At Kokomo Family Care, a clinic in Kokomo, Ind., many doctors no longer reach for a pen to write prescriptions or notes. Instead, they use a computer and software from McKesson HBOC, which have started to siphon away the sea of paperwork the small practice has been drowning in. Not only is there less chance of medication foulups or misplaced records, but the clinic has dropped nine employees whose sole job was taking care of paper--instead of patients.

On the West Coast, at San Diego-based Scripps Health, a new IDX system helps give doctors remote access to comprehensive digital records, CT...