672. What Makes Judy Faulkner Run?

Summary

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Freakonomics Radio Ep. 672: "What Makes Judy Faulkner Run?"

Original Air Date: April 24, 2026
Host: Stephen J. Dubner
Main Guest: Judy Faulkner, founder and CEO of Epic Systems

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Episode Overview

This episode takes a deep dive into the life, philosophy, and business practices of Judy Faulkner, the iconic yet highly private founder and CEO of Epic Systems—America’s leading electronic health record (EHR) software company. Host Stephen Dubner explores the hidden engine behind Epic’s extraordinary success, uncovering how Faulkner’s blend of engineering rigor, ethical compass, and idiosyncratic management style has shaped both her company and the broader healthcare IT landscape.

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Key Discussion Points & Insights

1. Who Is Judy Faulkner and What Is Epic Systems?

• Background: Epic Systems, founded by Judy Faulkner in 1979, now manages electronic health records for more than 80% of Americans and serves healthcare organizations in 16 countries.
• Company Campus: Dubner describes Epic’s whimsical 1,700-acre campus in Verona, Wisconsin, complete with themed buildings and an 11,000-seat underground auditorium.
• Distinctive Leadership: Faulkner stands out for abstaining from publicity, private investment, acquisitions, and going public.
  • Quote: “I've got one house, one husband, one dog... one car. I have a 2016 Tesla. I like it self-driving. I find that between it and me together we're better than either alone.” (Judy Faulkner, 02:40)

2. Software, Reliability, and Engineering Approach

• Case Study—Tesla Autopilot: Faulkner recounts a harrowing but methodical response when her Tesla malfunctioned—illustrating her analytical, engineer’s mindset.
  • Quote: “It would cross the WL line and go head first into the cars coming at me… So it was the software and not the car.” (Judy Faulkner, 03:10–04:18)
• Problem-Solving Ethos: Emphasizes how engineering rigor informs not just Epic’s software, but also its company culture and expectations around quality, safety, and rapid incident response.

3. Origins: From New Jersey to Healthcare IT Pioneer

• Early Influences: Raised by a pharmacist father and activist mother, Faulkner imbibed a sense of social responsibility (“tikkun olam”) and technical curiosity.
  • Quote: “[My mother] said...Try to make the world a better place, try to help people. I remember thinking, oh, that's a big burden… Now I look back and think, she was so wise to do that.” (Judy Faulkner, 13:00)
• Education and Discovering Computer Science: Accidentally redirected from physics to programming, Faulkner found computers to be “fun and games” before co-founding Epic at the behest of doctor-colleagues.

4. Unconventional Business Practices

• No VC/PE or IPO: Epic was bootstrapped, never took venture capital, and refuses to be acquired or to acquire others. The company remains privately held with a flat internal hierarchy.
  • Quote: “We didn't get private equity, we didn't get venture capital...We hire differently, we manage differently, and it works very well… We have never had a lawsuit from a customer, which in 50 years, I think is good.” (Judy Faulkner, 10:40)
• Profit Is Not the Goal: Epic’s annual revenues are vast ($6B), but profit maximization is explicitly not the focus—customer outcomes and employee/job satisfaction are prioritized.
  • Quote: “Profit...is a side effect, but it's not a goal.” (Judy Faulkner, 29:27)

5. Epic’s ‘Ten Commandments’

• Company Philosophy: Faulkner outlines Epic’s central rules, including:
  • Do not go public.
  • Do not acquire or be acquired.
  • Software must work; do not tolerate mediocrity.
  • Be frugal; do not take on debt for operations.
• Visible Culture: These commandments are posted throughout the campus (“... in all the bodily function areas, which is the bathrooms, the break rooms and the copy rooms.” 31:15)
  • Quote: “If you tolerate mediocrity, you become a mediocre company.” (Judy Faulkner, 30:47)

6. Market Reach and Antitrust Concerns

• Power and Monopoly Questions: As Epic has become the “lingua franca” of EHR, some rivals and regulators allege anti-competitive practices.
  • Quote: “We are now being hit, as you might know, with lawsuits for antitrust monopoly. It just seems so weird to have begun with three halftime people in a basement.” (Judy Faulkner, 22:21)
• Interoperability Challenges: Faulkner explains the technical complexities of integrating EPIC with third-party/ niche solutions.

7. International and Rural Expansion

• Pull, Not Push: Epic only sells to interested clients—does not aggressively pursue expansion.
  • Quote: “Somebody calls up from the Netherlands and says, can we buy it? And we say, come visit us.” (Judy Faulkner, 37:32)
• Rural Focus: Various models for rural hospital access, including partnering with state systems or consortiums.

8. Workplace Culture, Recruitment, and Retention

• Whimsical, Inviting Campus: Faulkner’s belief that work should be fun and that employees deserve inspiring environments.
• No Remote Work: Epic brought employees back on campus early post-pandemic.
  • Quote: “I'm glad about it” (on in-person work) (Judy Faulkner, 44:00)
• Selective Hiring: “Much harder to get in here than Harvard...our turnover is low.” (43:30–43:37)

9. R&D, Innovation, and AI in Healthcare

• Heavy R&D Investment: 30-35% of revenues spent on research, much higher than the industry average.
• AI Features for Care: Describes Epic’s AI tools for sepsis detection, diagnosis suggestions, and comparative treatment outcomes.
  • Quote: “We use AI for sepsis...They went from something like two and a half percent of their patients got septic to zero, and they saved over 100 lives because of that.” (Judy Faulkner, 51:24)
• Concerns About Gaming AI: Warns that AI, like many systems, can be manipulated if not carefully managed.

10. Relation to Physicians and User Experience

• Physician Frustrations: Many doctors express frustration with Epic’s interface or complexity, but often prefer it to competitors after broader exposure.
  • Quote: “A lot of the problems with our software is that they have to type to get the data in...that was a government requirement at one point that it couldn't be put in by a scribe.” (Judy Faulkner, 56:41)
• Regulatory Mandates: Notes government required physicians to do their own data entry, despite her objections.

11. Succession Planning and Company Longevity

• Ownership Structure: Faulkner has created a trust (Roots and Wings) ensuring Epic will never go public or be sold.
  • Quote: “My stock is divided into two parts, the value and the vote. The value gets given for charitable purposes. The voting side goes to the Purpose Trust… You can never vote to go public. You can never vote to be acquired…” (Judy Faulkner, 60:17)
• Personal Plans: No retirement target; plans to remain involved as long as health permits.
  • Quote: “I hope that I can stay strong physically and mentally.” (Judy Faulkner, 62:35)

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Notable Quotes & Memorable Moments

• On Not Seeking Wealth:
  “Our customers need it more than we do, and so we don’t want to misuse them… You shouldn’t concentrate or focus on the revenue side, but you can’t be stupid about it.” (Judy Faulkner, 28:09)

• On Cultural Roots:
  “Try to make the world a better place, try to help people.” (Judy Faulkner, 13:00, echoing her mother's advice)

• On Epic's Unique Style:
  “At Epic, we really think of it almost 180 degree reversal of what a public company would do in that our number one responsibility is to our customers, then to EPIC as a company, then to our employees, and then to shareholders.” (Seth Howard, 47:38)

• On Company Rules:
  “The whole music should be classical...Because I like it. It just feels like Epic to me.” (Judy Faulkner, 62:10)

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Timestamps for Important Segments

