At 7 o'clock on the morning of May 15, Peter Palermo was in a position of minimal dignity. He was lying, buck naked, on an operating room table at Fairfax Hospital. His legs were propped up and pointing straight at the ceiling. Nurses were shaving his body and painting it with an orange disinfectant, while humming along with a soft-rock radio station that was playing over the operating room speaker system. There were tubes in his arms and his mouth. There were pieces of tape over his eyes. An electronic instrument panel over his head traced his heartbeat, his blood pressure, his body temperature. He looked like a trussed bird.

While the nurses were covering Palermo's chest with a clear plastic material, lowering his legs and draping him with green surgical cloth, a tall, slightly stooped, tired-looking man shuffled in, holding his hands in the air in front of him. One of the nurses helped him into a surgical gown. Somebody put on a Jerry Jeff Walker tape. h

"Up against the wall, redneck mother," said Jerry Jeff. Dr. Edward Lefrak, the tall, shuffling surgeon, didn't say anything. He was dark and heavy-lidded and had an air of tentativeness and even faint embarrassment about him. He seemed to be a man who always had to do too much on too little sleep. But when he walked over to the left side of the operating table and picked up a scalpel, he didn't seem that way anymore; he was relaxed, totally concentrating, in command. At precisely 7:10, he sliced through the skin in the middle of Peter Palermo's chest with one long, smooth, deep stroke.

Then, with an electric instrument that alternately cuts and cauterizes blood vessels, Lefrak deepened his cut down to the sternum. The cauterizing filled the room with the smell of burning flesh. "Oh, oh, oh, oh, I love sangria wine," said Jerry Jeff. Lefrak picked up a small electric saw, and in one quick motion he cut Palermo's sternum in half. He inserted a steel retractor between the two halves of the rib cage and cranked it open, widening the opening he had made. He cut through a thin layer of tissue, pulled it back, and there was Palermo's heart -- as big as a slow-pitch softball, more yellow than red, furiously clenching itself and relaxing.

This is a coronary artery bypass operation. Fifteen years ago it hadn't been devised. This year, Dr. Lefrak will do about 400 bypasses, the great bulk of the 500 or so open-heart operations he will perform. At 37, just three years into private medical practice, he will gross upwards of a million and a half dollars in fees, which surely makes him one of the highest paid people in Washington. Thanks to the bypass, Lefrak and Dr. Jorge Garcia of the Washington Hospital Center -- also in his thirties, also at a community hospital, operating at a similar volume and income level -- have very quickly become the dominant heart surgeons in the Washington area, leaving the older and better-known university hospitals scurrying to recoup their prestige.

The bypass has, in addition to relieving a lot of angina pain and saving some lives, been one of the great business success stories of the 1970s, a decade short on those. It now generates more than a billion dollars a year for American doctors and hospitals. It has done so well because people's immense desire for good health and faith in medicine and technology; because the medical world is able to loose floods of money from governments and insurance companies; and because it works. For all these reasons, and because of the oddities of medical licensing, our society has decided to reward Lefrak's efforts more than almost anyone else's -- although it needn't, because, while he charges the standard market rate for his operation, he insists that financial rewards motivate him less than they do most people.

Peter Palermo came to Lefrak because two months before his operation, at 6 o'clock on the evening of March 12, his heart had gone into an irregular rhythm, called fibrillation, without any warning while he was fixing a clock in his suburban garage, and he had very nearly died. He was an unlikely heart patient. He was a big, cheerful, muscular, bald man of 51, an architect working for the Navy in Alexandria. He was 6' 2" and weighed 170 pounds. He didn't smoke anything but cigars or drink anything stronger than beer. He ran 75 miles a week. In February, he ran the George Washington marathon in 3 hours and 50 minutes.

Palermo survived because one of his daughters was with him and called an ambulance immediately and because a neighbor rushed over and revived his heartbeat by pounding onhis chest. He woke up a week later in Mount Vernon Hospital. His family doctor couldn't figure out what was wrong with him and so sent him to see a cardiologist at Fairfax Hospital. The cardiologist put him through a test called a coronary arteriogram, in which he put a plastic tube into a blood vessel in Palermo's groin, ran it up the vessel into his heart, and pumped radioactive dye through it.This allowed the cardiologist to make a motion-picture version of an X-ray showing the pumping action of his heart and the flow of blood through his coronary arteries, which feed the heart muscle.

The arteriogram showed that Palermo's left anterior descending coronary artery was almost completely blocked. The cardiologist gave him two choices: He could go on medication and give up running and other strenuous exercise, or he could get a bypass operation from Dr. Lefrak. He chose the bypass.

