672. What Makes Judy Faulkner Run? | Freakonomics Radio

Epic Systems, located in Verona, Wisconsin, is a major tech campus that develops software for healthcare systems. Over 80% of Americans have an electronic health record with Epic, and its "MyChart" platform is widely used. Founded in 1979 by Judy Faulner, who remains CEO, Epic operates in 15 countries and is a dominant player in its industry, despite rivals like Oracle and MedTech. The campus itself is notable for its size and whimsical, movie-set themed office interiors. Judy Faulner, a self-described "techie" with a background in math and computer science, approaches problems with a coder's mindset, focusing on parameters, identifying errors, replicating them, and supervising fixes. This temperament is beneficial for running a complex software system like Epic's, which manages vast, dynamic data in a critical industry. Faulner is one of history's most successful female entrepreneurs, yet she rarely grants interviews, citing the time commitment, the risk of missteps, and her introverted nature. Epic's success, according to Bob Wachter, chair of medicine at the University of California, San Francisco, stems from its integrated solution approach. Faulner's theory was to own the entire system rather than bolting on numerous tools from different companies, which provides a more cohesive and functional solution for the complex medical field. Epic's software enables seamless communication and sharing of critical clinical information between healthcare providers, assuming patient approval, which is crucial for patient safety. Faulner's upbringing influenced her values. Her father was a pharmacist, and her mother, Adele, was a peace activist who co-led Physicians for Social Responsibility, sharing in a Nobel Peace Prize in 1985. Her mother instilled in her the concept of "tikkun olam," or healing the world, by making it a better place. This early influence shaped Faulner's commitment to improving healthcare. Faulner discovered programming during a summer job in college, finding it "fun and games." While pursuing her master's degree in computer science at the University of Wisconsin, she took one of the world's first classes in computers and medicine. Her initial work involved developing systems for tracking patient information, replacing handwritten paper files that often led to errors. Despite repeated requests to start a company, Faulner initially resisted, lacking interest and knowledge of how to do so. Eventually, with guidance, she founded Epic, bringing together colleagues from the university. Faulner emphasizes the ethical nature of healthcare, noting that professionals in the field prioritize patient care, even when faced with significant financial challenges. She believes Epic's integrated software helps manage healthcare costs, which account for about 18% of the US GDP, by streamlining processes and reducing the need for numerous separate applications. A personal tragedy—the death of a patient cared for by her pediatrician husband due to a lack of shared medical information—spurred Faulner to develop "Care Everywhere," a system designed to share critical patient data across different healthcare organizations. Epic faces antitrust claims, with critics arguing against its market dominance and perceived inhibition of independent app development. Faulner defends Epic's approach, stating that the company doesn't inhibit development and provides more APIs than other vendors. She emphasizes that Epic's customers purchase a comprehensive system, and sometimes acquire external solutions that duplicate existing Epic capabilities. The company also allows customers to work with third parties, but integrating external systems can be complex due to differing terminology, designs, and safety concerns. Faulner believes Epic's customers should be free to choose, and a significant part of Epic's job is to ensure customers understand the full capabilities of the software they've purchased. Faulner's management style is highly unconventional. Epic does not go public, acquire other companies, or take on debt for operations. These principles are enshrined in Epic's "Ten Commandments," which are displayed across campus. Faulner explains that avoiding public ownership prevents the company from being solely driven by shareholder returns, which she views as often "vicious" and unconcerned with the company's value to the world. She has also structured Epic's ownership and governance to prevent it from being sold or going public after her retirement. Her stock's value goes to a foundation called Roots and Wings, while the voting rights are held by a purpose trust comprising family members and Epic staff, with clear rules against selling or going public. Epic operates without traditional budgets, with financial projections serving as guidance. The company dedicates a significant portion of its annual revenue, around 30-35%, to research and development, driven by evolving needs in medicine and healthcare, such as AI and web-based system migration. Faulner attributes the company's high employee retention and attraction of talent to its unique, whimsical campus environment, which she believes fosters happiness and better work. Epic requires all employees to work on campus, believing in-person collaboration is superior to remote work. Epic's software has significant potential for clinical and drug discovery. The "Discovery" platform helps life science organizations find suitable patients for clinical trials, democratizing access beyond academic medical centers to community and rural hospitals. Seth Howard, Executive Vice President of Research and Development at Epic, describes Faulner as a "techie at heart" who is curious, asks many questions, and stays involved in day-to-day operations and customer needs. Her focus is intensely on customer success, which she believes aligns with her mother's wish to make the world a better place. Faulner acknowledges that while Epic's system is highly effective, some physicians find it "sludgy" or complicated to navigate, leading to daily user problems. She believes that these issues are often a result of physicians not having experienced other systems, and that Epic, despite its imperfections, is generally preferred. Faulner also highlights a past government requirement that doctors personally input data, which she argued against, as it added to their workload. Epic is now focusing on new features that allow doctors to interact with the system through speech, eliminating the need for typing. Regarding AI in healthcare, Faulner sees immense potential, particularly in predicting diseases and personalizing treatment. She cites examples of AI being used to predict sepsis, saving lives, and connecting doctors with similar rare cases across the country. Epic also employs AI for diagnosis checking, which can flag potential misdiagnoses, and to provide "best care choices" by analyzing thousands of similar patient cases to inform clinicians and patients about treatment effectiveness, costs, and outcomes. Faulner acknowledges the challenge of physicians, who are experts, being told they might be wrong by a computer program, but emphasizes that providing data can guide them to better decisions. Faulner worries about the gaming of AI, where repeated, potentially false information could be accepted as truth. She also expresses concerns about the future of the country, education, and access to healthcare for those who cannot afford it. At 82, Faulner has no target retirement date and hopes to continue leading Epic as long as she remains physically and mentally strong.