Since the first quarter of 2004, the number of deals has increased by almost half. Still, most health IT merger and acquisition transactions remain relatively small.

In the first quarter of this year, there were 22 merger and acquisition deals for health care information technology companies. That number is an increase of 69 percent over the previous quarter and 47 percent over the same quarter one year ago, according to a recent report from health care market research firm Irving Levin Associates.

The total value of the announced deals was $624 million, with only 13 of the 22 announcements releasing the amount of the deal value. The average deal size was about $48 million, with the median at around $11 million.

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"A lot of them aren't huge deals; people don't have expectations to make millions of bucks overnight," said the report editor, Sanford Steever. The most popular type of deals was with medical record companies because they provide a tangible service, Steever said.

Health care services company WebMD Corp. and women's content network iVillage Inc. each snapped up a health IT company to expand the content and tools the companies offer.

In March, WebMD announced its deal to acquire HealthShare Technology, a company offering Web-based hospital-quality comparison tools, for $36 million in cash and milestone payments. HealthShare works with seven of the top 10 health plans, helping plan members make informed hospital decisions. It brings 85 million members to WebMD, which already serves 20 million consumers and health care professionals through its portal.

iVillage said it is acquiring Healthology, a producer and distributor of physician-generated health and medical information on the Internet. The $17 million deal was announced in January. Healthology was already a content supplier for iVillage health sites.

The largest deal of the quarter, by far, was the merger of Merge Technologies Inc., a health care software and services company, and Cedara Software Corp., a developer of medical software technologies. The deal, announced in January, was a $393 million all-stock transaction.

Upon completion of the deal, the company will offer comprehensive image and information management solutions to manage clinical and business workflow. The combined company will have an annual revenue exceeding $100 million.

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