Long time health care IT analyst and now investment banker Ben Rooks provides a saucy review of all the M&A activity since the publication of Healthcare Informatics, June 100 issue.
There has been a lot of action, especially in cardiology PACS
and CVIS, where vendors have been a popular target. Matthew Holt attributes much of the activity to the following:

Essentially there’s a lot of M&A going on compared to recent years,
mostly because of the realization that the big boys are going to play
in health care IT as the gap between medical imaging and clinical
software continues to shrink.

Certainly HIT and diagnostic imaging are two of the biggest market
segements in health care - there's bound to be some cross over as
vendors work for strategic market advantage. Another category of large
player is represented by the likes of Cardinal, McKesson and Baxter.

Ben provides a great
summary in his overview, naming numbers - valuing deals in multiples of revenue and
EBITDA - and speculates on strategy and what it all means. He closes
with the following advice:

With seven companies on the Healthcare Informatics 100 list
acquired in the six months since its publication, and a few more
rumored to be on the market as this is written, the current M&A
market is one of the most robust seen in years, and I expect that to
continue through 2006. In most cases, this shouldn't raise too much
concern for customers, because bigger buyers can mean better balance
sheets and better-assured longevity for the products.

Customers should, as always, probe on support plans, migration
strategies (if applicable), and the new parent's plans for their
vendor. But I tend to take the responses with a grain of salt,
believing that “we won't change your culture” ranks with “this won't
hurt a bit” and “the check is in the mail.”

Several years ago as an equity research analyst, I introduced
the “Five Minute Rule of M&A”: If a CEO can't explain the price or
rationale for an acquisition in five minutes of focused conversation,
sell the stock. While obviously not totally applicable for system or
service buyers, the corollary applies: If a vendor can't understandably explain its reasoning, be cautious going forward.

Hospital clients frequently express a preference for single vendor
solutions, assuming that there is less inherent risk in large systems
purchased from a single vendor. This can be true if you're talking
about Meditech or Cerner.

If you're considering a vendor that has grown mostly by acquisition,
hard questions should be asked about integration and the newly realized
“single vendor solution.” If the only thing that's “single” about a
particular single vendor solution is the logo on the splash screens,

[Hat tip: The Health Care Blog]