Suit Filed Against Epic May Address Crucial Issues Around Healthcare Data
On September 23, 2024, Particle Health, a startup that aggregates and shares data among healthcare providers and health technology companies, filed suit in the U.S. District Court for the Southern District of New York against Epic Systems, the nation’s largest vendor of electronic health records. The suit alleges that Epic is using its market power to destroy competition and represents a challenge to Epic’s dominance in the patient data marketplace.
Parties to the Suit
Epic is a software company that provides electronic health record (EHR) resources for hospitals and health systems allowing users to access, store, organize, and share electronic medical records. Epic includes patient portals, telehealth, charting, and clinical systems for healthcare providers. According to the suit, “[n]early every large healthcare provider in the nation uses Epic's EHR platform and software. Over three-quarters of the U.S. population have electronic health records within an Epic database.” According to KLAS Research, Epic served 39.1% of the U.S. acute care hospitals in 2023, has the largest hospital EHR market share in the world, and had revenue of $4.9 billion in 2023. Epic’s growth was partly fueled by Federal regulations that paid hospitals to purchase products with technical specifications that only a few companies, including Epic, could deliver.
Particle Health, founded in 2018, is a health data exchange platform that helps healthcare providers and other stakeholders access patient data from various sources by connecting to EHR systems to provide access to patient records, and provides an analytics service for medical records. According to their website, this allows Particle to put “actionable insights to work on some of healthcare’s most pressing use cases”. In 2023, Particle Health developed a third-party payer platform that was compatible with Epic’s EHR system, allowing “pay-viders" (insurance payers who have begun to offer treatment-related services) to access records for “secondary” purposes, like health analytics or processing claims.
Claims Made in the Suit
The suit claims that Epic promises users “efficiencies, streamlined processes, and, most importantly, cost-savings”, but that “Epic's EHR platform is hugely expensive, often involving upfront installation costs of hundreds of millions of dollars. After incurring such large costs of entry, very few healthcare providers are willing or able to switch EHR platforms.” This high barrier to entry to the EHR market contributes the Epic’s ability to maintain a very large market share. Particle also claims that Epic “has used its position of dominance to worm its way to the core of the U.S. healthcare system and stamp out competition in a wide variety of interrelated markets, thereby generating billions of dollars for itself” and that “[b]y providing the software that stores the majority of American medical records, Epic gains control over a crucial resource: the medical records themselves.”
The suit filed by Particle claims Epic is starting to use its EHR dominance to move into the market for “payer platforms" – allowing health insurance plans to access a large number of medical records for business-related tasks, which could benefit the payers by “reducing error-driven denials, providing better health-enhancing services to members, and generating more complete pictures of their members’ health and risk.” The suit states that Epic released its Payer Platform (EPP) in 2021 and had no real competitors at that time, according to the suit, because “Epic made it commercially impossible for any payer platform other than EPP to access records stored in Epic’s EHR software.” Epic says the intent of EPP is to help insurers use Epic clinical data to process claims and automate data flow. In the suit, Particle claims that Epic uses its market dominance to "destroy Particle and actively snuff out competition."
Market dominance by itself does not constitute a violation of antitrust laws in the United States. The Sherman Act does not prohibit monopolies, but makes the intentional act of monopolization (or the attempted act of monopolization) illegal when it is done through improper means. A company may exercise a legally obtained monopoly, for example through a remarkable product, business skill, or by historic accident, but that company may not engage in anticompetitive conduct that excludes competition.
In the suit, Particle makes several specific claims about Epic's actions to stifle competition, including Epic cutting off Particle customers’ access to EHRs. According to Particle, as payers have begun to act as pay-viders, EHRs need to be accessible to these payers for treatment services. Particle claims that the payers are then allowed to rightfully use the records for secondary purposes more traditionally associated with health insurance services. Particle claims that Epic “leveraged its chokehold over EHRs to coerce Particle’s customers … into ending their relationships with Particle.” According to the suit, in March 2024, Epic began to arbitrarily deny Particle customers access to Epic EHRs, and Epic informed these customers that they would regain access to the records “if and only if they stopped using Particle’s competing platform.”
Particle also accuses Epic of obstructing the onboarding of new Particle customers by creating a requirement that every new Particle customer, and any expansion of existing customers, be individually approved by Epic’s “Care Everywhere Governing Council”, a process that can take over a month, and in one case, took almost three months. The suit claims Epic pursued a fear campaign against Particle, claiming that using Particle creates “security and privacy risks” for its customers.
There are nine causes of action in the suit brought by Particle. Four of these are claimed violations of the Sherman Act, maintaining that Epic’s actions amount to monopolization, attempted monopolization, and monopoly leveraging. The significant market share Epic has over EHRs is not the claimed violation of the Sherman Act, rather, the use of this monopoly to stifle competition by entities other than Epic’s Payer Platform that want to access these records for secondary business purposes. The other causes of action in the suit include violations of business/contract law, as well as claims of defamation and trade libel.
The suit claims that:
If left unfettered, Epic's conduct will snuff out meaningful competition in the still-fledgling payer platform market, relegating yet another market to Epic's monopoly control. That outcome would not only harm the customers of payer platforms (health plans), but also the patients, doctors, and hospitals affected by prices and plans that payer platforms establish for their health care reimbursements. Even putting that aside, Epic's increasingly obstructive efforts to box out Particle also create inefficiencies and delays in the treatments actual patients need and receive, thereby harming the very constituents Epic purports to help. Without meaningful competition, Epic will be allowed to provide a worse product for higher price, which will in turn have cascading effects on the scope and price of plans that payers provide.… Epic's anticompetitive behavior means that payers have no meaningful choice in the payer platform market aside from Epic, regardless of price or quality. This is bad for payers, patients, healthcare workers, and competition.
A spokesperson for Epic said the claims are baseless and an attempt to divert attention from Particle’s unlawful actions on the Carequality health information exchange network. Carequality is a national interoperability framework used by clinics, hospitals, and health tech companies to request patients' medical information.
On October 9, Modern Healthcare reported that Epic and Particle agreed to a resolution put forward by Carequality, but Particle also said they do not intend to dismiss the suit, as the resolution did not address all of the complaints in the suit.
Larger Trends
In an interview with STAT, Michelle Mello, a professor of law and health policy at Stanford University, stated, “It represents what I predict will be a growth area for litigation: battles between the data ‘haves’ and the ‘have-nots,’” and noted that Epic’s control of patient data has allowed it to build a wall that could be perceived as anti-competitive. This case's outcome may significantly affect healthcare technology innovation, determining if patient data stockpiles can be used by potential innovators looking to improve the healthcare system.
Epic Systems' growth did not come from mergers and acquisitions of other companies, so many of the standard concerns about monitoring healthcare consolidation do not apply. However, we have seen increased interest in challenging tech companies that are exercising excessive market power to stifle competition. In recent years, we have seen the Department of Justice, the Federal Trade Commission (FTC), and state Attorneys General pursue cases against Microsoft, Amazon, Apple and Google when these entities used their market power to disadvantage rivals. Lina Khan has stated that the FTC has not yet determined if it will file an amicus brief in the Particle case.
A key difference between these cases and the Epic/Particle case is that, in this instance, the plaintiff, Particle, is a private entity and not a government agency. Unfortunately, when a small startup like Particle attempts to challenge a billion-dollar entity like Epic, the ultimate outcome may rest more on Particle's financial ability to pursue the case and stay in business as a potentially long process plays out. The ability of healthcare innovators to access healthcare data could be improved by a positive outcome in this case.