On the morning of Palermo's operation, Lefrak dropped by the cardiology lab at the hospital before going to the operating room, to look at the arteriogram.He picked up a silver film canister with Palermo's name scrawled on it, threaded the film through a small viewing machine and watched. The film showed a ghostly heart pumping away, being suffused with a milky fluid and then expelling it.If you looked closely, you could see the blockage in the left anterior descending artery; the artery showed up as a thick white line and the blockage as a shadowy spot in the middle of it. What Lefrak proposed to do was take a length of a vein from Palermo's leg and attach one end of it to the artery and the other to the aorta, thus rerouting the flow of blood to bypass the blockage entirely.

In the operating room, while Lefrak was opening up Palermo's chest, his two surgical assistants, Bill Harryman and Joe Murray, were cutting a deep gash down the inside of Palermo's left leg and pulling out a superfluous blood vessel called the saphenous vein. They tied off the branches of the vein and put it in a small plastic cup filled with saline solution for safekeeping.

Lefrak made a slit and inserted one large plastic tube into Palermo's aorta, and then inserted two more tubes into his heart. These would route his blood temporarily past the heart and lungs and into a machine that cools, pumps and oxygenates the blood, allowing the heart to lie still during the operation. The chief pump technician, Aaron Hill, turned on the heart-lung machine. Palermo's heart turned pale, sluggish. The central part of the operation was ready to begin.

One of the nurses helped Lefrak on with a pair of glasses with Jeweler's loupes attached to each lens. He poured a small pitcher of ice water over the heart to still it further, than ran a scalpel over its surface, poking and probing, until there was a small ooze of blood. This was the left anterior descending artery.

Lefrak cut a slit along the artery, cut a four-inch length of the saphenous vein and began laboriously sewing the vein to the slit of the heart. He used a sharp-nosed forceps to hold a crescent-shaped needle that was attached to the end of a piece of thread. He ran the needle through the vein, then through the artery, then pulled them together, then stitched again. He ran more than a dozen laborious stitches. It was like sewing a fishing worm to a raw oyster.

One of the nurses put on a Linda Ronstadt tape. Lefrak picked up two small metal paddles, placed them on either side of Palermos's heart and, with a signal to an assistant, had an electric shock passed through the paddles. Palermo's body twitched, and his heart started to beat again. Lefrak cut a small hole in the aorta and sewed the other end of the piece of vein onto it. "They always break my heart in two," said Linda. "It happens every time."

At 8:20, Lefrak was finished sewing. He told Aaron Hill to turn off the heart-lung machine, pulled out the plastic tubes that led to it and began to run metal wires through Palermo's rib cage and twist them together to close his sawed-apart sternum.

"Where's the next case?" he mumbled to one of the nurses. "He being shaved?" He began sewing Palermo's chest muscles, fat and skin back together and then, when things were well along, walked out of the room, leaving the assistants to finish the sewing.

He ducked down a flight of stairs outside the operating suite into the surgeon's lounge, fished a piece of paper out of his pocket and picked up a phone and dialed a number." "Hi, Mrs. Palermo?" he said into the phone. "Hi, this is Dr. Lefrak at Fairfax Hospital. We did the operation this morning. It went fine. It went real well. Yeah. The visiting hours are 11, 2 and 5. Maybe 2 would be a nice time. What's good for you? But he'll be out cold. You bet. Okay. Bye."

He hung up and slumped down in his chair. There had been a crisis the night before -- a patient in the intensive care unit had lost regular heartbeat -- and he hadn't gotten much sleep. With his right hand, he idly played with a rubber band.

Ed Lefrak is of the same generation as the emptily successful downtown papershufflers Walter Shapiro described in these pages last week, but almost entirely without similarity to them. The reason is that he has since childhood been completely directed toward being a doctor. He grew up in South Orange, N. J., the son of a dentist, was graduated from the State University of New York at Buffalo in 1965 and went on to the Indiana University School of Medicine. The '60s didn't mean a great deal to him because he spent little of that time outside a hospital.

After medical school he went to Houston for six years to train in surgery under Michael DeBakey and Denton Cooley at the Baylor College of Medicine, in a program legendary for cutting its participants off from all contact with the outside world. He married a nurse who worked on the hospital ward where DeBakey's surgery patients recuperated. During one rotation, Lefrak had to spend 91 days straight on duty in the cardiovascular instensive care unit, sleeping in an ICU bed amidst post-operative patients and never once stepping out of doors.

From Houston, Lefrak went to the University of Oregon Medical School in Portland to study for two more years under Albert Starr, a pioneer in heart valve surgery. When the two years were up, Lefrak was 35 years old. He had spent the previous 12 years in medical training. He was making $14,000 a year. He had three daughters (now he has four, and a foster son). He was fairly deeply in debt. But his ship was about to come in.

