ABSTRACT
The hospitals established in the United States were charitable institutions that cared for poverty-stricken, acutely ill patients. The healthcare industry was relatively slow in adopting information technology. Because of the emphasis on revenue maximization prior to 1983, patient billing systems were among the early uses of information technology. The healthcare industry is a regulated industry and regulation plays an important role in determining both the capital investments undertaken and the efficiency of hospitals. The production function consists of output on the left-hand side and the quantities of input on the right-hand side. Regulation such as licensure aim at curbing or eliminating demand-side inefficiencies whereas regulation such as Certificate of Need and rate regulation are aimed at supply-side inefficiencies.
