Epic confronts unprecedented challenges as it prepares to address customers and unveil road map

STAT News – Friday, August 14, 2026
By Brittany Trang and Casey Ross

Every August, Epic Systems founder Judy Faulkner holds court with over 20,000 people, including staff and executives from her most devoted customers, in an auditorium buried five stories into the Wisconsin earth. At the company’s annual meeting, she takes the stage to unveil her company’s latest innovations — products that inevitably form a technological road map for America’s hospitals.

This year, the crowd will also be watching Faulkner’s speech for another reason.

The company she founded nearly half a century ago, now the nation’s dominant seller of electronic health records software, is facing an unprecedented series of challenges driven by antitrust lawsuits, questions about its artificial intelligence strategy, an exodus of key technology leaders, and, most recently, the disclosure that state and federal investigators are looking into the company’s business practices.

Last week, STAT reported that the Federal Trade Commission and a coalition of state attorneys general are scrutinizing Epic for alleged violations of antitrust law. The probe is in its early stages, according to people who have been interviewed by federal and state officials. The FTC declined to comment on it. Epic did not affirm or deny whether it had been contacted by the FTC or was aware of the investigation, but a company spokesperson told STAT that Epic is a leader in interoperability and that “we do not engage in anticompetitive behavior.”

The increasing discomfort with Epic is not limited to external parties. Just a month before the gathering, a string of its most influential executives — including Sumit Rana, considered Faulkner’s heir apparent, and Seth Hain, the company’s longtime AI leader — left the company. Epic cited personal reasons for Rana’s departure and has remained silent about the rest.

But sources close to the company told STAT that the exits were preceded by tensions over its approach to developing AI tools as well as its policies for working with outside companies. Those disagreements are deeply entangled in the much larger question of succession: Who will take the reins when Faulkner, 83, steps away from day-to-day leadership, and how will the company evolve? 

Hain, Rana, and others had been driving collaborations with Microsoft, OpenAI, and other leading technology developers — moves that conflicted with the insular, build-it-yourself culture that Faulkner religiously fostered over decades of leading the company. The pressures bearing down on Epic’s closed posture are coming not only from the outside, through lawsuits by third-party developers, but from within its own ranks.

“This was always going to be messy,” said one former Epic employee who spent years at the company and remains in touch with former colleagues. “You’ve got a lot of people who have been waiting their turn under an absolutely controlling leader.”
Complaints of anticompetitive behavior

Epic started in a basement in Madison, Wis., in 1979. Faulkner scraped together $70,000 from friends, family, and acquaintances to buy a hulking-by-today’s-standards “minicomputer” and founded the health IT empire that today handles the electronic medical records for 57% of inpatient hospital beds in America. Approximately 82% of Americans have at least one record stored by Epic, whose annual revenue was $5.7 billion in 2024, up from $3.3 billion in 2020.

Many hospital executives credit Epic for digitizing data and building products customized to serve the intricacies of their businesses. But its sheer size and market power have also made it a lightning rod for criticism. Health technology researchers and executives now openly accuse the company of wielding, and actively reinforcing, a monopoly that thwarts competition and innovation. A recent paper published under the title “A problem of Epic proportion” calls for urgent government intervention to loosen the company’s grip on Americans’ health data to improve patient care and allow newer companies and technologies to thrive.

“Epic is monolithic,” said Leo Celi, a physician and professor at the Massachusetts Institute of Technology and Harvard University who co-authored the paper. He said the company has created “a culture of obedience” in which customers are beholden to its software ecosystem and constantly discouraged, technically and financially, from using promising products made by outsiders.

Epic “is not going to suddenly evolve its infrastructure” to allow for more open data sharing and innovation, Celi said. “It’s not going to suddenly open the gates.”

Industry insiders have speculated that such an intervention may come in the form of a federal antitrust inquiry. Though the examination is still developing, one of the four people who affirmed to STAT that the FTC is probing Epic’s practices said the government appears to be pursuing two separate lines of inquiry. One is focused on Epic’s agreements that bar its employees from working for companies that directly or indirectly compete with it. Another set of questions focuses on Epic’s use of its dominant market position to block rival third-party companies from getting access to patient data and information necessary to support their businesses.

Civil lawsuits filed over the past two years have raised each of those issues.

A lawsuit from CureIS Healthcare alleges that Epic began blocking its access to data held within customers’ own instances of Epic, part of a playbook it says the company uses to undercut third-party software vendors. 

A related argument underlies Particle Health’s antitrust suit against Epic. Particle alleges that Epic used a pretext — in which Particle customers inappropriately accessed medical records held by Epic — to cut off its customers’ access to patient records and coerce or scare at least 10 customers into dropping Particle as a vendor. Some claims in that lawsuit have already been dismissed.

Epic is also facing labor lawsuits regarding its unusually restrictive non-competes and stock purchase agreements. A case filed by the clinical trial management software company Veeva Systems was dismissed this spring, but another one filed by a former Epic employee, Andrea Hull, is still pending in California.

Epic, which is defending the lawsuits, declined to comment.

As federal and state agencies scrutinize allegations of anticompetitive behavior by the companies and the civil cases wend their way through the courts, some of Epic’s business practices are being thrown into relief.

