Scoop: Particle Health lands $10 million in funding after lobbing antitrust lawsuit against medical records giant Epic

Particle Health has been embroiled in a heated battle with EHR giant Epic Systems since March.

Healthcare startup Particle Health has been battling electronic health records giant Epic Systems all year. Now, the startup just raised some extra cash to add fuel to the fire.

The startup has raised an additional $10 million from its existing investors, three sources with knowledge of the raise told B-17.

The raise comes three months after Particle Health filed an antitrust lawsuit against Epic, alleging Epic has been stifling competition in the emerging “payer platform” market.

Particle Health, founded in 2018, acts as a middleman between electronic health records systems like Epic and healthcare companies, drawing patient healthcare information from the EHR for use by providers and digital health players. It’s backed by venture firms like Menlo Ventures, Canvas Ventures, and Pruven Capital, and last raised a $25 million Series B round in 2022.

The $10 million financing, which included all of Particle’s major investors, intends to give the company additional runway for its next phase of growth, according to one person with knowledge.

The cash won’t be used for Particle’s antitrust lawsuit against Epic, because Particle itself isn’t paying for the lawsuit, per two sources. Those people didn’t share how exactly the lawsuit is being funded.

The lawsuit is the latest action in a complex, monthslong dispute between Epic and Particle.

Last year, Particle launched a payer platform to provide health plans with data aggregation capabilities for tasks like analytics and claims processing. Epic released its own payer platform in 2021.

In March, Epic filed a formal dispute with Carequality, the data interoperability network that both Epic and Particle Health use to access and exchange patient information for their payer platforms. Epic alleged that some of Particle Health’s customers were using Carequality to access patient data for non-treatment purposes, potentially violating HIPAA. The EHR company then cut off data requests from those Particle Health customers.

As part of Carequality’s review process, which reached a final resolution in October, Particle terminated its contracts with two of the customers in question and agreed to obtain written documentation from a third customer demonstrating appropriate use of Carequality’s platform. Epic also agreed to revisit its own policies for determining whether an organization is using data for treatment.

But Particle’s September lawsuit, filed in the Southern District of New York, doubles back. The suit alleges that Epic used its market dominance to hinder Particle’s business by “coercing” Particle’s customers, including both its healthcare provider customers and its payer customers, to cut ties with Particle. The lawsuit claims Epic cut off Particle customers’ access to medical records stored in Epic’s software, and told companies it would resume that access only if they stopped using Particle’s payer platform.

Those actions and others by Epic, Particle’s lawsuit claims, have led many Particle customers to drop their contracts and deter prospective customers, leading to a meaningful revenue loss for Particle.

Particle’s lawsuit hinges on Epic’s so-called monopoly as the nation’s top EHR provider. KLAS research shows Epic covers over half of all hospital beds in US acute care centers; its closest competitor, Oracle Health, covers about 24%.

In turn, Epic sent a letter to the New York court in October asking the judge to throw out the suit. The company said the lawsuit “is Particle’s attempt to distract from the public reckoning stemming from Particle’s customers violating patient privacy.”