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Located in the heart of Silicon Valley, Stanford Medical Center is quite literally the birthplace of many architects of the computer revolution, and it is often the hospital to which they return for major surgery. But when new patients enter the hospital, their medical information is recorded and distributed much as it was 30 years ago: on paper.

As primitive as that might sound, Stanford is actually ahead of most hospitals in adopting new information technology. It has dozens of computer systems in its more than 70 clinics, and about three years ago the hospital embarked on an ambitious program to link them in a common system. It expects that to be operational within a year.The health-care industry is "at a place where banking was 10 years ago, and the airline industry was 15 years ago, pretty much paper-based," said Gerry Shebar, associate director of information management and technology for Stanford Health Services. "There has only been an awareness in the last couple of years that the only way out of the spiral of shrinking resources was to improve information systems."

Slow to adopt new information-systems technology, health care is playing catch-up in a big way. Just as the re-engineering of corporate America's business practices created a whole new set of information needs and anointed a new set of computer- and software-industry leaders, so the broad changes under way in health care are creating a huge market for new technology.

Hospitals, of course, have long been big buyers of technology, from imaging devices to sophisticated surgical instruments. And most, like Stanford, have gone through waves of computer purchases. Many individual physicians have bought personal computers, if only to aid their staff in pursuing reimbursement from insurers and Medicare.

But these computers have been unable to communicate with each other, so any given bit of medical or financial information remained accessible to only a few individuals. And that most critical of documents, the patient record, lived on in paper form.

Previously, that didn't matter much - health-care providers simply charged fees that covered the costs of their services. But now that much of America is shifting to managed care, which pays doctors and hospitals a fixed sum for each patient and requires the care providers to perform all necessary services, it matters a lot.

Successfully managing care - by monitoring doctors' practices and referral patterns or by seeking out low-cost service providers - requires better access to information throughout the system.

"Business entities practicing managed care have to be able to manage information," said Dr. Russell Hirsch, a partner in the Mayfield Fund, a venture capital firm based in Menlo Park, Calif.

The need to manage information translates into a multibillion-dollar opportunity for vendors of information technology. Analysts say health care could be the biggest growth market for these companies in the 1990s, exceeding $20 billion in sales annually by the turn of the century.

And the scramble to get a piece of that market is already getting fierce. Leading computer companies like IBM and Hewlett-Packard Corp. have long had units devoted to health care; in the last two years they have been joined by software powers like Microsoft Corp. and Oracle Corp.

The dozens of small- and medium-sized producers of specialized health-care information sys-tems, like the Shared Medical Systems Corp., HBO & Co. and Cerner Corp., now face a flood of start-up rivals. Venture-capital firms have added partners, often with medical degrees, to screen business plans from would-be purveyors of electronic medical records.

In another measure of the exploding interest in computerization, attendance at the Healthcare Information and Management Systems Society convention quadrupled this year to 10,500 from 2,500 in 1992. The conference is also attracting superstar speakers, including Microsoft Chairman William Gates this year in San Antonio, Texas, and Gen. Colin L. Powell, next year in Atlanta.

The move to install sophisticated information systems in hospitals, medical laboratories and doctors' offices should do more than lower costs for the health-care industry and provide a business bonanza for the computer industry. It should also make life a lot easier for physicians and their patients.

People belonging to health maintenance organizations, for example, would not have to bring charts with them when visiting a specialist because the documents would be instantly accessible over a computer network. Conceivably, health-care providers across the country could eventually share such information with one another if uniform data-transmission systems are adopted.