• 02:18 – Judy Faulkner introduces herself, shares her personal “simple life.”
• 03:05–04:23 – Tesla autopilot story reveals her analytic temperament.
• 07:37 – Bob Wachter describes why Epic “won” EHR market: integration focus.
• 10:40 – Faulkner explains Epic’s outlier status and bootstrapped origin.
• 13:00 – Discusses tikkun olam, social responsibility from her mother.
• 17:20 – On the ethics of healthcare work and choosing clients.
• 19:46 – Story of husband (a pediatrician) losing a patient due to lack of data, leading to “Care Everywhere.”
• 22:21 – Facing antitrust lawsuits as a result of Epic’s market dominance.
• 25:12–26:16 – Judy’s “Typical Day” slides: defining her CEO role.
• 30:15–31:32 – Epic’s Ten Commandments and why they exist.
• 37:05–37:35 – International market entry: only reactively, not proactively.
• 43:45–44:18 – Stance on in-person work vs. remote.
• 47:38 – EVP Seth Howard on Epic’s stakeholder priorities.
• 51:24–53:50 – AI tools in Epic software: sepsis, diagnosis checker, best care choices.
• 56:41–57:47 – Frustrations and regulatory decisions on physician data entry.
• 60:17–61:23 – Structure of the trust to ensure Epic stays private/independent.
• 62:29–62:45 – Judy on aging, retirement, and longevity at the helm.
• 64:52 – Her taste in music and audiobooks (mostly classical, science fiction).

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Conclusion

Stephen Dubner’s interview with Judy Faulkner paints a portrait of a tech founder who has quietly, sternly, and successfully built the backbone of modern American healthcare IT—while rejecting nearly every pressure of Silicon Valley capitalism. Faulkner’s principles, from frugality and customer-first focus to her ten commandments and succession trust, stand out as rare examples of truly alternative business governance—and raise provocative questions about what kind of capitalism best serves society.

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For feedback or to suggest similar companies for comparison with Epic, email radioreconomics.com.

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Transcript

[Stephen Dubner]

Freakonomics Radio is sponsored by Hotels.com Some names really do say it all. Hotels.com is one of them. When travelers book a hotel, they want savings that work for them, and Hotels.com makes it simple with save your way members choose how to save. Take an instant discount now or bank as rewards to use on later stays. No tricks or pressure, just flexibility and real value. For straightforward savings on your next stay, trust the hotel experts. Visit hotels.com it's all in the name. Freakonomics Radio is sponsored by Mint Mobile. Stop overpaying for wireless just because that's how it's always been. Mint Mobile exists purely to fix that. All plans come with high speed data and unlimited talk and text delivered on the nation's largest 5G network. Shop [e-mail] freak upfront payment of $45 for 3 month 5 gigabyte plan required equivalent to $15 per month new custom for first 3 months only, then full price plan options available, taxes and fees extra. See Mint Mobile for details. In the rolling hills of Verona, Wisconsin, just outside of Madison and far from the usual software Epicenters, you will find one of the biggest tech campuses in the United States. It is home to a company called Epic Systems. You may not know Epic, but there is a very good chance that they know you. Okay, over 80% of Americans have at least one electronic health record with EPIC. If you've ever used my chart, that's EPIC. They make the software used by many of the biggest and best healthcare Systems in the US and they now operate in 15 other countries too. Epic does have rivals like Oracle and Meditech, but for decades it has been the biggest player in this industry. The Campus sits on 1700 acres. There is an underground auditorium that seats 11,000. There are playful sculptures all around, and the inside of the office buildings are dressed like movie sets. Alice in Wonderland, Harry Potter, the Wizard of Oz. So who's the wizard behind the curtain at Epic?

[Judy Faulkner]

Judy Faulkner. Also known as Judith Ruth Faulkner. And if you take away my middle name, I'm Ruthless.

[Stephen Dubner]

Faulkner founded Epic in 1979 and is still the CEO. Epic is an unusual company and as you will hear today, Faulkner is an unusual leader. But I'm not sure that ruthless is the right word.

[Judy Faulkner]

I've got one house, one husband, one dog. One dog. I would want more than one dog, but husband does not. One car what's your car? I have a 2016 Tesla. I like it self driving. I find that between it and me together we're better than either alone.

[Stephen Dubner]

Which software is More reliable at updating regularly your Tesla software, or epyc.

[Judy Faulkner]

The difficulty in my mind with the Tesla upgrades is every now and then I say, tesla, you need better programmers. It was only once that I called them on it. My Tesla, when I would move it into auto drive, would cross the WL line and go head first into the cars coming at me.

[Stephen Dubner]

Wait, what? Say it again.

[Judy Faulkner]

Yes, that's what it would do.

[Stephen Dubner]

This was how long ago?

[Judy Faulkner]

Not long after I bought it, I'd be going home. It was hilly. I'd put it into auto drive. I would be at 35 miles an hour. It would quickly go to 60, cross that WO line and go straight at the cars.

[Stephen Dubner]

Wow.

[Judy Faulkner]

I think what it was trying to do is because it was hilly, it thought that maybe the road was going to end, so it was going to save me by going into the other lane. I don't know what it was thinking. I called them about it. They sent someone to ride in the car with me and saw that that's indeed what happened. Then they brought another car to see if it happened on that car too. And it did. Same thing happened. So it was the software and not the car.

[Stephen Dubner]

Did you get that treatment because you're Judy Faulkner of Epic or because you just drove a Tesla?

[Judy Faulkner]

I think it's because the Tesla people realized that was not a good thing to do and they did react quite appropriately.

[Stephen Dubner]

What would be the equivalent of EPIC software doing that? And has that ever happened?

[Judy Faulkner]

Not to my knowledge. We test it very well before it goes out. But we have reports that everybody is supposed to write. They're called red flags. If something is wrong, you have to write a red flag up about it. Most of the red flags are about things that can be fixed and don't make a big difference. Every once in a while, a red flag will either be a clinical error or a financial error. And on those things, we jump on them right away.

[Stephen Dubner]

Later on that night and even the next day, I couldn't stop thinking about this story that Faulkner told me about her Tesla. Not because it was a scary story, but because of how she told it. I think most people, if a critical piece of tech failed them like this, they'd get pretty dramatic. Retelling the story like this absolutely crazy thing happened, and if another car was coming, I'd be dead. But Judy Faulkner is, at her core, a coder, a programmer, a computer scientist. So when she told the story, she focused on the parameters.

[Judy Faulkner]

It was hilly. I would be at 35 miles an hour. It would quickly go to 60 she

[Stephen Dubner]

tried to identify the underlying error.

[Judy Faulkner]

It thought that maybe the road was going to end, so it was going to save me.

[Stephen Dubner]

But she replicated the error.

[Judy Faulkner]

Same thing happened. So it was the software and not the car.

[Stephen Dubner]

And she supervised the fix.

[Judy Faulkner]

The Tesla people realized that was not a good thing to do and they did react quite appropriately.

[Stephen Dubner]

This kind of temperament is probably a big benefit when you're running a software system like epix. They oversee a vast dynamic data set that underlies one of the most complicated, critical and expensive industries in the world. Judy Faulkner is one of the most successful female entrepreneurs in history. So why haven't we ever heard much from her? As I understand you don't do much of this interviews.

[Judy Faulkner]

I try not to, yeah.

[Stephen Dubner]

Why?

