Daou Systems, an Exton, Pa.-based healthcare IT consultant, has entered into a definitive agreement to be acquired by Proxicom, Inc. in a deal estimated to be worth about $21.6 million.

According to a spokeswoman, Daou will remain a separate company but a wholly owned subsidiary of Proxicom when the deal is concluded in the fourth quarter of 2005, assuming approval by Daou shareholders.

"Essentially, Daou will become the healthcare vertical for Proxicom," she said.

Proxicom is an Internet consulting firm with a substantial footprint in the automotive market. The Reston, Va.-based company has built Web systems for companies such as Mazda North American, GMAC and Toyota Motor Sales. It is a portfolio company of Gores Technology Group, a private investment firm headquartered in Los Angeles.

"It's good news for our stockholders, employees, customers and business partners," said Vincent Roach, Daou's CEO in a statement released Thursday morning. "The acquisition will allow us to stabilize our core businesses and improve their growth rates and operational profitability."

Certainly the timing of the deal was influenced in no small part by the changing healthcare IT marketplace. On April 21, Capgemini sold its North American healthcare consulting business to IT giant Accenture for $175 million. Just six days later, on April 27, IBM announced plans to acquire Houston-based healthcare IT consulting firm Healthlink in a multimillion dollar deal. Official have refused to disclose the terms of that deal, but with Healthlink boasting 630 employees and 2003 revenues in excess of $50 million, it was likely to be closer in size to the Accenture-Capgemini deal than to the Daou-Proxicom plan.

Daou has 130 employees, about a quarter of whom work in Exton. Its clients include payers, providers and government agencies. The acquisition is further proof that the healthcare IT market remains bullish in the eyes of technology companies.

Growth by acquisition also suggests that the expertise of long-time players such as Daou, Healthlink and Capgemini can't be easily replicated through a build strategy.

Commenting on the IBM acquisition, analyst Mark Bard of Manhattan Research noted, ""Unlike other industry verticals, the insight required to understand the integration of technology, processes and workflows unique to healthcare can be the difference between success and failure in the market."

"There's no question that the clinical automation train has left the station," said Vi Shaffer, research director with analyst firm Gartner. Shaffer said many consulting firms are eyeing the healthcare IT space. However, she warned that it's not an easy market to enter.

"There is no argument that there is major new investment going on in healthcare IT," Shaffer said. "The caution is that clinical transformation is really, really hard."

According to the Daou spokeswoman, CEO Roach is reviewing his retirement options. It's expected that Proxicom President and CEO Paul Cooley will serve as Daou's new CEO. Plans for Daou's existing workforce have not been completed, but it appears likely that most of the company's middle management will remain in their present positions.

In other business news:

• Dictaphone announced that its transcription service tool experienced substantial growth in the first half of 2005. The iChart Managed Services uses an ASP model to combine Dictaphone's speech recognition technology with a network of outsourced transcription service providers. Adventist Health System, Sarasota Memorial Hospital and Guthrie Clinic signed contracts in the first half of 2005 to use iChart Managed Services.

• Healthcare IT software vendor MEDecision announced a 14,000-square-foot expansion of its U.S headquarters. This space increase marks the second expansion the company has made within a year.

• Unify Corp., a business process software provider, announced a partnership with laboratory information system software and services company Fletcher-Flora Health Care Systems. The partnership will enable Fletcher-Flora to offer the Unify Relational Database with its new web-based Encalaber lab information system on a monthly subscription basis and allow them to expand into the mid-size and large hospital marketplace.