What if we told you that the most important company in US healthcare was run from a farm in rural Wisconsin? And that farm contained the world’s largest subterranean auditorium, as well as Disneyland—style replicas of Hogwarts and the Emerald City? What if we told you that the person who started, runs and owns this establishment has legally ensured that it will never be sold, never go public and never acquire another company? And that this person, Judy Faulkner, is also likely the wealthiest and most successful self-made woman in history?Welcome to the story of Epic Systems, the software company that underpins the majority of the American healthcare system today. Epic isn’t “just” an electronic medical record (the category it’s usually lumped into), or an online patient portal (which is how most of the US population interacts with it via its MyChart application). It’s more akin to a central nervous system for hospitals and health clinics. Almost everything in a hospital — from patient interactions to billing, staffing, scheduling, prescriptions and even research — happens on Epic’s platform, and over 90% of American medical schools’ graduating doctors, nurses and health administrative staff are trained on it during their educations. Tune in as we dive into the almost-unbelievable story of how this epic company came to be!Sponsors:Many thanks to our fantastic Spring ‘25 Season partners:J.P. Morgan PaymentsFundriseServiceNowCrusoeLinks:Save the date, July 15 in NYC!Epic’s Verona campusWorldly Partners’ Multi-Decade Epic Systems StudyEpisode sourcesCarve Outs:Ken Block in San FranciscoNintendo Switch 2Knives OutBrat by Charli xcxMusic To Refine To: A Remix Companion to Severance by ODESZAMore Acquired:Get email updates with hints on next episode and follow-ups from recent episodesJoin the SlackSubscribe to ACQ2Check out the latest swag in the ACQ Merch Store!Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions.
Chapter 1: Who is Judy Faulkner and why is she significant in healthcare software?
So much indeed. And of course, I don't think Judy really knew about all this at the time, but yes, indeed, it is a pretty auspicious time and place to be born because just about four years later after Judy is born...
Just up the road a little ways from Cherry Hill in Murray Hill, New Jersey, William Shockley and his colleagues would invent the transistor at Bell Labs that would enable Microsoft and Epic, Intel, and all of this.
And for a long time, the early pioneers of electronic healthcare records were hardware companies. Yes.
Lockheed, GE, Siemens.
Yes. Lockheed was a vendor to hospitals. Yes.
Incredible. But for the moment, Judy probably didn't know anything about this because her family is not in the tech industry growing up. Her father, Lou, is a small town entrepreneur. He runs a local pharmacy and soda fountain there in Earlton called Lou's. Lou's Soda Fountain. And perhaps this is where Judy would later get her own entrepreneurial bent from. Could be. So that's Judy's father.
Now, Judy's mother, Del Greenfield, was an absolute freaking dynamo. She graduated high school at age 15, and she worked first as a secretary, and then she worked with Lou at the store and pharmacy in Soda Fountain, and then later got really involved in peace advocacy during and after the Vietnam War, which I assume was not typical for her generation that lived through World War II.
She ends up becoming the director of the South Jersey Peace Center. And then later in life, after the kids were gone, she and Lou moved to Portland, Oregon, where Del became the executive director of an organization called Oregon Physicians for Social Responsibility, which, get this, in 1985, this group...
in partnership with a broader international group called Physicians for the Prevention of Nuclear War, wins the Nobel Peace Prize. Judy Faulkner's mom was part of a group that won the Nobel Peace Prize in 1985.
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Chapter 2: What historical and technological factors shaped Epic Systems' founding?
Yes. So the story of how this goes down is wild. At the time, Kaiser's two main centers of gravity were Northern California and Southern California. And they were almost like separate companies under the Kaiser umbrella. Had different systems, had their own EMRs, different management. Of course, talked to each other and part of the same parent organization.
Wasn't there like a almost like cousin organization that was Northwest? Yes. Like this stepchild?
So they had, I don't know if it was just Northwest or they had maybe some other smaller regional operations at the time, but they had a Pacific Northwest small region based in Portland, Oregon. Today, actually, Kaiser has large regions through a large part of the country. They've grown a lot since then.
But this small little Portland region, they had started using Epic for their ambulatory clinics. So like not even inpatient stuff in the hospital, but their outpatient clinics.
And at the time, the Northern California and Southern California big factions were battling each other, and they were each trying to develop their own proprietary EMR systems with software consultants with like Accenture and stuff.
Yeah, there was this era where hospitals thought that EMRs should be their IP, that they develop and have sort of a competitive advantage over other hospitals because their EMR was better. I don't know what the thinking was, but people wanted to own their own EMRs.
I think there may even have been some pipe dreams of like, oh, we're going to commercialize this and sell it to other hospitals. It seems like not a core competency that hospitals should be doing. Anyway, within the Kaiser system, though, there was a fairly high degree of rotatability of physicians, of doctors.
So if you were a doctor in Portland with Kaiser Pacific Northwest and you wanted to move or your family had to move down to California... You could transfer pretty easily to Northern or Southern California, Kaiser. So this was happening. And as physicians from the Northwest started coming down to California, they'd be like, man, what are you guys doing?
You're spending all this money with Accenture and, you know, blah, blah, blah, all these consultants to try to roll your own. Like, we've got this thing called Epic up in Portland that we're not even using at the hospital. And it's way better than the stuff that you're trying to build. Yeah.
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