[Judy Faulkner]

It's time consuming. You can mess up and just be embarrassed by what you do. So therefore it's a little bit nerve wracking because you don't know if you're going to mess up or not. And also consider I'm a techie, math and computer science. Techies by their nature are usually introverted, so I'd rather crawl under the table than be interviewed in most situations. But sometimes it's fun. When the people are fun, then it's fun.

[Stephen Dubner]

Today on Freakonomics Radio, we will try to have fun. And we'll also try to figure out the code that runs Judy Faulkner.

[Judy Faulkner]

This is Freakonomics Radio, the podcast that explores the hidden side of everything with your host, Stephen Dubner.

[Stephen Dubner]

In an episode we made earlier this year called Can AI Save youe Life? We spoke with Bob Wachter, who is chair of the Department of Medicine at the University of California, San Francisco. When it comes to AI and medicine, electronic health records are really important. And he was explaining how one company had come to dominate that market.

[Bob Wachter]

EPIC won this market. This was a little tiny company started by Judy Faulkner in the basement of an apartment off the University of Wisconsin. Is really remarkable story. I think they won because they were the best. The best was partly integration. Judy's theory of the case was we're not going to bolt on 37 different tools by a bunch of different companies. We're going to own the entire thing and that is going to allow us to provide an integrated solution. And medicine is so complex and there's so many moving parts that if you don't have an integrated solution, the thing's not going to work very well.

[Stephen Dubner]

That integrated solution part is really interesting, especially if you are in the software or healthcare IT industries. There is a fascinating Harvard Business School case study about Epic. The Acquired podcast did one of their excellent four hour deep dives into epic. I made the trip to Wisconsin hoping to learn more about Judy Faulkner herself. For someone who doesn't know what EPIC Systems is, doesn't know who Judy Faulkner is, doesn't know what you built and how, what's a short description of it?

[Judy Faulkner]

Usually people understand it if we say we do electronic health records for doctors, we enable it so they can communicate one to another. So if you leave Massachusetts, where you went to University of Massachusetts, for your care, and you come here and you go to University of Wisconsin, they'll share your record, assuming you've approved of that, and they'll share the critical clinical information to make sure you're safe.

[Stephen Dubner]

So I understand that to be true, and I understand that to be a good description for the layperson who doesn't know. But what you actually do, I mean, that would be the tip of a very large iceberg. Yes.

[Judy Faulkner]

Well, we run an IT shop here. We have about 15,000 people here and in 16 countries, and they're working hard on creating the software that helps take care of patients in all different ways. We've had MyChart out for 25 years now, I think. But people don't know that epic does MyChart. Even people in Madison, Wisconsin. Someone was telling me just the other day they were talking to somebody who uses MyChart and had no idea Epic made it.

[Stephen Dubner]

What strikes me as a thesis, maybe for this company and for this conversation, is, is that Epic looks from the outside like another software firm. And yet there are a lot of things about this place that strike me as radically different. And my thesis is that that comes down to basically, you. I'm just curious, first of all, what you think when I say that to you. Do you feel that you're an outlier?

[Judy Faulkner]

Yes, I do. We didn't get private equity, we didn't get venture capital to support us. We hire differently, we manage differently, and it works very well and it works for our customers. We have never had a lawsuit from a customer, which in 50 years, I think is good.

[Stephen Dubner]

You've barely lost a customer ever, have you?

[Judy Faulkner]

Well, we actually lost a customer once and they came back a year later.

[Stephen Dubner]

Why'd they leave?

[Judy Faulkner]

I think they thought that the other system might be better for them, and they tried it and it wasn't, and they came back.

[Stephen Dubner]

Faulkner grew up in New Jersey. Her father, Lewis Greenfield, was a pharmacist. Her mother, Del, was a peace activist who helped lead a group called Physicians for Social Responsibility, which shared in a Nobel Peace Prize in 1985.

[Judy Faulkner]

She started the South Jersey Peace center at the beginning of the Vietnam War. Got really beaten up for it by all sorts of people who thought she

[Stephen Dubner]

was terrible for doing that, thought she was unpatriotic.

[Judy Faulkner]

Yes. Right. But she studied it. She knew a lot about what was going on. Nowadays we're much more knowledgeable about the things that she knew. Then she continued on. She moved from New Jersey to Portland, Oregon, and that's when she started working with Physicians for Social Responsibility and became the director of that area.

[Stephen Dubner]

And their main concern was nuclear bombs.

[Judy Faulkner]

Right. And I believe she got put in jail in her 80s for protesting at a nuclear site. She always said she hates war, but she loves the soldiers. We have a photo of her and the policeman writing out the ticket, and they're both smiling happily at each other. It's a very cute photo.

[Stephen Dubner]

I don't mean to make you and your parents sound like Do Gooders at the expense of all else, but my sense is. I recall this from our earlier chat that was not recorded. The phrase that I think we talked about was tikkun olam, this Hebrew phrase for like, heal, repair the world. Try to leave the world in a little bit better shape than when you came into it. Can you just talk about that concept? Is that something that's important to you?

[Judy Faulkner]

Well, that was a concept my mother charged me with when I went off to college.

[Stephen Dubner]

What do you mean charged you with?

[Judy Faulkner]

She said that's what she wants me to do. You're going off to college now. Try to make the world a better place, Try to help people. And I remember thinking, oh, that's a big burden to put on an 18 year old's shoulders. I remember thinking that. Now I look back at it and think, she was so wise to do that.

[Stephen Dubner]

Faulkner went to Dickinson College, a liberal arts school in Carlisle, Pennsylvania. She was a math major.

[Judy Faulkner]

Between my junior and senior year, I took a summer job at University of Rochester. It was supposed to be particle physics. And when I got there, they expected me to program and I'd never seen a computer. So they gave me a Fortran book and a week's access to the computer. And at the end of the week they said I was a good programmer, but to me it was games. So when I applied for graduate school, I thought it was so neat that University of Wisconsin, on their own, moved me to computer science.

[Stephen Dubner]

You didn't raise your hand and say,

[Judy Faulkner]

no, I didn't know you could apply for computer science.

[Stephen Dubner]

It was a new major.

[Judy Faulkner]

Yes, it was a new Major. I took probably the world's first class in computers and medicine, taught by Dr. Werner Slack, and he asked me to work with him and his team. And that's how I got into healthcare.

[Stephen Dubner]

What was going on at that time in healthcare that it seemed to make sense to put together computers and medicine then?

[Judy Faulkner]

Well, the first jobs that they gave me were things that people would spend a lot of time on and the recipients of what they were doing didn't like it. So call schedules, they would say, okay, you work tonight, you work tomorrow night, you work the next night. And then people would say, you gave me the holiday evening because you don't like me. They couldn't say that about the computer. So doing some of that type of work was the beginning. And then they brought me in and asked me to develop a system that would keep track of patient information over time.

[Stephen Dubner]

And this was for a medical practice, how small or large?

[Judy Faulkner]

This was at the University of Wisconsin, so it was more by department. Department, department. So psychiatry, obgyn, rehab, medicine, different groups.

[Stephen Dubner]

And up to this point there were just paper files written in physicians. Indecipherable handwriting, I'm guessing that's correct, yes. And there were probably all kinds of things like prescription errors because of that.

[Judy Faulkner]

Yes, yes. In fact, I know one doctor whose prescription got turned down because the writing was too legible and they knew it wasn't his.

[Stephen Dubner]

What did you think of yourself then at the time as a young computer programmer?

