I asked @alfromnexhealth why everyone in healthcare hates Epic:
"They only do about $8 billion in revenue. But there’s a perception that they own a majority of the market. And that's not true.
What is true is that they own a majority of the hospital systems. Something like New York Presbyterian, which is a group of 11 hospitals throughout the city. That’s a hospital system. And I’m pretty sure they use Epic.
When it comes to where most consumers in the US actually get their day-to-day care, it’s extremely fragmented.
If you’re an average consumer in the US, you’re more likely to go visit a local doctor for your primary care needs. Epic is not even a player there.
In terms of why they’re so popular, or considered the evil bad guys in the industry, is due to this. Judy Faulkner, who I both admire and think she’s probably an evil genius, essentially got the Obama administration to pass some healthcare-tech-related legislation as part of the Affordable Care Act.
The government was incentivizing practices to digitize their health records. The incentive was basically, “We will give you $40,000 a year if you digitize your systems.”
Do you remember, way back in the day, when you would go to a doctor’s office and there’d be files of paper? The government’s incentive was, “Hey, we’ll give you $40,000 a year if you digitize those.” But you have to meet certain requirements to qualify for that incentive.
And those requirements just happened to be Epic’s spec. In other words, Epic gained mass adoption, especially at the hospital level, by getting the federal government to pay their customers to adopt their software.
Honestly, she really is the Bill Gates of our industry.
But that hold Epic has on the hospital ecosystem is not healthy. And I think it’s only a matter of time until this all changes.
But that’s part of the reason Epic is so famous despite not actually being that big."
Video
Turner Novak 🍌🧢 (@TurnerNovak)
New @ThePeelPod with @alfromnexhealth
Today @nexhealthHQ infrastructure serves 89 million patients and 81% of new AI healthcare startups are built on it.
But at one point, the company had $4k in the bank, a maxed-out Amex card, and was on the brink of running out of cash.
I sat down with Al to talk about why 75% of dentists still run a server in their closet, the reason innovation is so hard in healthcare, and why AI value will accrue to chips, models, and the action layer.
Full episode here + links below.
Timestamps:
0:00 Healthcare skipped 3 platform shifts and went straight to AI
4:10 75% of dentists still have on-prem servers
10:05 How data interoperability holds back healthcare innovation
16:02 Why everyone blames Epic
20:15 Building the developer platform for healthcare
24:36 Why everyone fails to fix the problem
29:11 Fragmented markets enabled developer platforms
32:32 Working as a receptionist at a doctor’s office
36:13 Building a prototype on Twilio
39:15 How incumbents went from blocking to partnering
46:05 Canvassing Soho dentists door-to-door
53:47 Reverse-engineering 40-year old databases
56:21 Funding NexHealth with side hustles for two years
57:30 The scheduling wedge no one could match
1:02:20 Raising $391k from professors and customers
1:03:46 Running out of cash, why customers kept churning
1:07:45 $4,000 in the bank and a maxed-out Amex
1:11:12 The $36k pre-pay that saved the company
1:13:24 NexHealth’s three businesses today
1:20:18 Payments and the “admin-day” problem
1:26:15 72% sales win rate
1:28:27 The term sheet signed the week before COVID
1:30:26 Spending half the Series A on an acquisition
1:33:47 Raising $176M they didn't need
1:37:28 Why starting before 2022 is an advantage
1:42:22 Where AI value accrues: chips, models, the action layer
1:44:55 81% of AI products are built on NexHealth
1:48:24 Staying patient for three years after ChatGPT
1:51:25 Competitors building on their API
1:54:02 “We’re a tech company, not healthcare company”
1:56:09 Hiring from outside healthcare
1:58:34 Shoes, email over Slack
2:01:21 What AI changed inside the company
2:04:16 Inspiration from Microsoft in 1977 - 1990
Video
— https://nitter.net/TurnerNovak/status/2082854053516615920#m