In some of the lawsuits, plaintiffs are seeking depositions from Epic employees who were allegedly involved in affairs at issue and asking for their documents and experiences. Epic’s former head of strategic partnerships and procurement oversight, Katie O’Brien, whom Particle describes in its request for her testimony as “Ms. Faulkner’s right-hand person,” left last April. She had been at the company on and off since 2000. Particle’s documents also name Dave Fuhrmann, a senior vice president who headed interoperability efforts at Epic. He began decreasing his hours at Epic over a year ago. He had helped develop Care Everywhere since its inception in the mid-’00s.

CureIS’ court documents request Rana on grounds that he knows about an alleged “Epic-first” policy the company implemented with its customers, among other subjects. And a lawsuit from Texas state attorney general Ken Paxton, who is suing Epic on both labor and antitrust grounds, lists Rana and several other Epic executives in its witness list.

All of the above lawsuits ask for Faulkner’s testimony.

Tug-of-war over AI strategy

In the month leading up to this week’s gathering in Wisconsin, the departures have accelerated. Rana, Epic president and successor to the company’s CEO, announced his departure in early July, citing his father’s death. Rana had been at Epic for over 27 years, writing the first lines of code for MyChart as a 21-year-old in his first job out of college. He oversaw teams across the company, including inpatient, clinical, implementation, and eventually all of R&D.

The announcement that Rana was leaving was quickly followed by news that Hain, a 21-year veteran of the company who served as senior VP of research and development, was leaving. He became the face of the company’s AI efforts and worked closely with many of its largest customers and technical partners. Fuhrmann also finally left the company after a period of winding down hours at Epic.

Three sources close to Epic executives told STAT that disagreements over AI strategy — whether to build or to partner — became the subject of an intense debate within the company, with Hain and Rana’s push to lean fully into partnerships with outsiders like Microsoft on the losing end.

“There’s a big battle going on intellectually, internally, on how much AI they’re going to do, where they’re going to invest in it, as well as a big debate on how open they should be to outside vendors,” said a former Epic employee. “Sumit, Seth, Dave [Fuhrmann] are more about, ‘Let’s get open. Let’s interact with more third parties in a more positive way.’ And Judy’s reaction to all this AI and change in tech has been to go the opposite direction — be restrictive, push people away.”

An Epic spokesperson, in a background conversation, told STAT that there is no such difference of opinion between Epic and executives leaving the company, and declined to answer further questions on the record.

Faulkner projected a united front in an email sent to company staff a few days after Rana’s announcement, saying the company has “an outstanding group of seasoned people” that all contribute to its success. But that hasn’t put a stop to the speculation about where Rana, Hain, and others will pop up next, or how Epic will maintain its dominance at a time of technological upheaval.

In a note posted online on Friday, Hain’s last day at the company, he thanked his colleagues, industry partners, and customers, and said, “The future holds plenty of intrigue.”

Rana will stay on as an adviser to the board, said an Epic spokesperson.

Rana’s technical background set him up well for a future as Epic’s CEO. Faulkner’s succession plan requires that Epic’s next leader not only be a longtime employee, but also a software developer. Even though Epic heavily favors a homegrown approach to its own technology, Rana and Hain had in recent years become champions of Epic’s work with Microsoft.

At the 2023 Epic annual meeting, Microsoft and Epic announced an expanded partnership focused on AI, and Rana interviewed Microsoft CEO Satya Nadella onstage. Hain appeared at Microsoft’s Ignite opening keynote last year, delivering a spiel about how central Microsoft was to Epic’s AI rollout — both its Azure environment and its DAX Copilot tool, which Epic was using to prepare doctors’ ambient AI notes.

Though Hain has talked extensively about Epic’s ambitious new foundation model, Curiosity — previously known as CoMET — for predicting patients’ next medical event, that model is built on the database of de-identified patient records the company has amassed from its health system customers who opt in to sharing the information. It is not a language model, and the generative AI features that Hain’s department has built for Epic’s doctors and patients — such as its in-basket message-drafting AI tool, chart summarization tool, patient portal bot Emmie, and its AI scribe meant to rival those from Abridge and Microsoft itself — are built on Microsoft and OpenAI models.

All eyes on Verona

On Tuesday, Faulkner will take the Deep Space stage in Verona to address an audience teeming with questions. The cavernous auditorium normally hosts monthly “work church” gatherings for employees to instill shared values and unity. Now it will be filled with a global audience of hospital leaders wanting to know how Faulkner will keep the company from coming apart.

Will Epic announce a course correction on its AI strategy? Will Faulkner discuss or entirely ignore the loss of top technical leaders and the attention from state and federal investigators?

As questions swirl about the company’s leadership and AI strategy, industry insiders will also be watching for who joins Faulkner onstage. Rana has previously received his own segment of the annual address, right after Faulkner exits, while others like Hain, chief medical officer Jackie Gerhart, R&D vice president Garrett Adams, and others last year were relegated to the second half of the presentation.

Rana last year told STAT that Epic uses an exercise in which people are asked to name three people who could replace them. Though he said the list is largely intended to be a mentorship activity, Faulkner may have utilized Rana’s list — she promoted Seth Howard, Adams, Mark Lipsky, and Erv Walter to take on Rana’s responsibilities. Howard, Epic insiders told STAT, is generally considered next in line for the CEO position behind Rana.

A former Epic employee said that people shouldn’t “shrug off” the exits of Hain, Rana, Fuhrmann, and others as just personal decisions or due to their stock maturing.

“This exodus removes a critical mass of successors whose deep system and industry knowledge, vision, and leadership held people and direction together,” the former employee said. “They were capable of the creative disruption Epic needs to evolve.”

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