Fairfax Hospital is thriving at a time when many local hospitals are struggling to adapt to an increasingly competitive health care market.

While hospital use is declining locally and nationally as patients turn to alternative forms of care such as outpatient surgery, outpatient therapies, hospices and home care, the Northern Virginia hospital has held its own.

Fairfax Hospital had an 86 percent occupancy rate in the first 10 months of 1984, the rate that has prevailed since 1982 and that hospital officials say they prefer to the 88 percent rate of 1981.

"We're just about as full as we can be," said Thomas Young, administrator of the Falls Church hospital, where robotic trolleys wheel down the corridors, carrying food to nursing stations and dirty laundry to be cleaned. The trolleys are just one indication of the innovative management techniques the hospital has used to stay ahead.

Local hospitals are cooperating with a coalition designed to hold down health costs, but despite those efforts, some fear a shakeout that would favor the most cost-efficient health care providers.

D.C. hospitals appear to be particularly at risk because some have higher labor costs than suburban facilities, serve a large indigent population and operate costly teaching programs.

Fairfax Hospital, by contrast, is in a strong competitive position because of its location and because of management efforts to hold down costs, Young said.

Fairfax Hospital, the largest in Northern Virginia, serves a large, growing, affluent and well-insured population. Although owned by a not-for-profit organization, the Fairfax Hospital Association, the facility made a profit of $12.6 million on total billing of $140 million last year. Of the $140 million total, $18.2 million in uncompensated care was provided. The hospital is also a teaching facility affiliated with institutions including Georgetown, George Washington and Virginia universities.

The hospital's average costs per patient, per day, range from $500 to $550, somewhat higher than the $501 area average, Young said. However, the costs per patient stay are closer to the average because patients stays are shorter than average, he said. "Our efficiency shows in the total bill," Young said.

Hospital management and physicians started developing ways to shorten hospital stays and provide alternative forms of care in the 1960s, when the needs of a fast-growing community put pressure on the facility's limited resources, Young said.

The hospital opened in 1961 with 300 beds, and developed one of the nation's first aggressive outpatient surgery programs to cope with the pressure on resources, Young said. Today, nearly 45 percent of all surgical procedures performed at the hospital are done on an outpatient basis.

Hospital capacity more than doubled to 656 beds in 1981, but the growing population kept up the pressure. "Necessity is really the mother of invention," Young said.

The hospital also developed an outpatient intravenous therapy program to deliver continuous medication through a patient's veins at home or at work, reducing unnecessary hospital use and costs.

The Fairfax Hospital Association CompHealth subsidiary operates an extensive home care program that allows patients to leave the hospital sooner, go home and be visited regularly by a therapist or nurse.

"We use fewer resources for a given condition," Young said, giving much of the credit to the "openness of the medical community to new ideas." The medical staff also has grown rapidly, and includes many "younger people exposed to an active teaching program" practicing medicine "without layers of tradition," he said.

Changes in insurance payment programs also have exerted "considerable pressure" to reduce hospital use, Young said. The federal government's new Medicare and Medicaid program limits payment by basing reimbursement on prospective average costs rather than on services rendered. More businesses are increasing their employes' share of hospital costs, making patients more cost conscious, Young said.

The hospital holds down its own costs through labor saving devices such as the robotic trolleys, through constant review of nursing assignments to maximize efficiency and through automated clinical information systems that monitor the costs of different treatments on an ongoing basis, according to hospital officials.

"We are a very efficient hospital by comparison," Young said. "We welcome the changes. Change is needed because, clearly, the cost of health care is becoming ruinous to the overall economy.

"It's like deregulation in banking or the airline industry. It's going to be good for all of us, but painful to some people."