A substantial portion of capital expenses borne by organizations is expense related to information technology (IT). Faced with skepticism that IT adds business value to the industry, researchers are attempting to find ways to measure and gauge the impact of these investments on business (e.g., Brynjolofsson and Hitt 1996). However, research to date has not yielded unequivocal results. While some researchers have shown that there is a positive contribution of IT to business (Barua and Lee 1996), still others have shown a negative contribution of IT (Loveman 1994). Given the tremendous economic and political interest in healthcare costs (Fuchs 1996), the increasing rate of IT expenditure by hospitals (Henderson and Thomas 1992) and the continuing debate on the conflicting results from IT productivity studies, there is a need for developing a way to measure and analyze the productivity contribution of IT and to apply it to the healthcare industry.