The coronary artery bypass operation was devised while Lefrak was a resident, in 1967, by an Argentine surgeon named Rene Favolaro, who was then at the Cleveland Clinic. It was made popular by several surgeons in Cleveland, by DeBakey and Cooley in Houston and by John Kirkland in Birmingham, Ala. It very quickly became a big hit. It was an operation with a natural clientele -- white-collar men in their fifties, the chief sufferers of arterial blockage -- that had access to doctors and to medical insurance, so it was a good money-generator for doctors and hospitals. It was tedious but fairly simple, and could be done in substantial volume. In the early days the drumbeaters for the bypass got themselves in trouble by claiming that the operation prolongs life, which has only been proved in cases of blockage of the left main coronary artery and in cases of triple blockage (an ongoing study by the National Institutes of Health has yet to show a significant difference in length of life between medically and surgically managed patients with other cases of heart blockage). Now they say it relieves angina pain and the imminent danger caused by certain kinds of arterial blockage, which is indisputable, and the oepration is accepted by one and all.

Washington, with its sedentary, affluent population of people on government health insurance, is natural bypass territory, but in the mid-'70s it was far behind other cities. George Washington and Howard University hospitals did not have strong heart surgery programs. Georgetown's chairman of surgery, Dr. Charles A. Hufnagel, had in the early '50s brought heart surgery to Washington and done some world-class work in valve surgery, but by the '70s he did not have a prominent program.

In 1974 the Washington Hospital Center brought Jorge Garcia, a young surgeon it had trained, back from the Cleveland Clinic to set up a big-time cardiovascular surgery program. In 1977 Fairfax Hospital went looking for a heart surgeon of its own and found Lefrak, who was given total control over the establishment of the cardiovascular surgery department there. Then, last fall, a task force of local heart surgery experts issued a report on the state of the art locally that pronounced the programs at Georgetown, GW and Howard "unacceptable" for their low volume of cases and high mortality rates. The report showed Lefrak with the lowest death rate in the area for bypass operations in 1978, 1.7 percent; Garcia's team at the Washington Hospital Center with 3.2 percent, second lowest; and Hufnagel with a rate of 11.8 percent, more than double anyone else's.

The report was well publicized and had the effect of officially enthroning Lefrak and Garcia as the area's premier heart surgeons. The staffs of the university hospitals were outraged by the reports; they say it did not take into account that they take on the most difficult cases and thus necessarily do a smaller volume of work. "Who ever said Chevrolet is better than Rolls Royce?" says one professor at a unviersity hospital. "Chevrolet makes a hell of a lot more cars." Nonetheless, on Jan. 1 of this year Hufnagel retired as Georgetown's chairman of surgery and also stopped doing any open-heart surgery. He says his interests have shifted. Dr. Robert B. Wallace, a heart surgeon who was chairman of surgery at the Mayo Clinic, replaced Hufnagel as chairman and also took over all of Georgetown's open-heart operations.

Lefrak's and Garcia's practices are booming. Garcia now has two other heart surgeons working with him, and together they will do about 900 operations this year. Lefrak just hired a second surgeon and will do about 500 cases this year on his own. Garcia's mortality rate for bypasses last year was 0.8 percent. Lefrak's last death on a bypass case was last October.

Lefrak won't say how much he charges, but his standard fee is said to be about $3,000 an operation. You can add it up. "I make an awful lot of money," he says. "I don't spend any of it, because I work all the time."

Garcia, the son of a farmer in the Philippines, lives in a house in Potomac with a private tennis court and seems more interested in the finer things in life. Asked what he likes best about America, he grins and says, in slightly tortured English, "Free enterprise? You can do anything you want. It doesn't matter who you are. That is my favorite thing." Lefrak lives in a more modest house near the hospital and is positively hostile to money.

"It's an anti-goal," he says. "The whole concept of business and making money bothers me. That's what always bothered me as a kid -- a businessman makes money. When I deal with businessmen, I can tell that's their goal. It doesn't seem like a useful way through life. It just doesn't matter. My money's sitting in a 5 1/2 percent savings account. It just doesn't interest me. The money is not the issue. I love heart surgery. I really love it. Those people who are working for work -- I feel sorry for them. They'll do anything to get out of an hour of work. There are millions of Americans like that. I lie in bed thinking about a big operation, looking forward to it. Those people live for the weekends. I used to hate the weekends because there wasn't anybody in the hospital."

On the other hand, the economics of medicine are such that Lefrak's principal assistant, Bill Harryman, is paid somewhere in the low $30 thousands a year by Lefrak. Harryman sees patients, performs physical exams, writes admission orders, orders tests, scrubs for surgery, cuts and sews, holds patients' heart -- everything but the actual lead surgery on the heart, and everything under the direction of Lefrak. At a place like Houston, what he does is done by a physician; Harryman was in fact only the second surgeon's assistant licensed to practice in Virginia.

