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Epic Costs

March 23, 2009
by vciotti
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Wow, more interesting news last week re: Epic's ongoing, unofficial Economic Stimulus Package:

1. Kaiser has upped its budget for 5 (read it again,

just 5) of its largest medical centers to implement Epic, this time to $1B. First press releases a few years ago forecast $150M, second iteration last year was $500M, now $1B. Gosh, I though that kind of inflation only came out of Washington, D.C?

2. Carilion in WV announced record losses last year, due mainly to poor investments (sounds like my 401K!). However, they also stated that their implementation of Epic's EMR was "the single biggest item" contributing to operating losses...

3. Kaiser is outsourcing a large chunk of their IT operations to IBM, and laying off 700 IT employees, who will be eligible for hiring by IBM... This come on the heels of a full-page ad Kaiser ran in US Today a month ago in which they bragged of their $4B (that's a "B" as in federal government Bailout) investment in Epic's EMR.Â

Now, I'm sure Suresh, the Epic CIO blogger on these pages, will assail me for being too pecuniary and not considering all the vast improvements Epic's EMR will make on patient care and internal operations of these institutions. I guess we just did too much work with The Hunter Group over the years to believe that throwing such amounts of money at IT makes sense. Let alone in these tough times. As the good nuns are wont to say to say: "no margin, no mission."Â



Vince, I'll back you up on this one, even as an Epic CIO. Epic is the best product on the market, though one could argue that the market sets a low benchmark. Epic is superlative at customer service the best of any vendor in my 25-year career, regardless of industry. But, sinking big money into an EMR at this point in history is questionable, at best. As good as Epic is, there will be leaner, cheaper, EMRs on the market in the not-too-distant future, maybe from Epic itself. Unfortunately, the Kaiser's of the world won't have the money or the cultural fortitude to invest and convert to these new EMRs. It's a very interesting time in the market and history of the industry. If I were a CIO at a hospital/provider without an EMR, I'd be looking at the new, emerging data aggregration products in healthcare IT as a less-costly bridge to the newer, better EMRs on the horizon.

Sutter Health has spent upwards of $500M on Epic to date and will be well over 1B before the project is complete. The current economic conditions and availability of capital are also causing the organization to review more critically the amount of capital $$'s invested in the Epic deployment.
To be fair to Epic, these large organizational installs require 1000's of hours on the build side getting all the differing clinical and admin groups to agree on a standard organizational build. That along with the inflated costs have having 100+ consultants on the project balloon labor costs exponentiallly.

Goof: meant to say "Sutter" in my post, not Kaiser. Truth is, Kaiser is hitting astronomical numbers too...


Two thoughts...
1) Gvt has $20 bill for HIT...might as well make it simple and save gvt admin time and costs. Just write one check to EPIC! That'll save $2 bill in admin costs and committes and certification and...
2) Funny - Kaiser is outsourcing to IBM, and IBM just announced it is outsourcing 5,000 staff to India! Just think, Kaiser could have saved say 20% if they cut out the middle man!

I've got an interview request in to KP's CIO Phil Fasano. We'll see.