In light of new federal policies allowing hospitals to subsidize the cost of information systems for physicians, we examine the relationship between local hospital investments in information technology (IT) and physician EMR adoption. Data from two Florida surveys were combined with secondary data from the State of Florida and the Area Resource File (ARF). Hierarchal logistic regression was used to examine the effect of hospital adoption of clinical information systems on physician adoption of EMR systems after controlling for confounders. In multivariate analysis, each additional clinical IT application adopted by a local hospital was associated with an 8% increase in the odds of EMR adoption by physicians practicing in that county. Given this existing relationship between hospital IT capabilities and physician adoption patterns, federal policies designed to encourage this more directly will positively promote the proliferation of EMR systems. © 2008 Springer Science+Business Media, LLC.