There's a buzz at Epic Systems, despite the drumbeat of sour economic news.

Inside the sprawling $300 million "Intergalactic Headquarters," a half-dozen job candidates await interviews on cushy sofas, enjoying a view of the upper Sugar River valley as sunshine pours through the full-length windows on a bright, though chilly, March morning.

"A lot of what we've done here is to help us attract staff," explains Epic recruiter Jon Neumann during a recent tour of the facility. "We're not Seattle, we're not Silicon Valley, so we need to be a little bit better."

Indeed, the rural setting and energy-efficient campus helped lure Neumann to the electronic health records company 18 months ago. After studying Spanish and psychology at Claremont McKenna College in southern California, Neumann interviewed with Google and considered staying on the West Coast. But after visiting the Epic campus, he realized the fit was right.

"The atmosphere was a big part of taking a job here," said Neumann, 24, a native of St. Cloud, Minn. "Madison isn't a big metropolis but it's not a small town, either. There's a sports scene, an arts scene but it still has that Minnesota charm."

Epic is hoping the money invested in its headquarters -- which features individual offices, an upscale cafeteria, locally produced artwork and loads of free parking -- will help it compete for top talent as the nation moves to convert all medical records from paper to computers.

President Barack Obama has given special attention to electronic health records (EHRs) as part of the nation's economy recovery plan. The $780 billion stimulus packages includes some $20 billion in incentives aimed specifically at EHRs.

The stimulus package also includes penalties for doctors who don't adopt the new technology, which advocates say helps eliminate errors and reduce expenses. Providers who don't install electronic records by 2014 will face reductions in their Medicare reimbursement.

"What the government is saying is 'Here is a loan to help you get started,' UNKNOWN_HIGHBIT_c5UNKNOWN_HIGHBIT_a0 " said Carl Dvorak, Epic's chief operating officer. "From what I've read, it seems pretty thoughtful. It doesn't waste a lot of money and has a mechanism on the back end."

A major investment By any measure, the U.S. has a long way to go to get everyone off the printed page.

Despite the number of large hospitals and clinics that have adopted EHRs in the past decade -- including Madison's UW, Meriter and St. Mary's hospitals -- only about 17 percent of the nation's physicians are using computerized patient records, according to a survey last year in The New England Journal of Medicine. Another 26 percent are either considering installing new systems or have already started.

A major roadblock has been getting smaller providers to make the investment. Three-fourths of the nation's doctors still practice in small offices, with 10 or fewer doctors, and simply don't have the money to spend on computer technology.

"The federal government is optimistic that eligible folks will take advantage of this new incentive program to use health IT," said Dave Roberts, vice president of government relations at Health Information and Management Systems Society, a trade association for IT providers.

The Congressional Budget Office (CBO) is estimating more than $36 billion will be spent on health care IT by 2015, bringing $15 billion in savings.

Roberts said the investment by the government should benefit companies that install new systems -- firms like Epic and its major competitors, including Cerner Corp., the leader in hospital-installed electronic records, McKesson and Eclipsys Corp.

Even Wal-Mart has announced plans to enter the healthcare IT space. The company unveiled last week a partnership with computer giant Dell Inc. and software maker eClinicalWorks to launch a bundled electronic health records package for doctors, including installation and maintenance.

Still, the tough economy and credit crunch in particular have been hard on the medical industry. Hospitals and clinics have found it difficult to secure financing for brick-and-mortar expansion projects, not to mention the investment in new record-keeping software.

A 2008 survey from the Wisconsin Hospital Association found that nearly two-thirds of hospitals are planning to cancel, delay or scale back capital projects because of the economic downturn.

Already feeling the pinch, hospitals are also concerned about the ongoing expense of maintaining electronic health records systems after they are installed.

One estimate from consulting group Avalere Health put the cost at $124,000 per doctor just for the hardware and software. The Medical College of Wisconsin estimated its cost to install an Epic system at $70 million.

"The fact they are providing incentives up front should help," said George Quinn, senior vice president of the Wisconsin Hospital Association.

At the same time, anyone who has ever bought a computer know the costs don't stop there.

"It's like having someone give you a new car but not any gas to put in it," said Mary Kay Grasmick, spokeswoman for the hospital association.

No free money Epic isn't viewing the stimulus funds as a chance for windfall profits.

Revenues there have continued to climb -- hitting a record $601 million in 2008, up 19 percent over 2007, according to new figures.

Epic has also continued to recruit staff but is not going overboard with new hires. With about 3,300 employees, it's now the largest private sector employer in Dane County with a payroll of over $250 million.

It added 144 new employees in December, January and February but also had 95 departures for a net gain of 49 staffers. Over the same period a year ago, Epic had a net gain of 25 staffers.

"We're hedging our bets a little bit," Dvorak said. "We're getting more resumes than ever before but I think it's too early to tell if the stimulus is enough incentive" for all providers make the investment in EHRs.

Even without the stimulus boost, Epic officials say there's plenty of business in the pipeline. The company is continuing to work with its current slate of customers, including respected health care systems like the Cleveland Clinic, New York's Mount Sinai Medical Center and the University of Chicago Medical Center.

"We're still doing installations from '07 and '08, with all the support that goes along with it," Neumann said.

A major work in progress remains Kaiser Permanente's multibillion-dollar conversion to electronic health records. The West Coast provider has estimated project costs at $4 billion over the first 10 years.

One criticism that arose during the rollout was that Epic's system is hard to install and difficult for some users to adopt. It requires doctors or nurses to punch in vital information during a patient visit, a process that some providers have found difficult.

But Epic continues to earn high rankings among other medical software vendors from KLAS Enterprises, a national research firm. Epic was ranked No. 1 in seven out of 20 categories in the most recent survey on customer satisfaction.

A bigger issue remains simply finding enough qualified employees. Neumann quoted IT industry stats showing there are 139,000 job openings and only 49,000 people seek those jobs.

Traditionally, Epic has relied on college recruiting in the Midwest and postings on the Internet to find qualified candidates.

Since the company requires relocation to the Madison area, younger workers willing to move have served as Epic's main talent pool. It's the main reason the average Epic employee is only 29 years old, Neumann said.

But with some pressure to add staff, Epic officials are hitting the road themselves to recruit outside of the Midwest.

"We're thinking now we might need to cast a little wider net," said Neumann, who ran track in college and is signed up for his first Ironman Wisconsin triathlon in September.

Another recent hire, Tessa Smith, joined Epic after graduating last year with a master's degree in cognitive education from Kent State University. A native of Colorado and Ohio, Smith said she had always heard good things about Madison but was "pleasantly surprised to find it was all accurate."

"I really like it here," said Smith, 24, who rents an apartment near Hawk's Landing. "It's a youthful, healthy city and I've found it easy to meet new people."

Smith says simply mentioning where she works has served as a good ice breaker.

"Saying you work at Epic is a real catalyst for conversation around town," she said.

Mike Ivey - 3/17/2009 12:17 pm


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