VERONA — Epic Systems Corp., the Madison area’s explosively successful health care software development firm, is putting the final landscaping touches on its rustic-looking Farm Campus — its third set of office buildings — and already, the company is plowing ahead with plans to start building Campus 4 this fall.
With a constant stream of job applicants and customers arriving for training sessions, the Verona company, now up to 6,500 employees and $1.5 billion in revenue last year, is a huge economic engine for the area.
But some may wonder how long that can last, and if another digital bubble will burst before long, leaving Epic’s 950-acre Verona campus an outdated shell.
“I think at some point, it’s going to plateau out,” said Barry Runyon, analyst for Gartner, the Stamford, Conn., information technology research group. But, he added, the adoption of electronic health records, a field in which Epic is a market leader, is not as advanced as it may seem. “It still has a long way to go,” he said.
There’s something more than a bit ironic about techies working in buildings designed to look like a farm.
Epic’s three new office buildings, built by contractor J.H. Findorff & Son at the south edge of the campus, have the appearance of a bucolic farm, built generations ago.
A white farmhouse with a wrap-around porch leads into a creamery that connects to a red barn, complete with beige silo.
A machine shed, made to look like a metal building, has a John Deere tractor parked in back.
Gray cupolas and a horse-shaped weather vane sit astride the white stable building with a connected stone house.
The farm theme makes sense, chief administrative officer Stephen Dickmann said. When Epic employees look out the windows, “What do we see? Iconic Wisconsin dairy barns,” he said.
Those are the exteriors, of course. Inside, offices line the L-shaped structures, in the same format as Epic’s nine other office buildings. The farm motif, though, carries through details of the decor.
In the farmhouse entryway, a wooden Flexible Flyer sled and a pair of vintage skis stand beside a cushioned seat; pastel hallways are decked with white wainscoting. The creamery section’s vinyl floor looks like black-and-white tile, and antique milk jugs and butter churns flank cozy seats. A four-story stairway is made of reclaimed barn wood and a barn owl replica looks out from the top.
Tarun Sasikumar, a Columbus, Ohio, native who has worked for Epic for one month, headed outside on a recent day and did his work on a porch swing. “It’s gorgeous inside,” he said. “I just came here after lunch for some quiet time.”
The machine shed houses two vintage International Harvester Farmall Super M tractors. One is displayed showroom-style in a hallway and has become a big attraction for visitors, Dickmann said. “It’s hard to resist crawling up on the tractor,” he said. “They sit on the tractor and have their picture taken.”
The other tractor is completely disassembled. Its parts are mounted on a three-story wall like art sculptures, with a printed parts manual at hand to explain each item. The machines were purchased from farmers in the Argyle area, Dickmann said.
The stable building has office doors that look like horse stalls and coat hooks in the shape of bent horseshoes. The stone house portion is carpeted in a flowery red and blue print — like Grandma’s might be, Dickmann said — and features copies of old family photos and land deeds borrowed from local farmers. One of the deeds went to John Stewart who, in 1844, bought 40 acres for $150.
A cafeteria with a farmers’ market theme is available to workers in the three buildings, and they are served by a three-story underground parking ramp.
Meanwhile, on the north end of Epic’s campus, construction crews are wrapping up work on Deep Space, the auditorium designed to seat 11,000. It will be ready on time for Epic’s users’ group meeting in September that’s expected to draw at least 8,000 people, Dickmann said.
Verona city officials have estimated the value of the Farm Campus and auditorium at about $400 million. Epic does not disclose its construction costs.
Massive impact on area
The Farm Campus adds 1,000 offices for a total of 4,500 at the Verona campus. That’s not enough to keep up with Epic’s continuing hiring spree, Dickmann said. In the past year, Epic has added more than 1,000 employees and expects to grow its staff further in the next 12 months.
The company also still has 432 workers at its previous headquarters at 5301 Tokay Blvd., Madison, as well as small staffs at its locations in the Netherlands, Dubai and Singapore.
So Epic will start on Campus 4 this fall on the north side of the campus. A 1,500-space parking ramp already has been approved by the Verona City Council, and Epic presented plans for a cafeteria building to the Verona Plan Commission last week.
