Digital Health, Clinical AI and the Trade War

 From: Will Falk  

To: Canadian Healthcare Observers  

Date: October 16, 2026  

Re:Digital Health, Clinical AI and the Trade War

The reality of digital healthcare in Canada has long been that three largest hospital EMR vendors have almost no Canadian presence. 

Epic and MEDITECH have zero Canadian employees, and the Cerner part of Oracle only a handful, even as we spend more than $1 billion on these systems every year. In 2026, living on the shores of Lake America, are we still okay with this? 

Meanwhile, physician EMRs belong to Canadian healthcare giants and represent a $300 to $450 million market, headquartered in Toronto, Kelowna and Vancouver inside larger healthcare companies. 

The hospital EMR market is three to five times that size. My bottom-up estimate for total costs – licences, hosting, implementation – is $1.5 billion to $2.2 billion a year. Ontario’s Auditor General found that province alone spent an average of more than $500 million annually over 13 years. 

That figure is rising: Newfoundland’s Epic install, several new Ontario sites, and Quebec’s Epic program – contracted at $1.5 billion – ramping to $3 billion or more. 

The employee counts. Epic: no Canadian office and no Canadian entity. MEDITECH, in Canada since 1981 lists a 781 number and names three Canada-dedicated staff in Massachusetts. Oracle does have thousands of people in Canada, but that’s Oracle, not Cerner. On the public evidence, none of the three maintains more than a token Canadian presence for their EMRs. 

This is not normal, and it’s not okay.

In a year when every cabinet table is arguing about US trade in services, one of our largest health-IT expenditures has no entry on the ledger.  

Co-pilots are prying this open. On September 1, OpenAI announced that ChatGPT for Healthcare can now connect directly to Epic patient records through the hospital’s own FHIR interface. 

Microsoft expanded Dragon Copilot into a full clinical assistant this year. Canadian scribes Tali and WELL’s Nexus AI, and Heidi from Australia, all have similar products in market. With every announcement like this it becomes clearer that the system of work is separating from the system of record. Clinical copilots are a welcome development that allows for increased Canadian competition in these hospital systems. 

Ottawa has the power levers. On September 3 the Prime Minister created Digital Transformation Canada with an explicit mandate to use federal purchasing power to help Canadian tech and AI firms scale and to strengthen digital sovereignty. That is close to what the Munk School’s Sovereign by Design report requested in March: One body with the authority to buy, build and invest. 

That report places health records in its second-highest sensitivity tier, recommends “juridical sovereignty” as the minimum for the provinces that hold them, and warns that Buy Canadian’s definition of a Canadian supplier still lets a firm qualify with “a Canadian mailbox and non-Canadian personnel.” 

A phone number and no address is that loophole, exactly. We should prefer Canadian-owned and -operated infrastructure with a legal air gap from the US CLOUD Act. 

Legislation before Parliament (S-5) will give Health Canada new regulatory levers to fill in this moat.  

The obvious objection. Push the record vendors and Washington pushes back – and the Canadian health-tech firms we are trying to help are the ones who get hurt, because they need access to a US market 10 times the size of ours.  

Both points are fair. But we already run this experiment everywhere else in healthcare. No drug or device maker sells into Canada without a licensed Canadian establishment answerable to Health Canada. 

We require that of the company selling the pacemaker. We require nothing of the company holding the record of the patient it was implanted in. 

Premiers and hospital executives can help stop these practices and repatriate much of the spend: 

• Make a Canadian office a procurement requirement, not a preference, and tie it to the next competition rather than ask for it in existing contracts. 
• Score Canadian employment and Canadian hosting in every procurement; data residency is not data sovereignty when the provider answers to a foreign court. Score down AI training data leaving the country. 
• Break the oligopoly apart at the AI co-pilot layer, where switching costs are low and the incumbents’ advantage is smallest. 
• Contract for open, non-exclusive APIs, and refuse AI bundles that hand the record vendor the work layer by default. Do not allow contract extensions into AI without a fresh competition. 
• Sign shorter contracts. 
• Be careful about US-only solutions. Favour companies, even US companies, that have a more global footprint and posture. 

On August 30, following a presidential decree, Google Maps renamed Lake Ontario “Lake America” for American users; within a day Ontario agencies and, reportedly, Elections Canada were showing it on their own sites. 

If a dependency buried in a US platform can push a politically driven change onto Canadian public websites overnight, we should at least know which dependencies we are accepting in clinical infrastructure. 

Are we really okay with most of our hospital data being in these hands?

Will Falk is a retired management consulting partner and Senior Fellow at the C.D. Howe Institute.  

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The views expressed here are those of the author. The C.D. Howe Institute does not take corporate positions on policy matters.  

 A version of this Memo first appeared in Canadian Healthcare Technology magazine.