The study found that electronic medical records systems save money by reducing redundant care, speeding patient treatment and improving safety.

"Our findings strongly suggest that it is time for the government and others who pay for health care to aggressively promote health information technology," said Richard Hillestad, a RAND senior management scientist who led the two-year study.

The study also indicated that if the efficiency of the nation's health care system increased by just 1.5 percent a year -- the same level of increased efficiency brought about in the wholesale and retail industries through the use of technology -- annual savings could be as high as $346 billion.

The Rand study said installing electronic medical records systems would cost U.S. hospitals about $98 billion and physicians about $17 billion -- an average of $7.7 billion per year over a 15-year adoption period. However, replacing paper records with electronic tools would likely more than offset those upfront costs.

Already, some medical centers are making a move to digital systems. St. Joseph's Hospital Health Center, a 430-bed facility with 6,000 employees in Syracuse, N.Y., announced today that it will move from a manual records and radiological imaging system to a digital records and storage system. The move, aimed at boosting efficiency and speed, as well as allowing expanded access to records and radiology charts, will cut its storage systems total cost of ownership in half.