Designs for five more buildings, with a total of 1,500 offices, will go to the city in October, Dickmann said. They will have an “olde English” theme, in the manner of Cambridge University or the Harry Potter novels, he said.
“The city of Verona is pleased to see Epic’s continued success and the expansion of their campus in Verona,” said city administrator Bill Burns. “Epic has had a very positive impact on the community. They have created thousands of high-paying jobs that are a benefit to the entire region.”
A January 2012 valuation pegged Epic’s buildings and property worth $384 million, or about one-fourth of the city of Verona’s total property value of about $1.57 billion at that time.
With the Farm Campus buildings, the Deep Space auditorium and another 38 acres Epic purchased this year, the campus is worth nearly $800 million now, and Epic owns 950 acres, up from the 340 acres originally purchased.
Epic also has shown Verona officials conceptual plans for a proposed campus 5, with up to five more office buildings.
The work is keeping well over 1,000 construction workers busy. There’s also the outsized impact of housing, food, transportation and assorted purchases for Epic employees, job applicants and visitors. Add to that the new companies and jobs created by Epic alumni who stay in the Madison area, and several firms that have sprung up here to serve as consultants to Epic clients.
But how long can that mushrooming growth continue?
Privately owned Epic has 295 customers that serve nearly half of the U.S. population, the company says in its fact sheet. They include big organizations such as Kaiser Permanente and prestigious academic hospitals such as those run by Yale and Johns Hopkins.
Epic outpaces its closest competitor, Cerner, about 2-to-1 in the number of hospitals it serves, said Coray Tate, vice president of clinical research at KLAS, an Orem, Utah, health care technology research firm.
“Epic has been extremely successful, both in sales and in meeting the needs of customers that buy their solutions,” Tate said.
Epic is not alone in its rapid growth. Cerner, whose services go beyond developing electronic health records software, also is forging ahead quickly. The publicly traded Cerner, with annual revenue of $2.67 billion, has 12,000 employees worldwide, including 8,500 at its Kansas City headquarters. On Aug. 1, it announced the purchase of 237 more acres there to house as many as 15,000 more employees.
“The health IT (information technology) industry, as a whole, is growing very quickly and for a lot of good reasons,” said David Muntz, principal deputy national coordinator of health information technology with the U.S. Department of Health and Human Services. “We are moving data that was captured and held hostage on paper into electronic form.”
Companies like Epic design software for a wide range of functions, ranging from scheduling appointments, ordering prescriptions and billing to maintaining records of a patient’s hospital visits and medical test results.
But those functions are just the “core of a much bigger universe,” Muntz said. He said the use of electronic health records will expand to examine patterns in larger patient groups, to consider ways to deliver the best patient care, and to give patients more of a say in their care.
Muntz said the big push to adopt electronic health records is not a bubble about to burst, as the dot-com bubble did in the early 2000s. “No, it’s going to be a longtime growth,” he said.
Government figures show that as of June, more than 75 percent of eligible hospitals have received a total of $15.5 billion in federal incentives for adopting electronic health record technology since the incentive program was created in 2009. But there are still more than 400 hospitals running “legacy systems” that will have to be updated within a few years, KLAS’ Tate said.
In addition, existing customers will be paying licensing fees and will need operational updates over the coming years, giving companies like Epic a steady funding source over at least the next 10 years, said Runyon, Gartner’s research vice president on health care providers.
“I see their growth, probably over the next three to five years, and then we may start to see it plateau out,” he said. “Once the market gets saturated, they’ll get into a replacement cycle.”
Runyon said if there’s anything for Epic to be cautious about, it is the ability of hospitals to continue to afford the high price of electronic record systems, and the possibility of an upstart company to shake up the marketplace. “There’s always someone doing something out there that no one expects,” he said.
Epic officials declined to comment on the company’s plans for the long term. However, the company landed its first contract in the United Kingdom last year, and it has small offices in one European city and two in Asia, which could indicate efforts to move beyond U.S. markets.
Tate said he thinks Epic will continue to be a major player. “Would I like to have Epic in my backyard as an anchor in my community? Yeah,” Tate said. “I think that the future looks very bright for Epic, going forward.”