This study empirically examines the association between hospital inefficiency and the decision to introduce electronic medical records (EMR) and computerized physician order entry (CPOE) in a national sample of U.S. general hospitals in urban areas in 2006. The main research question is whether the presence of hospital cost inefficiency or other factors driving inefficiency in the production process of a hospital explain low adoption rates of health information technology (HIT) in a hospital setting. We estimated a logistic regression of HIT adoption as a function of hospital cost inefficiency scores obtained using a stochastic frontier analysis. The results demonstrate that hospitals with a greater degree of cost inefficiency were more likely to introduce EMR, suggesting that the benefits of EMR implementation in terms of improved efficiency were likely to outweigh the costs of adoption compared to hospitals that are more efficient. The results showed no association between cost inefficiency and the CPOE adoption decision.