[Judy Faulkner]

Well, I thought computer programming was fun and games. So isn't it neat to get a major that you're working in that is just fun every day to do?

[Stephen Dubner]

Okay. And then as you're getting into the healthcare realm, what was your thinking about that? Did you think, like, oh, I could have a career in this?

[Judy Faulkner]

No, I was just doubling down during the work I was assigned.

[Stephen Dubner]

Faulkner got her master's degree in computer science in 1967. By then she was already earning a reputation.

[Judy Faulkner]

The people I work with, they would go around the country showing their colleagues, look what we have. And then they'd call me up and ask me to start a company. And I would say no. And it would repeat again. I had no interest in starting a company. I had no idea how to do it. So that went on for a couple years. I would sometimes get four calls a week. Start a company, and I'd always just say no. Until one day I met a guy who had spun off a lab system from the uw and he said, well, there's three things you have to do. Get a good lawyer Get a good accountant, get permission from the university. So I started to do that and then there was a group of people that I worked with who were obvious to be part of the initial company and in their off hours they would help out.

[Stephen Dubner]

Can you just talk for a minute about doing business in this? We call it an industry, healthcare, but it's different. I mean there are other mission critical industries. But being in the business of healthcare means what to you and how do you find people who can do what you're doing with software within that?

[Judy Faulkner]

I think that healthcare in general, the people who work in it, the doctors, the registrars, the administrators, are very, very ethical. And sometimes it's really hard on them. A young person, when I was having dinner with someone, showed up in their ED with something that could have cost them multimillion dollars. And he wasn't insured. Do they take care of them? If they take care of him, they have to complete it. Do they not take care of them and tell them to go elsewhere? That would hurt them and they did the right thing, they took care of him. It's a very ethical group. I like working with it.

[Stephen Dubner]

So healthcare is famously responsible for about 20% of GDP in this country, which 18, I'm told. 18. Yeah, you're right. They've been saying it'll get to 20 soon, but that's been for a decade now.

[Judy Faulkner]

Yes, they had hypothesized they'd be at 22 right now and they're at 18. I think our software helps with that.

[Stephen Dubner]

Ah, tell me about that.

[Judy Faulkner]

Well, it's one system the patient can go through from one to another and you're still one patient on one system. They have told us that they save a huge amount of money by not having to have 250 separate applications that are replacing ours. I think it's important and I think most of us who work here would hesitate to go to a place that doesn't have our software because they realize it does help save lives. I came home one day to find my husband very upset. He's a pediatrician. He was taking care of a girl who had certain problems and she was under good control and doing well. And she went with her parents to another city. She got sick. They took her to the ed and at the ED they didn't know her problem. So they treated her just like somebody who didn't have that kind of problem. And she died. And he was just beside himself. He kept saying if they had it, they would have known what to do. It would have been really easy. She'd be alive. So that's when I went back here and asked some of our software developers to write a system that would allow the information to go from one place to another so that they would know what she had. Not only did they write that, but they went all around the country to our customers saying, we're here to put this in and make sure you get it. And they wouldn't let any of our customers not put that in.

[Stephen Dubner]

This was when?

[Judy Faulkner]

About 2007.

[Stephen Dubner]

And what is this piece of your software called?

[Judy Faulkner]

Care Everywhere.

[Stephen Dubner]

EPIC is increasingly the target of antitrust claims. How big a part of your worry portfolio is that?

[Judy Faulkner]

Yes, that is definitely a worry. There are individual systems that would like us to work with them as if they were us.

[Stephen Dubner]

I'm sorry, I don't know what you mean by that.

[Judy Faulkner]

Let's assume it's a dermatology system that someone has written. They want us to work with their dermatology system hand in glove, as if it were our own. Or a rev cycle billing system. They want us to work very closely with that. One of them said, it will only take 10 programmers. And I thought, oh, my goodness, do you realize you're one of 50 in just that niche area? And we would have to work with all 50. That would be 500 programmers, which is a lot of programmers. But the other thing is that many of our customers like our software because they can go from one to another in terms of the different pieces we all have working together. You put something in from the outside and it doesn't. You've probably, you know, you go from one system to another system on your computer, they use different terminology. They might have different colors, different places on the screens, different designs. It might be education level. And one will use 10 different groupings, another will use 15 different groupings. If it's something to do with healthcare, how do you match it safely? So it takes a lot of work to make them work as if they're one.

[Stephen Dubner]

So how do you think about the. I guess it's a paradox, which is if you succeed in a realm like you have succeeded, then you become a lingua franca, essentially, for many people within this big, big, big realm.

[Judy Faulkner]

That's right.

[Stephen Dubner]

But then there are critics who might be rivals, they might be regulators who start to talk about monopoly.

[Judy Faulkner]

I think that our customers should be free to work with any third party they want to work with. I have often said to them, folks, do you know what you bought? Because our system is big. And sometimes what happens is they buy something that they already have. Bought from us, and they don't even realize that they have those capabilities that they went out for. So sometimes a lot of our job is to make sure they know what they bought so they can make an intelligent decision. We are now being hit, as you might know, with lawsuits for antitrust monopoly. It just seems so weird to have begun with three halftime people in a basement.

[Stephen Dubner]

Among the lawsuits that Epic is currently facing is one brought by the attorney general of Texas, alleging that Epic violates the state's Free Enterprise and Antitrust Act. In another case, the New York firm Particle Health is arguing that Epic interfered with its customer contracts and used its market power to squeeze out competition. Coming up after the break, how did Epic go from three halftime people in a basement to such a huge player?

[Judy Faulkner]

Somebody calls up from the Netherlands and says, can we buy it? And we say, come visit us.

[Stephen Dubner]

I'm Stephen Dubner. This is Freakonomics Radio. We'll be right back.

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[Stephen Dubner]

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[Stephen Dubner]

There is a question I sometimes ask in interviews. It's a cliched question, but sometimes useful, especially for someone like a CEO. The question is simply this. How do you spend a typical day? It isn't so much the specifics of their day that interests me, it's how they choose to frame the answer. And when I asked Judy Faulkner this question, the frame was very Judy Faulkner.

[Judy Faulkner]

Could you get a copy of those slides? There's two slides on my job. Thank you.

[Stephen Dubner]

She asks a colleague who's sitting in on the interview to go to her office and grab a printout of the slides.

[Judy Faulkner]

I'll read the list and then be able to answer more accurately because I feel like whatever answer I give without looking at the list, I don't know if it's right.

[Stephen Dubner]

Her colleague returns with the printouts. One of them is titled Typical Day. The other My role Company success.

[Judy Faulkner]

My role is company success. I've got to make the right decisions. I've got accountability for our products, our service and meeting commitments responsible for client happiness, profitability, the campus succession, planning. Take a stance. And that's an important thing, I think, for CEOs, you've got to take a stance on things. People call me and I have to know, oh, Joe knows the answer to this, Mary knows the answer to that, and get them on the line and help with the answer. So my job is not necessarily to know the answer, it's to know who knows the answer.

[Stephen Dubner]

You plainly know everything that's going on to some degree in all these buildings, but you can't know everything.

[Judy Faulkner]

It's going on much faster than I can keep track of. And I don't know even all the products we're working on because we hire bright, capable, hardworking people and they come up with new things all the time. I have a T shirt that says healthcare. It is more complex than rocket science. And we have three people who used to work in rocket science and all three say it's right. It's more complex because it changes all the time. Whereas rocket science, there are principles that are unchanging. So I've often thought I should call Elon Musk up and tell him we'll take over for you.

