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The U.S. hospital industry's agreement to provide $155 billion of savings on health care over 10 years may carry near-term risks but could benefit the sector in the longer term.

Hospital groups, which negotiated with the Senate Finance Committee, agreed to reduced Medicare and Medicaid payments while apparently receiving promises about the proposed federal overhaul to the health-care system that made the pill easier to swallow.

While $155 billion in cuts over a decade may spell dire trouble for many struggling hospitals - particularly trauma centers and smaller standalone facilities - analysts expect the deal could bring positive results for the industry, notably the addition of millions of paying patients.

"In the short run it makes me nervous. I am concerned there will be cuts (to hospitals) before (they benefit from expanded) coverage. In the long run I think it's probably a pretty good deal," said CRT Capital Group health-care stock and bond analyst Sheryl Skolnick.

The deal is certainly better than the estimated $220 billion in hospital cuts the Obama administration earlier proposed, she said.

Hospital stocks rose Tuesday on reports of a deal but retreated a bit Wednesday, except for urban hospital operator Tenet Healthcare Corp. (THC), whose shares rose 7.3% to $3.07. Shares were up more than 15% over the past two days.

U.S. Vice President Joe Biden announced the agreement Wednesday, calling it a step toward achieving deficit-neutral health-care overhaul legislation. That change aims to expand health coverage to more than 45 million uninsured Americans, a goal that should benefit hospitals, which for years have cared for high numbers of nonpaying patients.

However, the deal remains tricky to analyze because many specifics have yet to be revealed.

Skolnick said it appears that hospitals agreed to the deal if $40 billion to $50 billion in payments they receive for caring for the poor are phased out over time, as more Americans become insured. She warned, however, that another big chunk of the cuts might occur before hospitals benefit from expanded health coverage.

The industry notably appeared to win assurances that should there be a public health plan option of some sort, payments to hospitals under such a plan would be higher than Medicare rates, she said.

Much of the savings are expected to come from reductions in the inflation-related increases hospitals receive each year for treating Medicare patients, and other funding cuts. Historically, those increases have been in the 3% range, and some analysts believe they'll now be closer to 1%. Skolnick said if these yearly rate changes actually cut total hospital Medicare reimbursements rather than reduce the increase in payments, hospitals would take a bigger hit.

A.J. Rice, Soleil Securities health-care services analyst, said he believes there's a general sense that the agreement "will be positive on the market for hospitals," that with this amount of cuts and the addition of newly insured patients, they will come out ahead.

As for Tenet's stock spike, Rice speculated that investors may believe that in the long term, the health overhaul will benefit urban hospitals by mitigating the economy-related volatility in uninsured patients.

Skolnick does expect Tenet to become more profitabile once significantly more Americans are insured, although she sees another possible factor at work in the stock price.

A national health-care overhaul, she speculated, should set the stage for industry bellwether HCA Inc. to become public again and pay down its debt through an initial public offering. Should that happen, debt-burdened Tenet and other publicly traded hospital companies should be able to recapitalize as well through follow-on offerings, she said.

-By Dinah Wisenberg Brin, Dow Jones Newswires, 215-656-8285; dinah.brin@dowjones.com