The third step is to assess IT impacts on hospital efficiency using regression analysis in conjunction with DEA technique to explain the effect of IT investment as an influencing factor on the variation of the DEA efficiency scores. This approach, called a two-stage procedure, involves measuring the DEA scores in the first stage and regressing such scores against the influencing factor in the second stage. The influencing factor in the regression analysis is the factor that can affect the way hospitals transform traditional inputs to outputs but is neither completely controlled by hospital management nor a critical input needed for hospital production like physicians and nurses (Fried, Schmidt, & Yaisawang, 1995). In addition to IT investment, other factors can be reimbursement policy and ownership, for example.