ABSTRACT
This chapter analyzes the productivity of information technology (IT) in the healthcare industry in the face of regulation and organizational choices. It describes parametric and nonparametric techniques to investigate the productivity question of IT and other hospital inputs. The results from the stochastic production approach showed that firms vary greatly in the efficiency of production processes and resource allocations and that this variation does indeed lead to differences in results in ex ante productivity calculations. Overall, the production function approach resulted in the evidence of positive contribution of IT to the production of healthcare services. The issue of the quality of capital which is particularly relevant to IT is resolved to show that quality adjustments to investment can cause dramatic differences in productivity results. The chapter also presents some closing thoughts on the key concepts discussed in the preceding chapters of this book.
