Anyone that has turned on a television in the past week knows that global political conditions are creating new waves of fear over potential economic catastrophe. The crisis in Libya, protests in Iraq, and even hints of unrest in Saudi Arabia have set off a sharp spike in oil prices in the United States, with concerns growing to a point that some politicians have even proposed tapping the strategic oil reserve. During a nascent economic recovery, oil price shocks are certainly not a good thing and investors are clearly beginning to get a bit antsy.

I suppose no one told the folks buying EPOC, a.k.a. Epocrates. According to a report from investment firm Ernst & Young, IPO’s have surged in the first quarter of 2011 with 26 offerings raising nearly $10 billion dollars. Included in that report as one of the top-performing IPO’s of this year is Epocrates, which went public on February 1st. As of March 7th, shares were up 49% from their initial offering price of $16. That equates to a value of $563 million.

While that’s certainly exciting news for Epocrates, its investors, and mHealth enthusiasts in general, there are plenty of skeptics out there – and they may have a point.

As we discussed in our initial post on the IPO, Epocrates value largely relies on one key fact – it has access to a very high value demographic. With approximately one million health care providers using Epocrates across a variety of platforms, there are naturally a lot of medical device companies, pharmaceutical companies, and others who would be willing to pay for access. However, some industry observers, Andy Obermueller in this piece, raise concerns about the excitement surrounding Epocrates.

(1) He notes with concern that Epocrates current paying subscriber base has been shrinking yearly, from 32% of all users in 2007 to 9% in early 2010. While this has been a significant revenue source, it certainly can not be relied on the future.

(2) He argues that the usability of Epocrates as a marketing channel to healthcare providers is flawed. If only 9% of users think Epocrates is “worth it” to upgrade, he wonders why they would pay attention to any marketing information that comes through this channel. Second, he argues that as soon as Epocrates tries to monetize this asset, its users will flee.

(3) He argues that Epocrates is largely doomed to becoming obsolete as EMR’s become more comprehensive and supplant Epocrates and similar apps. He makes a fair point that institutions, fearing liability issues, are likely to eventually bar providers from using many apps, particularly those supplying drug dosing information.

Some of the points are fair critiques of where Epocrates currently stands, but I think the overall position reveals a lack of practical understanding of the healthcare system for a number of reasons.