Upbeat news: In 2005, health care providers will bask in a spate of salubrious financial weather.

Downbeat news: Salubrious is a relative term. The sunshine is spotty. Slippery patches of ice lurk in the shadows and ominous clouds billow on the horizon.

Start with the positives.

Sunny spots

Medicare, which accounts for about $4 of every $10 in revenue collected by 4,800 U.S. hospitals and 875,000 physician practices, will augment total reimbursements to doctors by 4 percent this year.

That means an additional $2.2 billion to divvy up. Hospitals will share an extra 6.6 percent for outpatient care, or some $1.5 billion.

The increase for physician services works out to a 1.5 percent payment boost across the board. The Balanced Budget Act (BBA) of 1997 had called for a 3.3-percent cut, but Congress intervened. Hospitals meanwhile will get a 3.3 percent inflation update for outpatient services.

Inpatient care at urban hospitals is slated for reimbursement at a 4.7 percent higher rate in fiscal 2005; rural hospitals will see an average increase of 6 percent. Total Medicare payments to approximately 3,900 acute care facilities are projected to be $105 billion, up from a projected $100 billion in fiscal 2004.

Doctors and hospitals will also have a new source of Medicare revenue: “Welcome to Medicare” physical examinations for incoming beneficiaries. Hospitals can collect $78 for each outpatient exam from the government and, along with doctors, can bill for a more extensive visit and follow-up treatments if indicated.

A new emphasis on preventive care for Medicare patients will cover blood glucose and cholesterol tests for those at risk of diabetes or heart disease. The Center for Medicare and Medicaid Services (CMS) will also reimburse physicians 106 percent of the price they pay for drugs they administer in their offices.

Non-profit hospitals and health systems in general are as flush as they’ve been in years. Those with the highest credit ratings, from AA+ to A-, averaged almost 4 percent profitability, according to Standard & Poor’s managing director Martin Arrick. That’s the best performance since 1997.