Dan Peer and other employes at Northern Virginia Doctors Hospital are about to become guinea pigs in one of the hospital industry's most adventurous experiments in corporate finance: the creation of the nation's largest employe-owned company.

Later this summer, if all goes according to schedule, Doctors Hospital and 103 other hospitals owned by Hospital Corp. of America will be sold to a new company owned primarily by an employe stock ownership plan. Through the ESOP, Peer, some 600 fellow workers at the Arlington hospital and thousands more throughout the country will for the first time get a direct stake in the profits from their labors.

Yet Peer, a 38-year-old assistant manager of patient accounts who has worked at the hospital for nearly four years, says he is a little leery about the ESOP.

"Why are they really doing this? What are they trying to get out of this?" Peer asked. "HCA is just going to be controlling this {new company} anyway, as far as I can see."

Peers' sense of skepticism is not unique. Health economists and labor experts are asking a more pointed question: Is HCA, like some other firms that have used the ESOP tool, merely sloughing its problems off on the backs of workers and the communities they serve?

HCA officials reject the concerns and say the ESOP may well turn out to be a bonanza for employes.

While conceding there is some element of risk for workers, HCA president R. Clayton McWhorter said: "If our projections are correct, the return to the employe {through the ESOP} should be greater than what they would be getting presently."

When HCA, the world's largest for-profit hospital chain, first proposed more than a month ago selling off many of its hospitals to a new employe-owned company, Wall Street applauded wildly.

Why not? The move will allow the company to get rid of facilities that dragged down earnings, repositioning HCA for growth in an industry that has seen growth grind down after three years of private and government health care cost containment efforts.

However, as HCA is cleaning up its balance sheet, the new company will be casting off in what can best be described as precarious waters.

HCA Jr., as the new firm has been dubbed, will from the start be a far weaker company than HCA. While HCA will retain a lucrative mix of HCA's larger hospitals and the highly profitable psychiatric hospital division, the new company will be left with smaller and more rural facilities -- many in smaller communities with no other hospital.

Even though major financial institutions appear confident enough in HCA Jr.'s future to promise nearly $2 billion in loans to the ESOP, the new company will be cutting it close in meeting its long-term debt obligations, health experts say. Experts predict the new firm will have to sell off facilities, raise prices and lay off workers to cut costs. And workers will continue to have little say in the management of their facilities, even though they will become the principal shareholders in the new company, critics contend.

"I am extremely skeptical," said Jeff Fiedler, an official who tracks corporations for the AFL-CIO. "They are not ceding any meaningful participation to the employes, and it remains to be seen what they will do in the work place to finance this . . . . Will they ask workers to take wage cuts? Will they have layoffs to keep the company a going concern under the new finances?"

Lawrence Lewin, a prominent Washington health economist, was equally critical. "It's hard for me to see how they {workers} are going to be financially or managerially better off outside the system," said Lewin, who runs a Washington consulting firm that bears his name. "I can appreciate the ingenuity of it . . . . {But} it sure as hell is not a free lunch," he added.

With its gambit, HCA is reviving a spirited debate over ESOPs. Originally touted as a means of spreading wealth to workers, critics question whether they have simply become another tax-favored corporate finance vehicle. While promoters say ESOPs allow companies an innovative way of raising worker productivity, others charge they are an ingenious ploy for enriching managements at workers' expenses.

Thanks to special tax treatment from Congress, ESOPs have spurted in popularity in recent years. More than 8,000 companies have some kind of ESOP, covering a total of nearly 8 million workers -- or almost double the number covered in 1980, according to the National Center for Employe Ownership in Oakland.

Yet none of these plans approaches the size and the scope of the HCA proposal. HCA's proposal is actually something between an ESOP and a leveraged buyout, in which management borrows the money to finance the purchase of a company and pays off the debt through profits or the sale of assets.

In HCA's case, the new ESOP and company will borrow roughly $1.8 billion -- half through banks led by Wells Fargo & Co. and half through bonds raised by Drexel Burnham Lambert Inc. -- to finance the purchase of 104 HCA hospitals. As other ESOPs have found, there are considerable tax advantages to this approach to raising capital, including the right to deduct a portion of principal payments. Some analysts anticipate the new company will pay no federal taxes for several years at the very least, although HCA officials say this is not clear yet.

In addition to the cash generated by the sale of hospitals, HCA will also get warrants enabling it to buy up to 34 percent of the common stock in the new company, while the new company's management will be given incentives to earn up to 10 percent of the stock. The ESOP will become the retirement plan for the new company's workers; as the debt is paid off, the ESOP will release stock into individual accounts for each worker, stock that they can take or convert into cash when they retire.