[Stephen Dubner]

So there are all these things that you do different and there are many, many others, right? You don't have titles really in the

[Judy Faulkner]

firm, we don't use them internally, externally, people can make up their title, and they do. Although once someone told me that he had met our chief medical officer and I had to ask him who it was because we have about a dozen physicians who work here, and any of them could have used that title.

[Stephen Dubner]

EPIC is the biggest in the field of what you do. And then when I look at your revenues, which I realize most people here don't even know that's correct.

[Judy Faulkner]

We don't talk about it. Is that good or not good in your mind?

[Stephen Dubner]

I'm guessing it's great because they have a different focus, which is quality versus, you know, profitability or their own ownership and so on. But when I look at that, the last year I saw was 5.8 billion in revenues. For a firm that is so dominant in an industry that is so large, my conclusion is you are not profit maximizing at all.

[Judy Faulkner]

I agree with you entirely.

[Stephen Dubner]

All right, so let's talk about that. That's a choice.

[Judy Faulkner]

Plainly, that's a choice we make. We have enough money as revenue to run our company and be successful. Our customers need it more than we do, and so we don't want to misuse them. We also help some of the customers who take care of the indigent, are broke, et cetera, in multiple ways. We help them come to our meetings, our users group meetings, and we'll pay for their transportation. I say you shouldn't concentrate or focus on the revenue side, but you can't be stupid about it.

[Stephen Dubner]

So you're a little under $6 billion a year in annual revenues. You have. You said about 15 or 16,000 employees, is that right?

[Judy Faulkner]

Could be 15 somewhere in there.

[Stephen Dubner]

The calculation I did, I think was based on maybe 14,000 employees, which I read, and it came out to something like $410,000 annual revenue per employee.

[Judy Faulkner]

Is that good or bad?

[Stephen Dubner]

Well, that's what I wanted to know. And to me it looked like, well, quite a lot. But then when I compare it to other software firms, especially if you look at a Google or a Facebook, it's quite low, but it's fine. It is. Well, this gets back to the fact that profit maximizing just doesn't seem to be a goal. Correct.

[Judy Faulkner]

It isn't a goal. It's a side effect, but it's not a goal.

[Stephen Dubner]

I've read that you typically spend somewhere in the neighborhood of 30, 35% annually on research and development. Yes.

[Judy Faulkner]

Yes.

[Stephen Dubner]

Is that an actual goal or is you just. You spend what you need to spend, then tally it up at the end of the year because I know you don't have budgets of any kind.

[Judy Faulkner]

Yes, yes. Well, our financial people will do their projections, but that isn't a budget, it's just their projections.

[Stephen Dubner]

In the many years that you've been in business, what have been the developments in either medicine or in the healthcare system that led you to need to spend or want to spend a lot more on R and D in a given year or set of years?

[Judy Faulkner]

I think AI right now is a biggie. Moving our system to the web was big. Those are two recent big ones.

[Stephen Dubner]

Those two printouts that Judy Faulkner keeps handy typical day in my role are not the only lists that she keeps, or even the most important. That distinction would go to Epic's very own ten Commandments. Number one, do not go public. Number two, do not acquire or be acquired. Number three, software must work. Number four, reality equals expectations. Five, keep commitments, even the unspoken ones. Six, focus on competency. Do not tolerate mediocrity.

[Judy Faulkner]

What we say is, if you tolerate mediocrity, you become a mediocre company. And is that what you want to do?

[Stephen Dubner]

Number seven, have standards. Be fair to all. Eight, have courage. What you put up with is what you stand for. Number nine, teach philosophy and culture. And number ten, be frugal. Do not take on debt for operations. You can find these commandments posted around Epic's campus, visible to employees and visitors alike.

[Judy Faulkner]

They're in all the bodily function areas, which is the bathrooms, the break rooms and the copy rooms. I wanted to put them into the stalls, but didn't do that there.

[Stephen Dubner]

Someone talked you out of that.

[Judy Faulkner]

Maybe so. We just have them by the mirrors in the bathroom.

[Stephen Dubner]

Numbers one and two. Number one, do not go public. Number two, do not acquire or be acquired. There have been no acquisitions.

[Judy Faulkner]

That's right.

[Stephen Dubner]

You build it all. I know this is what you're accustomed to, but for the rest of the world, those first two are very unusual. I just want to know why those have been your beliefs for so long. And I also want to know if you ever came close to breaking either of those commandments.

[Judy Faulkner]

Never came close to breaking either of them going public. I remember in the beginning of Epic looking up good companies and reading what their shareholders wrote about those good companies. The shareholders were only interested in return on equity, not what value the company was giving to the world. And they were vicious about the company whenever there wasn't the return on equity that they wanted. And I thought, who wants owners who are like that?

[Stephen Dubner]

On the other hand, founders like you, from Software companies of that same era, Microsoft, same era, Apple, same era. Those founders are going to ultimately cash out themselves for many, many, many billions of dollars. And they become, you know, the richest people in the world. That's a path that I assume would have been open to you. Maybe not as big, but the same path.

[Judy Faulkner]

Well, yes, sort of. I own a chunk of Epic and every year I get some stock to Roots and Wings, which is the foundation. And then Roots and Wings is more complex than this, sells it to Epic. Do you know why it's called Roots and Wings?

[Stephen Dubner]

It was something your kids said, right? When you were kids.

[Judy Faulkner]

When my two younger kids were in the car, I was driving them somewhere. Maybe they were 5 and 10 at the time. I asked them, what are the two things your parents need to give you? And so they looked at each other, they looked puzzled. Then they started whispering. Then they knew the answer. You could just see, they were so excited. Food and money. I said, no, Roots and Wings. Roots so that you grow strong wings so you can fly. So many years later, when it came time to have a foundation, take the money. Because otherwise if I die and all has to be cashed in, that's some huge amount of money. What are you going to do with it? So create a foundation. They said to me, you need to name it Roots and Wings, which I thought was very sweet. Roots and Wings can give donations to deserving organizations and Epic gets stock back that had been my stock that it could then distribute to, to employees.

[Stephen Dubner]

So in a counterfactual, let's say that, you know, Judy, Judith, Ruth Faulkner from 19, whatever, 70 something, had decided, oh, you know, rather than pursue this business and just bootstrap it with some friends and family money and grow it as it seems natural, what if you had taken investment either then or later? And I'm sure there have been thousands of opportunities to take outside money. Do you think about how the firm might operate differently in that case?

[Judy Faulkner]

I just think that we've been so lucky to avoid it. It would have changed us. I think now what I found out was some of the people who were originally involved with the creation of Epic, mostly there were people I had worked with at the university. Some of them did see Epic as a cash out thing, which I hadn't known. I only found it out once Epic started becoming more successful and realized that they wanted to sell it, which wasn't what I wanted to do at all.

[Stephen Dubner]

Did you always have enough ownership or leverage to fight off those impulses?

[Judy Faulkner]

Yes, correct.

[Stephen Dubner]

Since it's worked so well for you. Why do you think this style hasn't been more widely used?

[Judy Faulkner]

I believe that there are quite a few companies where the goal of the people starting the company is to have a good product for people they care about. Nowadays, though, they go get venture capital. Venture Capital might support 10 different companies. Maybe only two of them have the growth that venture capital is looking for. So they drop the others who then die. Or private equity comes in later. And private equity often will sell off a lot of the company. So it looks like their expenses are less, it looks like they're more profitable, but really they've just been mangled.

