Another Epic Loss: Iasis Upgrades To Cerner

It’s too early to make a definitive claim, but I’m picking up some increasing evidence that Cerner is beginning to win out over Epic as some health systems upgrade. I’m not suggesting that Epic is ready to topple by any means, but it does seem that Cerner’s winning more potential matchups than they were before.

Want an example? Take the recent news that Iasis Healthcare will switch out its McKesson platform for the Cerner  Millenium EMR.  The 17-hospital system will spend $50 million to make the upgrade, which should be complete by March 2018. Most of the spending is ($35M+) is projected to come in fiscal 2016.

As I noted in an earlier post, Epic continues to grow at, well, an Epic pace. Reports suggest that Epic added 1,400 staffers last year, and the company seems likely to keep on pace in 2016. And as I previously noted, Epic software is either being used by or installed at 360 healthcare organizations in 10 countries, and also reported generating $1.8 billion in revenues for 2014.

But as the Iasis deal illustrates, Cerner is picking up some split-decision deals for what look like important reasons. One intriguing reddit post by captainnoob explains why his health system went with Cerner:

We whittled our choice down to 3 applications… McKesson Paragon, Epic, and Cerner. Those 3 were our forerunners as they were fully integrated and had modules to handle (almost) every service our facility provides. Ultimately the decision to go Cerner was based primarily on a combination of user input and cost of ownership.

  • User Input – We did numerous site visits with users from various clinical and managerial areas to talk workflow, ask questions such as how each product dealt with certain challenges we have already faced with McKesson, and view demonstrations in real-world conditions.
  • Cost of Ownership – Not just the cost of the product and implementation, but the cost of maintaining the product over 5-10 years.

I’m not sure why the competitive advantages Cerner has have shown up in higher relief recently. But my guess is that the wins Cerner is capturing have something to do with the psychology of EMR investment.

Going from a severely underpowered system — or none — to Epic involves taking a big leap of faith. How can you rationalize spending dozens or even hundreds of millions (or billions) on Epic? I’d argue that in essence, the ROI on that buy has been essentially unguessable. So the systems that have made a big Epic buy have had to justify their investment by pointing to big, still-intangible benefits like improved population health.

On the other hand, health systems that didn’t do Epic the first time, and have reasonably competent systems on board already, aren’t buying vision or reputation-ware. They aren’t pioneers, but instead, are looking for an economically and technically workable solution. In that circumstance, I know I’d be far more likely to go with a system with a lower total cost of ownership than an expensive Big Blue-style tool.

But these are just my theories. What do you think?  Is the investment tide turning toward Cerner, and why?

About the author

Anne Zieger

Anne Zieger

Anne Zieger is a healthcare journalist who has written about the industry for 30 years. Her work has appeared in all of the leading healthcare industry publications, and she's served as editor in chief of several healthcare B2B sites.