HCA's tactic is one that has sparked controversy in the past. The Department of Labor has challenged a number of ESOPs on the grounds that they have enabled management and investors to buy excessively cheap stock compared to the cost of stock for workers. Victor Campbell, HCA's vice president for investor relations, said that won't be a problem with this ESOP because all parties will pay exactly the same price for the stock.

In fact, HCA executives say, they are striving to make the ESOP deal palatable to employes. Two of HCA's most senior and well-respected managers -- President McWhorter and Executive Vice President Charles N. Martin Jr. -- are heading the management team that will run the new company.

A special "ESOP committee" composed of three employes of the new company has been appointed to represent the interests of workers, with its own set of lawyers and investment bankers who will independently appraise the fairness of the deal for the new firm's employes. Officials also say the new company will contribute stock worth up to 25 percent of workers' salaries annually into their pension accounts, or more than three times what workers are getting now. HCA executives point out that because the parent will own a big chunk of junior, the workers have a very real stake in its success.

Above all, HCA officials say, HCA Jr.'s new independence and worker ownership signal a potential windfall for both employes and management. Collectively, the new company's hospitals represent roughly $1.5 billion in annual revenue, with operating income approaching $300 million -- or more than enough to service the $200 million to $250 million in debt payments it will owe annually, according to McWhorter.

As a smaller, private company, furthermore, HCA Jr. will receive closer management attention and increased standardization of administrative procedures, and be free from the quarter-to-quarter earnings pressure facing a public company, HCA officials say. McWhorter predicted that the new company will be more aggressive in pursuing ventures in areas such as substance abuse and rehabilitation care.

"We decided that maybe HCA was too big. It's like flying a 747 from the tail -- you hope you get there," McWhorter said. "We'll have more leeway as a private company to do some things that the larger system would not or could not do."

But HCA's optimism about the ESOP has met with a fair amount of skepticism by some in the health care and labor communities, who share the feeling that the hospitals going into the ESOP face a shaky future in the face of increasing competitive pressures. Some said HCA Jr. will be hard pressed to keep up occupancy levels, which have already fallen to the 50 percent level in some of its hospitals.

"From an employe's point of view, I'd be worried that my management has an overly high confidence in their ability to manage these hospitals profitably," said Edwin Gordon, health care industry analyst for Tucker, Anthony and R.I. Day in New York.

"They're going to have to run an exceptionally tight ship," Gordon said, noting that HCA Jr. will be hard pressed not only to meet debt service, but to come up with funds to make needed capital improvements. "They will have to run with operating expenses that are lower than those levels that HCA was willing to have," he said.

"These may be perfectly okay hospitals, but they are not the ones HCA is betting on for the future," added Lewin. "I think what the employes will find is that their retirement fund has been jeopardized because they have been given real dogs."

Randy Barber, president of the Center for Economic Organizing, which does financial consulting for labor unions, said he expects jobs will also be jeopardized by the HCA move: "They {HCA} are taking their less profitable operations, creating a new firm and loading that down with more debt than HCA currently has. That's a formula for a high-risk company, which translates into a formula for higher-risk jobs."

Indeed, HCA officials have acknowledged that they will likely sell off some of the ESOP's own hospitals after the deal goes through.

A different criticism lodged by Barber and other labor officials is that HCA, while turning over ownership to the workers, is effectively sharing little of the control of management. While workers will be permitted to vote their shares on major issues, such as a merger or large divestiture, their participation in decisions will otherwise be limited to the recommendations of the three-person ESOP committee of mid-level managers.

"This is like having a deputy assistant secretary of defense vote on a policy set by Cap {Caspar} Weinberger," Barber said. "Some local hospital managers are not going to ask hard questions of top management."

Perhaps above all, according to critics and noncritics alike, Hospital Corp.'s effort to shed its unwanted assets vividly illustrates a point often raised by opponents of the profit motive in health care: that communities who trust their hospitals to big corporations run the risk of running afoul of the bottom line.

Forty-five of the hospitals HCA is sending into the ESOP are the sole hospitals in their communities and were perfectly safe in the late 1970s and early '80s, an expansion period for the for-profit hospital industry. Now, as the industry is starting to contract, these hospitals are at risk as they don't meet Wall Street standards of performance.

"Some of these hospitals will have to close, and HCA will not have to do it," said Princeton University health economist Uve Reinhardt, who calls the HCA restructuring "good public relations."

For their part, HCA executives call their move a "socially responsible" way of divesting hospitals.