The Epic Threat to Innovation in Healthcare

Andrew Steele
Apr 23, 2026By Andrew Steele

Author and Columbia professor Halle Tecco recently shared a thought provoking post on the power that Epic exerts on the healthcare industry, and on healthcare startups and innovation in particular.  Here's the text of the post:

"I recently spoke with a hospital CMIO who told me they were switching AI vendors. They were moving from a well-funded AI scribe startup to Epic's native AI ambient scribe, even though he genuinely liked the startup's product better. 

It came down to money: Epic was $100K a year compared to the startup’s annual cost of $1M.

That story is playing out across the industry. SaaS is struggling broadly; software stocks lost over $1 trillion in early 2026, in part because it's easier to build things in-house now. 

But in healthcare, we also have the disadvantage of having an incumbent like Epic that squeezes out competitors. In Robert Wachter's words: "Epic’s stranglehold on the healthcare system AI market is likely to stifle investment and innovation". 

I do think the “SaaSpocalypse,” as some people call it, is an overcorrection. But if your entire pitch is a workflow automation layer on top of someone else's data, you're in a tough spot."

This is spot on,  but while I'm skeptical about the SaaSpocolypse, as I've written before, I would say it's more dire for SaaS & AI startups in healthcare vs. any other vertical because of the stranglehold Epic has on the industry.

Healthcare by its nature (necessity?) is massively risk averse, and the explosion in ransomware attacks in the late teens & early 20's have only hardened that mentality relative to technology adoption.

To echo what the CMIO told Halle, I've personally heard the following from CIO's, CISO's and CMO's for both regional systems and large IDN's (paraphrasing from memory):

  • - "If I know something is on Epic's roadmap, I'm either not buying from another vendor, or will only sign short term deals so I can switch when Epic is ready"
  • "I want to buy platforms, I'm not interested in point products anymore"
  • "My CEO won't question my decision to buy from Epic/Oracle" (twist on the old-school Silicon Valley truism that "nobody ever got fired for buying Cisco...")

Over $1.5 billion-with-a-B of capital has gone into ambient listening startups in the last couple years, and 2 months ago Epic released AI Charting. I wonder what the return prospects are now for those investors?

The advice I'm giving to founders is if you think Epic can build a competitor to you, pivot. Doesn't matter how much better you believe your tech is, healthcare doesn't buy cutting edge or disruption. Plus, you will always be at a price disadvantage. Instead, focus on how you can build a moat that Epic can't or would choose not to try to bridge. 

In many (most?) cases that's easier said than done, but to build sustainable adoption, that's the only choice unless & until Epic's stranglehold loosens.