It's been a tough summer for Jerry Northam, the vice president for finance at Washington Adventist Hospital in Takoma Park. For much of July and August, Northam has been answering calls from worried brokers and investors wondering what would happen to the value of the hospital's $30 million in tax-free bonds if the hospital were to be closed or merged with another hospital.

The telephone lines began burning July 17 when Maryland officials released a consultant's study of hospital facilities in the state. The study suggested that, to cut spiraling costs, thousands of beds would have to be eliminated and as many as 14 hospitals and medical facilities might have to be closed or merged.

Hospital administrators, union leaders and politicians were the first to be heard from, turning the air purple with words like "surprise," "dismay," "travesty" and "devastating." The storm of questions from brokers and investors quickly followed.

"We had just a horrendous time with brokers from all over the country," Northam said. On one day, he recalled, he talked with 12 brokers, trying to assure them that the hospital was not likely to close, its occupancy rate was above average and its finances were in good shape.

Even in the unlikely event that the hospital were to close, Northam said, its bond holders would not have to worry. An promise to pay them off at the bonds' face value would be built into any closing agreement, he said. However, he did not know whether bond holders who paid a premium for their bonds -- a price above the face value -- would get that premium back.

Northam spent days trying to reassure investors that the sky was not falling. Among the worried callers was one area resident who holds about $1 million of Washington Adventist bonds. Several investors holding bonds quoted at 109 ($1,090), Northam said, offered to sell them back at face value ($1,000) just to unload them.

For every broker or investor who was willing to be reassured, there were others who simply followed their instincts and moved out of the way of bad news. Trading in the Washington Adventist Hospital bonds, normally thin, picked up and prices slid several points.

The uncertainty spilled over to the tax-free bonds of Leland Memorial Hospital in Riverdale and Shady Grove Adventist Hospital in Gaithersburg. All three hospitals are members of the Adventist Health System, affiliated with the Seventh Day Adventists.

Broker Marilyn Lowen at Laidlaw Adams & Peck in Rockville sent clients a note about the hospital study, saying, "While politics will probably determine the outcome of which hospitals, if any, are closed, we feel the best defense is to liquidate our positions in these bonds and move laterally into more stable issues." She enclosed an advisory from Laidlaw's bond experts in New York saying, "Our customers literally have nothing to lose . . . and everything to gain by selling out of these issues now while prices are still reasonable."

Lowen said that while she moved a number of Laidlaw clients into other bonds, some investors, especially those holding 11.5 percent bonds, said they liked the yield enough to hang on.

Other brokers saw the falling prices and improved yields as a buying opportunity. Because interest rates and prices move in opposite directions, an 8.75 percent bond that originally cost $1,000, offers a current purchaser a yield of 9.94 percent when its price drops to 88 ($880) and a yield of 10.42 percent when its price falls again to 84 ($840).

Because of the ephemeral nature of the municipal bond market, including the wide variation in bid prices and the lack of readily available price histories, it is difficult to nail down the precise buying and selling patterns of the hospital bonds during the past six weeeks.

For instance, a bid price on Washington Adventist Hospital's "9s of 99," (a 9 percent bond due in 1999) was quoted at 86 ($860) early last week and at 92 ($920) late in the week. At 92, the bond would be back to its price of early July -- before the panic.

Indeed, it now appears that the bid prices on most of the Washington Adventist bonds are almost back to where they were in early July. The Leland and Shady Grove bonds still appear to be off slightly.

Whatever the prices, the churning climate has left Jerry Northam angry. "Confidence has really been shaken in Maryland hospitals," he declared. "Hospitals that were once fairly sound investments suddenly turn out to be on a hit list."

At this point, confidence in the hospital bonds is not likely to be restored until Maryland officials decide what, if anything, they are going to do about the problems that face their hospitals.

In the fun-and-games department, it's been mostly games and very little fun until recently at Monarch Avalon in Baltimore, a 26-year-old company that manufactures board games. Athough they have two stock market games in their 400-game portfolio, Monarch Avalon's own stock hasn't been ringing any bells until recently. Monarch Avalon ended 1984 with its shares selling at $3.25, down 53.6 percent for the year, and with 12-month earnings that were down by 84.8 percent. Now, eight months later, Monarch Avalon is selling for $18.25, up 461.5 percent for the year, although its 12-month earnings are still down by 55.6 percent.

Why the sudden rise in the stock price? In a word, sex -- in the form of a Dr. Ruth Westheimer game. They call it "Dr. Ruth's Game of Good Sex." Due out shortly, it will retail for $24.95. Says Monarch Avalon's president, Eric Dott, "I've never seen orders come in like this." News of the game broke in June, sending the stock from $3.25 price to $6. Since then, speculators have sent the stock soaring. It rose $7.25 just last week.

One of the early investors in the stock was Wachtel & Co., of Washington, which paid less than $2 a share for its original purchases and sold out recently at prices of $6.50 to $18.

Netword, the tiny Maryland company that has built up a nice little business delivering electronic mail via the U.S. Postal Service's E-COM System, has spent the last year dreading the day when the E-COM System would close. That day comes tomorrow, if the Postal Service's plans to shut down the service proceed as scheduled. Netword has offered to purchase some of the Postal Service's hardware and software as part of an effort to provide a similar service on a modified basis.

Half of the customers and brokers have been on vacation, but August turned out to be a big month for some Washington-area brokerage houses. Why all the action? One reason, managers say, is that investors continue to realize that their money-market funds, which once paid 14 percent interest, have dropped off to about 7 percent. So they go searching for higher returns and much of their money goes into funds based on government securities that pay 11 or 12 percent interest. While the yields are better, purchasers may not realize that the value of their investments can fluctuate. If an investor tries to sell his shares in the fund after interest rates rise, he may lose part of his principal.