Health tech startups grapple with EHRs' embrace of AI

Incumbent electronic health records players are facing off against Silicon Valley startups in the health care AI arms race.

Zoom in: Health systems prefer to buy from platforms they already use, so the central tension is between legacy's footprint and startups' nimbleness.

• "The behemoths are too big to fail in health care, and yet they almost always do," UCSF Department of Medicine chair Bob Wachter said during a book talk today.

Driving the news: Epic today released AI Charting, a built-in feature that listens during patient visits, drafts the clinician's note and queues up orders.

• "It has never been easier for a health system who has data science and data engineering in-house to essentially build the AI tools themselves," Nebraska Medicine chief transformation and digital officer Michael Hasselberg says, adding that many health systems are trimming their third-party vendors.

What's next: General Catalyst is positioning its $6 billion portfolio company Commure as a major EHR vendor, with a product called Athelas Air.

• Commure has a partnership with HCA, a system that historically used Meditech as its EHR.
• Commure has raised less than $1 billion to date and has made more than 10 acquisitions spanning medical scribing, patient navigation, and data and diagnostics, per president Dan Warner.

The intrigue: While Epic goes all-in on AI tools, TD Cowen analysts wrote this week that Oracle, which acquired Cerner for $28.3 billion in 2022, may sell the EHR vendor to pay for AI data center investments.

• An industry consultant says Cerner could be a target for Thoma Bravo-backed NextGen Healthcare, or even Matt Holt's anticipated health tech venture Thoreau.

Reality check: Startups can maintain moats in areas like revenue cycle and prior authorization, where there is easily definable and sustainable ROI, says LRVHealth managing partner Keith Figlioli.

Editor's note: This story has been updated with comments from Commure president Dan Werner..