Software Licensing for Healthcare: Before You Buy or Renew with Epic

By Rich Staas

Director of Client Services, NPI

July 10, 2017

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This content was updated January 12, 2021.

Over the years, Epic Systems has grown to be a leader in EHR (Electronic Health Records) and other software licensing for healthcare. Known for its high-value products and services, and historically strong customer loyalty, more than 190 million patients have a current electronic record in Epic.

However, Epic is also known to be inflexible at the deal table. As one of the most expensive EHR systems on the market, they can demand a premium based on its solid reputation (more on that in a second, though). Below, we explore what to know before buying or renewing with Epic’s software licensing for healthcare.

What to Know About Epic: Contract and Renewal Costs

Lack of flexibility at the initial negotiation doesn’t mean there isn’t room for cost reduction across the lifetime of an Epic investment. Epic’s software licensing for healthcare requires multiple integration points with other vendor offerings – and this requirement is only expected to grow as the healthcare IT ecosystem becomes more interconnected. Fortunately, integration-point contracts are typically quite negotiable and an area where customers can find some savings on their Epic deployment.

Software Licensing for Healthcare: Knowing the Risk of Non-Compliance

Another thing to assess as you plan for an Epic renewal is a potential risk of licensing non-compliance for some Epic customers – specifically with regards to Microsoft. In these cases, large hospital networks may purchase licenses from Microsoft to support external users of their Epic deployment (doctors, patients, affiliates, etc.). Those purchases may have been made under a Volume Licensing Agreement.

The problem? Microsoft is telling some customers those licenses should have been procured under a Services Provider Licensing Agreement – even though they already own the licenses they purchased under a Volume Licensing Agreement. For a large healthcare network, this could mean unexpected licensing costs, and hundreds of “extra” licenses that can only be used internally. Therefore, it would be wise for Epic customers to conduct an internal review of risk in this area; and for new customers, be aware of this distinction and make sure you purchase Microsoft software licensing for healthcare in the best way.

Epic Software Licensing: Will Customer Satisfaction Affect Negotiation Flexibility?

Meanwhile, customer satisfaction with Epic is variable. In the 2016 Black Book Inpatient EHR Surveys, Epic’s customers reported feeling more “trapped” in their relationship with the vendor. According to the survey, overall customer loyalty dropped from 89 percent in 2015, to 80 percent in 2016. And while 98 percent of customers planned to renew their current contracts with Epic, far fewer (72 percent) said they would recommend an Epic purchase to their peers.

Since then, Epic has been working hard to improve their customer satisfaction and retention rates. As a result, they received eight Best in KLAS 2020 awards and were highlighted by Top Overall Software Suite.

Will this renewed focus on customer satisfaction translate into greater deal flexibility from the vendor? It could (eventually). For those customers who can’t afford to wait and see, it’s important to understand every point of leverage and savings opportunity across their entire Epic investment in preparation for upcoming renewals and purchases.

Negotiating Software Licensing for Healthcare

If you’re looking to reduce your software licensing costs with Epic (or any software vendor), it’s important to come to the table with vendor-specific pricing and negotiation intel. NPI can help. Our price benchmark analysis and license optimization services can help you materially reduce spend and eliminate overspending risk.

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