[Stephen Dubner]

Private equity is moving into, gosh, many, many, many areas of health care, human health care, pet care. You know, a typical version might be a physician's office or a dentist's office where the founder or founders want to retire. But I think what happens a lot now is that their younger partners, they have so much medical school debt that they can't raise the money. So I'm curious how it changes things for you when you're working with these, let's say, roll ups of physician offices.

[Judy Faulkner]

We don't have many like that, just a few. And we're very leery about working with them because we can feel a difference. We can feel the focus not on as much helping patients, but much more on making a profit.

[Stephen Dubner]

I was surprised to see how many foreign inroads EPIC has made. You're in 15 or so countries?

[Judy Faulkner]

16, I think.

[Stephen Dubner]

Sometimes there's a national health system, sometimes it's private, like in Lebanon. I saw it was for the American

[Judy Faulkner]

aub, American University of Beirut.

[Stephen Dubner]

Yeah. So I guess every case is a little bit different. What surprised me is it's so hard to do any business outside of your home turf. Is your international expansion driven by expanding the firm? Is it driven? That's a no.

[Judy Faulkner]

No, no. I'm just laughing. You know how we sell?

[Stephen Dubner]

I do know how you sell. You don't sell until somebody comes to you and asks if they can buy it. Yeah.

[Judy Faulkner]

So that's how the international goes. Somebody calls up from the Netherlands and says, can we buy it? And we say, come visit us. And they come visit us.

[Stephen Dubner]

Do you reject potential clients all the

[Judy Faulkner]

time, both in the US and overseas? We do, yes. We don't want a client not to be successful. And if we think they're not gonna make it, like, let's say they're too small and the expense and the work effort would be too great, we'll say no to them.

[Stephen Dubner]

That's a problem though, right? Because you want small healthcare systems to have access. So what do you do there?

[Judy Faulkner]

I remember one case a number of years ago where I said, no, you're too small. And they said, how many doctors do you need? And I told him and he said, give me some time. Three months later he called back, he said, we got him and I sold client.

[Stephen Dubner]

What do you do about rural hospitals or systems? That's a tricky one, isn't it?

[Judy Faulkner]

Yes, that's on our list of things that we're trying to focus on. Three things. One, work with our large health systems in that state to have them extend to the rural. Two, have the state itself buy from us and they take care of extending to the rural, to the federally qualified health systems, to the corrections groups. And the third thing is just that the rural groups themselves mass together and come to us as a group.

[Stephen Dubner]

So you, Judy Faulkner, are one of the most successful female founders entrepreneurs in history. Do you think much about that?

[Judy Faulkner]

Probably not what you think I think.

[Stephen Dubner]

What do you think I think?

[Judy Faulkner]

Who cares whether it's female or not female?

[Stephen Dubner]

The reason I'm actually interested is because you're such an outlier in the non profit maximizing and the non taking over the world and the non beating your chest realm. And you're also just an outlier by gender in that CEOs. You know, there just aren't that many female CEOs and founders. There are a few more now than there were when you were starting, but not that many, honestly. And I'm just curious whether you think that's a coincidence or not.

[Judy Faulkner]

What part would the coincidence be?

[Stephen Dubner]

You being a female is a coincidence too, with a coincidence of running a firm in a very, very, very different style without an emphasis on profit maximizing, et cetera.

[Judy Faulkner]

The others who I know are doing something similar are run by both men and women.

[Stephen Dubner]

When I asked some other folks at EPIC to name similar companies, they struggled. One name that does sometimes come up is Patagonia. If you have some good comps for EPIC and Judy Faulkner, let me know. Our email is radioreconomics.com Coming up after the break. What is the plan for Epic after Judy Faulkner? I'm Stephen Dubner. This is Freakonomics Radio. We'll be right back.

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[Stephen Dubner]

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[Stephen Dubner]

When we drove in here, it's a wild place. It's beautiful, it's colorful, it's whimsical, it's fantastical.

[Judy Faulkner]

Whimsical is a word I use a lot. Yes.

[Stephen Dubner]

I wonder if for you, coming to do what you do every day is a form of play. I sense that you are driven to work hard because it's fun, but I don't know how all that connects up.

[Judy Faulkner]

Sometimes I think of going to a grocery store and walking around. Very nice grocery store, attractive. And then the door opens to the back rooms and they look terrible when you look inside. Have you ever noticed that? And I've often thought why can't their employees have as nice an environment as the customers?

[Stephen Dubner]

I'm laughing because my very first job at age like 10 was stocking the local. We had a tiny little grocery store in a one stoplight town. And yes, I thought the same thing many times.

[Judy Faulkner]

Yeah, and it's not that much extra and it will keep your employees so much happier. So I think it's nice to come to an environment that is warm and friendly and feels like there's some thought and whimsical.

[Stephen Dubner]

Do you think it actually benefits the work as well?

[Judy Faulkner]

Yes, I do.

[Stephen Dubner]

How so?

[Judy Faulkner]

Well, first of all, I'm not sure how many people we had apply for jobs here. Something like 350,000.

[Stephen Dubner]

I saw the number. It was absurd. Much harder to get in here than Harvard, let's say that's right, or medical school.

[Judy Faulkner]

And so we have many people who want jobs here, and that helps us a lot. I think it helps with retention. Our turnover is low.

[Stephen Dubner]

I know that you have everyone working here on campus, in actual offices. The work from home, quote, revolution is still in dispute in a lot of places. What's your best argument for why it's better in person?

[Judy Faulkner]

What I think is interesting is so many CEOs I've spoken to say they wish they had done what we did, which is bring people back immediately. Now they've sold their buildings. Their people are scattered all over the United States. What do they do? They say it's not the same. So I'm glad about it.

[Stephen Dubner]

During the day that we spent on the EPIC campus, we also met with some of Judy Faulkner's senior colleagues. Seth Howard is a software developer who's been with Epic for 18 years.

[Seth Howard]

We're not big on titles, but when I need a title, I usually use executive vice president of research and development. But really what that means is I'm responsible for making sure that we are developing what the healthcare community and the patients that they serve need both today and in the future.

[Stephen Dubner]

So I, as a patient, like everybody listening to this, is a patient at some point. I think one of my biggest wishes would be that a firm like epic, which has made the collection and organization and synthesis of medical data, you've changed that landscape immeasurably in the last 30, 40 years. And it's not only useful, obviously, in treatment and communication and billing and a lot of other things. I mean, healthcare is a complicated industry, but I would think it'd also be particularly useful in clinical discovery, drug discovery, et cetera, et cetera.

[Seth Howard]

So there's a few elements of that. One is clinical research is quite complicated. And so we've built this network. One of the newer parts of the network, we actually call it Discovery. That's the component that helps bring life sciences into that ecosystem. What that means is if you're a life sciences organization and maybe you're bringing a new oncology drug to the market, you need to find patients who are a good candidate to test that drug during the stage two, stage three trials. Historically, that's been quite focused on a small number of academic medical centers, which leaves a lot of patients in community hospitals or rural communities, communities potentially left behind. And so our goal has been to create a more democratized access to clinical trials for the entire EPIC community who's participating in that discovery platform. And so those Trials can identify the patients that are good candidates, whether they're at an academic medical center or at a community hospital. And then the providers are able to access those treatment options, offer that to the patient, and enroll them in those trials with much less friction.