In his senior year in college Harryman applied to medical school but didn't get in, so a couple of years later he went to a two-year surgical assistants' school in Alabama, "to get I guess as close to being a doctor as I could," as he puts it. Now, at 32, Harryman knows more surgery than most surgical residents. The other surgical assistant, Joe Murray, and the head operating room nurse, Trish Seifert, are experienced cutters and sewers too. In the training program Murray went to, he took the second year of medical school in his first year and then spent a year doing rotations. But physician's assistants aren't doctors. They are legally barred from managiang patients or charging fees for service. To become doctors, they would have to go through all of medical school and their experience would count for nothing. The difficulty of getting an M.D. degree, even for people who do work almost at the level of the work doctors do, is one reason why doctors are assured of making so much money.

Another reason is the prevalence of health insurance. The medical treatmaent arising from Peter Palermo's collapse in his garage will cost, he guesses, about $23,000. But he'll pay just $1,075 out of pocket. Faced with a choice between surgery and avoiding strenuous exercise, it was much easier for him to choose surgery knowing that he wouldn't have to pay for most of it himself.

Palermo had a model recovery. After his surgery on Wednesday morning, he was wheeled into the intensive care unit, a Star Trek-looking place where the patients are full of tubes and surrounded by electronic instruments that make spooky blips and beeps.He stayed there until Saturday morning; by Saturday night he was walking the halls of the ward to which he had moved; and on Wednesday he went home.

For most bypass patients, the experience of being sawed open and wired back together induces some kind of personality change -- in milder cases a feeling of weakness and mortality, in severe ones a disease that the nurses call ICU-itis. "They need constant reorientation," says Mary Ann Watson, a registered nurse in the intensive care unit. "Each time they wake up, it's like, Where am I? We've had people that are bombing in World War II. They can't remember where they are. Some want to know when they're going to have surgery. We had a police officer who thought the police were after him. The families get very upset and wonder if it's permanent. Some of them take a week to adjust. Some take months. Some feel their life is significantly different after surgery."

"We tell them to expect it," says Deidre Carolan, a nurse on the recovery floor. "We tell them that most of what they see -- it'll be a dream."

"We say, 'This is not heaven, Mr. So-and-so,'" says Trish Seifert. "'You're doing okay.'" For the patients, the distinction can be more difficult to accept -- after all, if your heart has stopped and been replaced by a machine, if you can breathe only through a tube, if your chest feels as if it's about to come apart, and if you have to spend the next six weeks sitting at home convalescing, it's impossible not to feel that your life has been fundamentally changed by shamans of medicine, it's impossible not to feel deeply disoriented and invaded.

On the day of Peter Palermo's operation, Dr. Lefrak did another bypass operation, this one a quadruple. "Looks like a '57 Buick, doesn't it?" he said, regarding the four sections of vein he had sewed to the patient's aorta. Then it was time for the tough case of the day -- a tiny premature baby, the child of Cambodian refugees who spoke no English. The baby weighed less than two pounds.

The human fetus has a vessel that shunts blood directly from the pulmonary artery, which supplies the lungs, to the aorta, bypassing the lungs because they don't work during gestation. The vessel is called the ductus arteriosis, and in a baby that spends its normal term in the womb, it closes off on its own. In this baby it hadn't, and as a result its lungs weren't working properly.

The baby was brought into the room in a clear plastic incubator and carefully transferred to a tiny operating table by the nurses. It was less than a foot long, and had an eerie unbabylike thinness. Its skin clung to its ribs. Because the baby was too small for heartbeat or blood pressure to be measured, the nurses wired its pulse for sound and hooked up a speaker called a Doppler that amplified the sound of the blood. The baby had tubes in its tiny arms and in its head. It was breathing through a mechanical respirator.

The nurses placed the baby on its side and draped it to leave exposed just a patch of rib cage the size of an index card. Lefrak carefully cut a four-inch incision along one of the ribs, deepened it and pried two ribs apart with a tiny retractor. Nobody said anything. There was no music playing. The nurses and assistants were crowded around the table trying to see. A pink lung and some purple veins were visible through the retractor. From the Doppler came a faint beating sound, under another sound like that of water flowing far away.

Lefrak found the ductus, slipped a piece of black thread underneath it and held either end of the thread in his hands.

"Do you hear a murmur?" he said to one of the nurses.

"yes, I hear it real clearly."

"Now tell me if it changes." He crossed the ends of the thread into a knot and pulled them apart painfully slowly, sending the knot down closer and closer to the ductus until finally it was tight.

"It's gone now, doctor," said the nurse. She paused a moment. "He's cured!"