ whose job it is to answer “yes” (through work-flow engines, screen painters, etc.) to the thousands of detailed and sometimes inane questions (eg: “Is the system user friendly?”) in reams of “RFP Feature Checklists” they receive. By contrast Epic carefully 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 with

leading vendor CEOs: Harvey Wilson (Eclipsys), Rich Tarrant (IDX), Neal Paterson (Cerner), Pam Pure (McKesson), etc., and asked each CEO how they market their products. Each CEO gave 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:

020406080

100120140160180200220240260280300

4 5 6 7 9 121721232428312832313642424455

6569859198

111126

145157

174190

230

260280

294