📝 usncan Note: Epic Faces Antitrust Challenge As Lawsuit Proceeds
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Judy Faulkner, founder and chief executive officer of Epic Systems Corp., during the Forbes Healthcare Summit in New York, US, on Tuesday, Dec. 5, 2023.
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Epic is the health data infrastructure for many hospitals and health systems in the U.S. A federal judge in New York has allowed an antitrust lawsuit against the company to move forward, ruling that healthcare data platform Particle Health presented enough evidence to pursue several claims. This decision may open the door for other solution providers to launch similar antitrust challenges.
Judge Naomi Reice Buchwald issued an order that partially granted and partially denied Epic Systems’ motion to dismiss Particle Health’s lawsuit. The court dismissed Particle’s Section 1 Sherman Act claim (restraint of trade) and its defamation and trade libel claims, finding those allegations unsupported. But the judge allowed the core Section 2 antitrust claims—monopolization, attempted monopolization, and monopoly leveraging—to proceed, along with related New York Donnelly Act antitrust claims and tortious interference claims. The court ruled that Particle plausibly alleged Epic abused its dominance in electronic health records to undermine competition in the payer platform market so that those claims will move forward into discovery.
Epic responded on X: “The Court dismissed the majority of Particle’s claims. The ruling included the observation that Carequality’s ‘imposition of the corrective action plan [on Particle]
was entirely reasonable.’ Epic has worked and will continue to work to protect the privacy of patients’ data. We look forward to the opportunity to present evidence to prevail on the remaining claims.”
Particle Health CEO Jason Prestinario welcomed the court ruling. On LinkedIn, he wrote: “This is the first time in Epic’s history that an antitrust case against them has gotten to this point. It’s the next step to a bigger victory for better patient care and more patient control of their medical info.”
Epic First Strategy Puts Pressure On Point Solutions
Healthcare point solution companies are tracking this closely, as provider organizations and their CIOs adopt an “Epic First” strategy that shuts out or minimizes third-party vendors while they wait for Epic to build its own version.
Healthcare provider organizations rely heavily on point solutions in ambient technology, which health systems have adopted so rapidly that it now borders on commodity status. Demand pushed companies like Ambience, with a $1.25 billion valuation, and Abridge, valued at $5.3 billion, to unicorn status.
Those valuations may already be shifting. Epic announced plans to release a native ambient solution at its recent annual conference. Under pressure to deliver ambient technology now, CIOs are adjusting their strategies and signing short-term contracts with third-party vendors while they evaluate Epic’s product.
Epic repeatedly follows this pattern: it allows a third-party solution into its Epic showroom—the partner ecosystem for EHR integrations—and a few years later launches a competing in-house product that threatens to displace those bolt-on solutions.
The discovery phase of the lawsuit will reveal more about how Epic’s practices withstand legal scrutiny. With massive adoption by hospital systems, Epic will continue to dominate the healthcare software space. The key will be developing solutions embedded directly inside the EHR. While third-party solutions can benefit from data sharing, they will have minimal impact if they cannot embed their software into the workflow compared with a native product.
