Epic, Oracle Health and other electronic health records companies are eyeing opportunities abroad, primarily in countries where the digitization of healthcare lags behind the U.S.
The U.S. hospital market for EHR vendors has firmly shifted in Epic’s favor over the last few years. It was the only vendor to add beds and hospital customers in 2023, according to a May report from market research firm KLAS. Consolidation among health systems has meant that more than half of acute care beds use Epic, and that share is expected to grow as more large integrated systems switch to the vendor.
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Analysts say expansion opportunities in the hospital EHR market will become tapped out, leading companies in the space, which also include Meditech and Altera Digital Health, to look elsewhere for growth. Epic has made a push toward payers and life sciences industries and Oracle Health is investing in artificial intelligence.
For some vendors, the next frontier is outside of U.S. borders.
“EHR adoption trends in the Middle East are five to seven years behind the U.S., …they’re trying to catch up,” said Jonathan Christensen, senior insights director at KLAS. “In Europe…they’ve had this technology in place, and now there's a lot of focus on really optimizing the technology and really getting the most out of it.”
Epic added 203 hospitals and more than 24,000 beds internationally in 2023 while Oracle added 66 hospitals and more than 9,000 beds, according to a July report from KLAS. Italian EHR vendor Dedalus added 147 hospitals and more than 30,000 beds. Unlike in the U.S., no vendor suffered a net loss of beds and hospital customers.
Government funding is playing in companies' favor. Similar to how the Health Information Technology for Economic and Clinical Health Act of 2009 spurred EHR adoption in the U.S., the National Health Service in the U.K. has dedicated about $2.5 billion in funds to incentivize hospitals to adopt digitized health records systems. Other countries such as Germany have similar incentive programs, said Arun Gill, principal analyst at Signify Research.
“Governments in many countries have been providing funding for investment in [EHRs], which in turn, is helping some of those vendors and becoming one of the key drivers for growth,” Gill said.
At its annual user conference, Epic began devoting a day in 2023 to its rising number of international customers. The company has 12 offices outside the U.S., including locations in England, Australia and Canada.
Epic declined to make an executive available for an interview.
Government-run health systems offers vendors the chance to win contracts that could extend beyond healthcare. Still, each market has its own set of challenges and motivations.
Dr. Daryl Cheng, clinical lead on The Royal Children’s Hospital Melbourne’s digital innovation team, said the hospital made it clear to Epic there were a lot of differences before it went live with its EHR system in 2016.
“We had stressed, very importantly, that they would need to customize to fit our requirements, both legislative and governance, but also the way our health system works in terms of interactions with patients, in terms of the way we hire our staff,” Cheng said.
The hospital decided to adopt the system because it was looking to increase its digital technology capabilities after moving into a new building in 2012, Cheng said. During the vetting process, clinicians at the hospital preferred Epic for its usability. They also considered Oracle Health/Cerner and a few smaller, local players.
“It was not without its problems," Cheng said. "The terminology, the medication names, the way we document all these things are [different] and were just a classic example of how we had to work together, very strongly."
Hospitals in Australia also use a team-based approach versus the doctor-centric approach that’s common in America, Cheng said. Royal Children’s didn’t have the funding to buy the entire Epic system and uses different vendors for lab systems and radiology.
Analysts said while hospitals internationally are moving away from a best-of-breed approach, which leverages applications from multiple vendors, to using a single company's suite of solutions, the migration is 10 years behind the U.S.
Health systems in other countries are choosing their EHR vendors for different reasons than typical U.S. providers. National insurance coverage means there is less emphasis on billing and reimbursement. It has made a difference for companies like Oracle Health that aren't as strong in revenue cycle management, said KLAS' Christensen.
"Revenue cycle has really cemented Epic's status here in the U.S because they are so tightly integrated and do that so well," Christensen said. "That's kind of been the thorn in Cerner/Oracle's side for a long time. The fact that they don't have to deal with that as much in some of these countries, I think has really benefited [Oracle]."
Oracle has been able to scale its ambitions in international markets since it acquired EHR giant Cerner for $28.3 billion in 2022, said Alaa Adel, managing director of Oracle Health International.
In particular, the U.K. and Middle East have been two of its strongest markets, Adel said. The company also has more than 300 customers in Australia despite losing a large New South Wales contract to Epic in 2022.
“We're seeing ourselves migrate from an EHR company into more an ecosystem company as part of Oracle, whether it's also the life sciences, the payers, the [data] hosting and everything that comes with it,” Adel said. “Last year, the international business grew double-digits from a revenue perspective.”
Since many of its international customers are government-run health systems, there is an increased level of transparency, Adel said. The company has experience in that regard with its rollout in the U.S. of the Defense Department and Veterans Affairs Department EHR systems.
A lot of government-run health systems are not as keen to switch EHR vendors, which can be an advantage for a company like Oracle Health once they have a contract in place.
“There's a high amount of scrutiny that comes with ripping and replacing an adequate system for something that might give you marginal gains,” Christensen said.
On the flip side, there are not as many opportunities for companies to win contracts and health systems outside the U.S. tend to have significantly smaller budgets, Christensen said.
“The level of IT investment is just very low,” Christensen said. "We're talking like 1% of total operating budget compared with 5% to 7% here in the U.S.”
