Epic monopoly on EHRs is hurting U.S. health care, Texas AG says

Epic Systems Corp. has created an electronic health record (EHR) monopoly that hurts patient care while stifling innovation across the United States, according to a new lawsuit filed by the Texas Attorney General Ken Paxton’s Office.

The Wisconsin-based company’s “deceptive” business practices are blocking parental control over children’s health records after age 12. That undermines parental rights to direct care and violates Texas law granting parents unrestricted access to their children’s medical records, Paxton said in a news release.

“We will not allow woke corporations to undermine the sacred rights of parents to protect and oversee their kids’ medical well-being,” Paxton said. “This lawsuit aims to ensure that Texans can readily obtain access to these records and benefit from the lower costs and innovation that come from a truly competitive electronic health records market.”

Epic’s response

The company commented on the lawsuit in a statement sent to Medical Economics:

“The action taken by Texas is flawed and misguided by its failure to understand both Epic’s business model and position in the market and the enormous contributions our company has made to our nation's health care system illustrated by products like MyChart — software that tens of millions of Americans depend on every day,” the Epic statement said.

“Every month, we improve quality of care by helping providers see a more comprehensive picture of their patient through over 725 million record exchanges — more than any other electronic health records vendor — and over half of these are with non-Epic systems,” the company’s statement said. “Health systems using Epic shared information with almost 1,000 patient-facing apps 2 billion times in the past year. Epic does not determine parental access to children’s medical records. Decisions about parental access to children’s medical records are made by doctors and health systems, not by Epic.”

The case

Paxton’s announcement summarized the case, which is not limited to access to children’s health records. Epic’s database software has more than 325 million patient records, or 90% of the American population.

“The corporation uses a wide range of exclusionary tactics to prevent potential competition from its partners, customers, and even its own employees,” Paxton’s announcement said. “Epic also interferes with hospitals’ ability to use its own patient data as part of its scheme to block software competitors. As a result, Texas patients experience diminished quality of health care due to their preferred physicians receiving incomplete or out-of-date patient health records. These anticompetitive practices further harm Texas hospitals and Texas patients by raising costs and blocking innovative technologies.”

Capturing market share

The complaint included a short primer on health care system participants, centering on patients treated at venues ranging from small, self-employed physicians to large networks of clinics, hospitals and practices. Storing and sharing patient records on paper is laborious, so now those records have been digitized into electronic health records (EHRs).

“Epic understands the critical role patient data plays in health care,” the lawsuit said. The company has spent decades locking hospitals into Epic’s EHR system, which allows the company to stand as gatekeeper, the lawsuit said.

“Epic controls who can access this data, when they can access it, and the terms by which they can access it — despite the simple fact that it is the hospitals' and patients' data, not Epic's,” the complaint said.

Once hospitals buy into the system, it becomes almost impossible to get out. Epic uses massive penalty fees to coerce customers into not switching to overlapping competitor applications. The company also uses its war chest to absorb losses on new products and starve competition, the complaint said.

The entry into the EHR market has become so difficult that in 2018 business giants Amazon, Berkshire Hathaway and JP Morgan Chase joined to form Haven, starting with service for those companies’ employees. But it folded in 2021, failing to deploy a single alternative EHR system, the lawsuit said.

Cash enough for castles

Epic’s 2024 annual revenue was $5.7 billion with a 30% margin for earnings before interest, taxes, depreciation and amortization. Its “monopoly profits” were redacted in the complaint, but apparently were enough “to build literal castles and moats around their headquarters in Verona, Wisconsin,” the complaint said. The lawsuit included photos that were posted online showing a building constructed to look like Hogwarts school of magic from the Harry Potter novels, and a set of buildings with waterfront views.

The case was filed in the District Court of Tarrant County, Texas, because Epic does business and has customers there. The lawsuit states it does not raise any federal claims and it is not removable to federal court.