Health maintenance organization stocks, shelled by recent losses at companies such as Aetna Inc. and Oxford Health Plans Inc., can't look forward to a recovery in 1998.

What plagues HMOs -- rising costs and a slowing flow of new patients -- won't be cured anytime soon, investors said.

"We have doubts about whether HMOs are a viable system," said Edgar Wachenheim, chairman of Greenhaven Associates in Purchase, N.Y., which oversees $1 billion in assets.

Greenhaven sold a 697,000-share position in Foundation Health Systems Inc., a California HMO, in the past couple of months.

Other investors may not hold Wachenheim's extreme view of HMOs, which emerged in the past decade as a response to spiraling health care costs, but few are lured to their shares even at lower prices.

HMOs face a surfeit of enemies, Wachenheim said.

Businesses constantly want to reduce what they pay HMOs to cover their employees, patients complain about limited health choices and doctors object to getting paid based on the number of people they see.

Declining earnings and diminishing investor enthusiasm took their toll on HMO stocks in the second half of this year. The Morgan Stanley health care payer index declined 10 percent since June 30, compared with a 10 percent gain in the benchmark Standard & Poor's 500-stock index.

Even after the latest slide, most HMOs aren't cheap. The 12 members of the Morgan Stanley HMO index trade at 58 times trailing 12-month earnings, more than double the S&P 500's 25 times net income. To be sure, the high P/E includes many one-time charges for the HMOs.

After years of fast growth and consolidation, HMOs face problems brought about by trying to string together far-flung computer and patient networks.

The stock of Oxford Health Plans is down 67 percent since June 30, almost all of that coming on Oct. 27, the darkest day for stocks overall since the Oct. 19, 1987, crash.

On that day, Norwalk, Conn.-based Oxford said its computer system lost track of bills and payments, resulting in a loss for the third quarter.

PacifiCare Health Systems Inc., down 17 percent in the second half, said recently it is grappling with hobbled computers and is losing money in five states.

A series of problems related to Aetna's acquisition of U.S. Healthcare Inc. dragged its stock to $70.56 1/4 from $117 on Aug. 4. In early December, attorneys filed a lawsuit seeking class action status on behalf of shareholders, alleging that Aetna failed to warn of rising costs and operating difficulties.

Investors will have to accept computer system problems as a fact of life for HMOs.

"Most health plans are at some point in the process of going through systems transitions," Thomas Hodapp, an analyst at BancAmerica Robertson Stephens, said last week. And any large-scale change increases risk. Computers aren't the HMOs' only problem. Getting new customers often means taking them from a rival HMO by offering a lower price. It also may lead to an increase in marketing costs.

Business Week reported in its Dec. 8 issue that the industry's marketing costs rose to $800 million last year from $235 million in 1990 and could reach $1.6 billion in 2000.

Cigna Corp. knows that well. The Philadelphia-based insurer said Oct. 1 that a drive to boost its patient rolls raised costs, and as a result, analysts' earnings projections were too high.

The industry "is much more competitive now," said Harvey Bateman, a money manager at Sirach Capital Management in Seattle. He said that was one reason his firm sold more than 1.1 million shares of United Healthcare Corp. in September and October.

At the same time, the U.S. government will cut Medicare payments to managed-care companies by $20 billion over five years under the balanced-budget legislation passed this summer.

High marketing costs and computer bugs are often seen as short-term events that can beat up stock prices and bring in investors who pick up discounted shares in hopes of a turnaround.

Some "value" investors remain leery, however, including Jim Farrell, chief investment officer at Newbold's Asset Management in Wayne, Pa., a unit of Pilgrim, Baxter & Associates.

His firm shed "a big chunk" of its 684,000 shares in Aetna after the company's profit fell. Farrell said he's not likely to invest in HMOs until there is "evidence of increasing prices on contracts with HMO customers," something that might not occur for another 12 months.