[Stephen Dubner]

I'm just curious whether you have friends or colleagues at other firms, what they think of the EPIC way of doing business.

[Seth Howard]

I'm in a group of people that are business leaders in the Wisconsin area and when I've described our way of operating and our primary metrics are really are our customers happy and successful? And if the answer is yes to those, everything else follows, including the financials. Folks have said, gosh, that's really how everyone should operate.

[Stephen Dubner]

Let's say I agree with that and that I think it would be better for our country, our society, our world, if more firms operated like that. What would you say to the majority of the firms and C suite people, et cetera, who really do feel that it's their responsibility to put profitability first? Is there any way you can entice them to enter into that slightly different realm?

[Seth Howard]

It's probably not impossible, but I do think it'd be really tough to move from a world, especially a publicly traded company, where your responsibility in a large part is to the financial outcome for your shareholders. That would need to change. At Epic, we really think of it almost 180 degree reversal of what a public company would do in that our number one responsibility is to our customers, then to EPIC as a company, then to our employees, and then to shareholders. The interesting thing, our employees are shareholders, but it's the shareholder value that we put as lower on the priority list.

[Stephen Dubner]

Pretend I haven't met Judy and I don't know much about how she set the course for this company. Just describe her as a colleague and as a leader.

[Seth Howard]

Well, she is a techie at heart, so she likes to know how things work, she's curious, she asks a lot of questions and she likes to stay involved in the day to day. She likes to stay connected to customers. She likes to understand how customer needs are evolving and how well we are meeting those needs and where we can do better. So you'll find her spending a lot of time Speaking with the CEOs of various health systems, really focused on where you need more help from us, where is our software not working, et cetera, et cetera.

[Stephen Dubner]

How does she respond when something internally goes wrong?

[Seth Howard]

Well, she is of course, number one, focused on what do we need to do to fix it, especially if it's something that's Affecting a customer.

[Stephen Dubner]

Does she have a temper?

[Seth Howard]

I wouldn't describe it as a temper. It's an intense focus on customer success.

[Stephen Dubner]

This intense focus on customer success may have a little bit to do with what Faulkner told us her mother said when she was heading off to college.

[Judy Faulkner]

Try to make the world a better place, try to help people.

[Stephen Dubner]

How do you feel about your success? At fulfilling her wish?

[Judy Faulkner]

I think she would be happy if she could see what was happening. Now with what I'm working on, I don't think she'd be happy. With so many of the things in the world.

[Stephen Dubner]

Outside of your firm and your industry, what do you worry about?

[Judy Faulkner]

If you ask me what I worry about at night, it's what's going to happen to our country? What's going to happen to education? I worry about that. What's going to happen to healthcare and people who can't afford it.

[Stephen Dubner]

What is your view generally on AI in healthcare? And by the way, that's how we came to be sitting here today, because Bob Wachter, who we did a piece with, explained your role in all this. And I didn't know anything about you, and that's how I really got interested in speaking with you. The episode that we did with Bob was about very basic question. How is and will AI change medicine? Really? You've built a system that. I mean, it is AI in many ways.

[Judy Faulkner]

Yes, Yes, I was gonna say that. It's been around for ages and there's different kinds of AI. The AI that can look at millions of pieces of data very quickly is very good. That's where it can be gamed too. And that worries me.

[Stephen Dubner]

What do you mean? What's a particular worry about how it could be gamed?

[Judy Faulkner]

Well, first of all, lots of things have been gamed lately. Capitalism has been gamed, government has been gamed. I think AI, we have to watch, make sure it doesn't get gamed. But if you want AI to say a certain something, you put it in repeatedly all over the place it goes back to. If you repeat something often enough, people will think it's true. Well, AI will think it's true.

[Stephen Dubner]

So lung cancer is caused by orange juice, for instance. You could anything. But when you think about the upsides of AI in your sphere, what are your dreams and fantasies there?

[Judy Faulkner]

I think AI is going to help in many ways. It's going to help predict diseases that you might have. We use AI for sepsis. Someone just the other day wrote to us and said, using our AI for sepsis. They went from something like two and a half percent of their patients got septic to zero, and they saved over 100 lives because of that. If you are a very odd patient with problems that your doctor has never seen before and doesn't know how to care for you and has tried this and this and this, and nothing's really working, we can find the two other patients in the United States who are similar to you and have the three caregivers be able to talk to each other so they can take better care of you.

[Stephen Dubner]

Are there any HIPAA complications there?

[Judy Faulkner]

No, we're not revealing who the patient is. And then other things we have in there is a diagnosis Checker. Supposedly about 10% of diagnoses are wrong. And if you have the diagnosis wrong, the treatment's going to be wrong, too. We may say the 32,500 patients very similar to your patient. 55% of the time this was the diagnosis given, the diagnosis you gave was used 0.2% of the time. It's not telling the physician to change anything, but it is giving the physician an alert that others have made different decisions. So the physician can decide if he or she is right or if he or she is wrong, because that will affect the care. We have something called Best care Choices for my patient, and it will. Look at those thousands of patients similar to you, and we'll look at what meds were used or treatment was used and let you know how successful it was for that patient like you. So regardless of what your diagnosis was, here's all the meds that were tried, and here's what worked. So let's say it was blood pressure. It might say this treatment helped the patient get a better blood pressure in four weeks. This other treatment was even better, but it took two months. Here's the incidence of heart attack, here's the incidence of stroke, here's the cost so that the clinician and the patient can talk together about what is the best for you.

[Stephen Dubner]

Do you worry that the best treatments, if they're more expensive, will be avoided? I mean, that's not your problem.

[Judy Faulkner]

Yeah, that is a problem that has to be discussed with the physician.

[Stephen Dubner]

It's not your problem to solve, but

[Judy Faulkner]

it's our choice to give them the data, because it is the data, as

[Stephen Dubner]

you well know, the kind of person that becomes the median physician. It's a really hard thing to do. It's very demanding, and you have to be really smart. And I think that most physicians feel expert and don't want to be told, especially by a disembodied computer program that they may be wrong or that they should consider different options.

[Judy Faulkner]

Keep in mind, I married one. I'll agree with you entirely.

[Stephen Dubner]

All right, but what do you do with your software? Plainly, you want to get to the best outcomes for the patient. Well, I say plainly. I don't know, maybe you don't care, but I gather you do care about that. So how do you do it? Whether it's communication style, the way the data is presented to the physician. Do you handhold, babysit a little bit to make the physician feel more empowered in some way?

[Judy Faulkner]

Well, the physicians do want to make the right decisions. So giving them the data so it guides them to the right decision rather than waiting till they're all done and then telling them they were wrong is a much better way to do it.

[Stephen Dubner]

I have a lot of doctor friends just by chance. I love them. I feel like the kind of person who chooses to become a physician is a very special. You have to be, I think, very selfless. I know that traditionally it used to be thought of as a way to get rich, but you have to work really hard at it now.

[Judy Faulkner]

Yeah, you do now.

[Stephen Dubner]

And you have to know so much,

[Judy Faulkner]

and you have a lot of responsibility.

[Stephen Dubner]

A lot of responsibility. So I asked a lot of these friends and professional acquaintances in medicine, you know, to tell me about their experiences with epic. I would say, on average, from the physician side, this is not from the hospital administrator side at all, but from the physician side, I would say their view of EPIC was slightly negative. Maybe on a scale of 10, it'd be like, you know, four and a half to six and a half. Their complaints were all about their interactions. They feel like it's sludgy for them, that it's either too complicated to find exactly the right billing code in a particular case, they find that they don't know the system well enough to always get the information they want because they're obviously busy and taking care of a lot of patients. And I was just struck by the fact that the industry itself plainly loves you more and more systems. Buy your software and keep it forever. And yet a lot of the individual physicians, at least the ones that I know and talk to, they have these kind of micro daily user problems. How do you work on that?

[Judy Faulkner]

Did you ask them if they've ever used another system?

[Stephen Dubner]

I didn't, but I think the answer would probably be no, because that's where

[Judy Faulkner]

we get our customers. They've tried ours, and I think your evaluation of them is right on. Then they try another, and they think ours is better. That's really helpful to us because a lot of our new customers are putting in our software because they're own doctors, worked elsewhere, and they don't want to use the system that their new place has because they liked Epic better. So I think even though it's in no way perfect, it's better than in their opinions, than what else is out there. I think that a lot of the problems with our software is that they have to type to get the data in. And in fact, that was a government requirement at one point that it couldn't be put in by a scribe.

[Stephen Dubner]

Does this go back to the high tech act?

[Judy Faulkner]

Yeah, it does.

[Stephen Dubner]

Which you were involved with.

[Judy Faulkner]

And I remember arguing against that one. I remember saying, if the doctor feels that someone else in the room could take good notes, why do you make the doctor do it?

[Stephen Dubner]

And what was the answer to that?

[Judy Faulkner]

Well, they voted and I got voted out on that one.

[Stephen Dubner]

This was when you were appointed as an advisor in the Obama administration, correct?

[Judy Faulkner]

I think you're right. It was, I don't know, maybe 15 people around the table and topics would come up that we would say yes or no to. And that was one I said, let the doctors decide how to do that. But I lost on that one. I think that what's really important now is the new features we have in that the system talks to the doctor, the doctor talks to the system, and they don't need a type. They can just talk to you as the patient.

[Stephen Dubner]

Here's a question that was passed along from Zeke Emanuel, who's been on our show a few times. Oncologist and medical ethicist and policymaker. He says, why does she, meaning you, inhibit independent app development and easy access to the platform? She plays favorites that inhibit innovation.

[Judy Faulkner]

Okay, I'll try to answer that. We certainly don't inhibit anyone from developing whatever they want. So we have a lot of apps out there. We have more APIs. You're familiar with an API? More APIs than any other vendor. So we try to say, here's data, folks. You need to get permission from the healthcare organization because it's not our data. We write the code to allow the data to go out to the app, but we don't give the permission because it's University of Wisconsin's data or it's Cleveland Clinic's data. It's not our data.

[Stephen Dubner]

There is a Harvard Business School case study on Epic that includes a poll that, I guess MBA students are supposed to take to predict the future of the company and of you. Would you Mind taking a look at this poll and reading it aloud for me?

[Judy Faulkner]

Ten years after Judy's retirement as CEO, Epic will choose which one, grow its market share, remain a competitive vendor, be sold to another IT firm, go public.

[Stephen Dubner]

How would you answer that?

[Judy Faulkner]

Can't do the last two. So it's only grow its market share and remain a competitive vendor, which I hope it will do both of those.

[Stephen Dubner]

You say it can't do the last two, but it's not like it's impossible. But you're doing everything you can to set it up so that that won't happen, correct?

[Judy Faulkner]

Well, only possible if the laws change somehow. But in today's law, it's pretty well structured so that that can't happen. My stock is divided into two parts, the value and the vote. The value gets given for charitable purposes. The voting side goes to the Purpose Trust. And the Purpose Trust has two groups who vote my stock, my family members and Epic staff.

[Stephen Dubner]

I thought there were some healthcare CEOs in there as well.

[Judy Faulkner]

Yes, but they're not the voting of my stock. I've got four family members and succession plans and five Epic company members and succession plans. They get to vote following my rules of. Here's what you have to do. You can never vote to go public. You can never vote to be acquired. And there's a whole bunch of other things. You can't create new stock which gets over those rules, a lot of different things to make sure that it's all followed. Then we have three CEOs from our CEO Council, which meets once a year.

[Stephen Dubner]

Can you say who they are?

[Judy Faulkner]

We just changed who they are, so I can't yet because I don't have their names in front of me. But they're people who volunteered to do this and we're very interested in doing it. Their job is to take anyone to court who doesn't vote according to the rules.

[Stephen Dubner]

Do you enjoy or not enjoy talking about succession? I mean, it's your life.

[Judy Faulkner]

Yeah. No, it's important to do because you don't want to just leave things a mess. So there are several pages of rules, but there's only some rules that you have to do. The rest is just things that are recommendations.

[Bob Wachter]

Yeah.

[Stephen Dubner]

What would be an example?

[Judy Faulkner]

The very last thing is the lightest weight example. And it is. The whole music should be classical.

[Stephen Dubner]

Is your whole music classical now?

[Judy Faulkner]

Yes.

[Stephen Dubner]

Why is that?

[Judy Faulkner]

Because I like it. It just feels like Epic to me.

[Stephen Dubner]

Can I just say congratulations? Thank you for a remarkable accomplishment and really remarkable life. I mean, hope you're not going anywhere soon. How old are you?

[Judy Faulkner]

82.

[Stephen Dubner]

82. And do you have a target date for retirement?

[Judy Faulkner]

No.

[Stephen Dubner]

Will you retire?

[Judy Faulkner]

I hope not. I hope that I can stay strong physically and mentally.

[Stephen Dubner]

You think there's a chance we'll see a 100-year-old Judy Faulkner running Epic?

[Judy Faulkner]

Sure. Or chances you'll see a 100-year-old Judy Faulkner? I don't know if she'll be running Epic. Then there's other good people here, too.

[Stephen Dubner]

All right, we'll come back then for your hundredth birthday. That again was Judith Ruth Faulkner, founder and CEO of Epic Systems. Coming up next time on the show, another builder of sorts, someone who makes things from scratch. David Lang is a composer, a particularly well read composer with a Pulitzer Prize and all sorts of other honors. He especially likes to write music around existing texts, some of them sacred texts and some of them secular. We tagged along for the world premiere of a new David Lange piece that's drawn from Adam Smith's the Wealth of Nations. Seriously, the very simple secret of turning a bible of economics into a revolutionary new piece of music. That's next time on the show. Until then, take care of yourself. And if you can, someone else too. Freakonomics Radio is produced by Renbud Radio. You can find our entire archive on any podcast app. It's [e-mail] where we publish transcripts and show notes. This episode was produced by Zach Lipinski with help from Dalvin Abuaji. It was edited by Ellen Frankman and mixed by Eleanor Osborne with help from Joseph Webster. Thanks also to Bob, Bob Wachter, Julia Adler, Milstein, Mickey Tripathi, Bapu Jenna, Zeke Emanuel and everyone else who helped with research. The Freakonomics Radio Network staff also includes Augusta Chapman, Elsa Hernandez, Gabriel Roth, Hilaria Montenacort, Jake Loomis, Jeremy Johnston, Mandy Gorenstein, Peter Madden and Teo Jacobs. Our theme song is Mr. Fortune by the Hitchhikers and our composer is Luis Guerra. As always, thank you for listening. What music do you listen to at home and in your car? Mostly classical.

[Judy Faulkner]

I listen to books, science fiction for the most part. I'm a techie.

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[Judy Faulkner]

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