It was Wednesday afternoon, time of the weekly group meeting at the Kinderheim residential center for boys, but the two-story, concrete-and-brick institution outside Upper Marlboro was nearly vacant.

One residential wing was closed, long empty and slowly crumbling. Only scattered pieces of worn furniture populated the huge first-floor recreation hall. Rooms everywhere were bare; corridors were shadowy and still.

Gathered on the second floor, inside the main dining hall, on a group of chairs and a small table pushed into one corner was most of what remained last week of the German Orphan Home Association's 99-year-old children's institution: three of six boys, two counselors, a social worker, a director and a few support staff.

Each week now, they must prepare for what is inevitable. In a few months, probably in January, the Kinderheim, probably in January, the Kinderheim, also known since 1897 as the German Orphan's home, will shut down.

Its death is part of the decay that has overtaken private health care institutions that treat society's old, disabled, mentally ill or, in this case, young and emotionally troubled citizens.

Like similar private institutions across the country, Kinderheim has been financially crushed by a combination of rising costs, the splintering of traditionally charity-minded ethnic and religious communities and the movement in the health care industry toward small-scale, community-based treatment.

"Private residential treatment is becoming as antiquated concept," said Harry Kriemelmeyer Jr., president of the German Orphan Home Association's board of directors. "It's a tough business because it comes down to filling beds to survive. The kids keep getting caught in the middle of economic binds."

That kind of bind has been quick to choke off the resources of the Kinderheim-German Orphan's Home, considering its long history. Opened with a grant and a charter from Congress, the home for many years was a rallying point for a cohesive ethnic German community in and around the old Christian Heurich Brewing Co. in Washington's Foggy Bottom.

After the home became established in an old mansion on Good Hope Road SE,its "staff" of one sturdy couple raised several generations of orphans from infancy to adulthood - thanks to the help, Kriemelmeyer says, of "a strap and a woodshed."

The program began to suffer after moving in 1966 to the 68-acre site outside Upper Marlboro, however.

In 1971, with only five orphans to care for, the home hired social workers, changed it name to Kinderheim and began accepting children referred by the state social services department. Soon, it was working with emotionally disturbed youths and, later, with court-managed delinquents.

Although Kinerheim often housed as many as 25 juvenile residents, the books never balanced. Inflation was part of the problem. But a greater source of trouble, Kriemelymeyer said, were the ever-growing licensing regulations and funding requirements adopted by the state.

Like all private health care institutions, Kinderheim had to hire consulting psychiatrists, trained social workers, trained counselors and other support staff. Soon, there were 18 employes for 25 children.

At the same time, state funding came slowly. Currently, Maryland's private institutions receive only $550 per month for each child placed by social and juvenile services. With 25 children, the Kinderheim had expenses of $883 per month for each child.

"The ideal is to have blanket funding for 25 kids each year," Kreimelmeyer said. "But we only get it for each kid each month. Our numbers varied up and down, and every time they dipped down, we'd lose our shirts. It gets to the point where we're killing ourselves by getting kids out of here - which is what we are supposed to be trying to do."

With a $100,000-per-year infusion from the 700 members of the German Orphan's Home Association, the Kinderheim struggled along. Then, community-based "group homes" - small operations with skeleton staffs and small overhead which cared for three to eight children - began sprouting all over the state, following a nationwide trend. Referrals of children to Kinderheim plummeted.

The community-based programs, which have also become popular in treatment of the mentally retarded, physically handicapped and elderly, are seen as superior to institutions because they cost far less and are able to help traditionally outcast members of society have relatively normal lives.

"They have a good program (at Kinderheim)," said Katherine Veazey of the Prince George's County bureau of state Juvenile Services. "But they have a big facility. We want to put most of our kids in a group home-type facility now."

"Some group homes are quantatively superior," said Kinderheimer administrator Michael Stern, who worked in group homes and state institutions before coming to Kinderheim. "And face it: the one who puts together the most efficient package for the least bucks is going to get the contract."

The problem, Stern says, is that smaller private institutions like Kinderheim have been lumped with much larger and more isolated state institutions in the minds of social workers placing children and, at the same time, have been lumpted with group homes - which are much cheaper to operate - when pre-child contract grants are allotted in state budgets.

Whatever the reasons, Kinderheim's population dropped from two dozen to five at the end of last summer. Losing $50,000 a year from its endowment in addition to the $100,000 it was supplying the home, the German Orphan Home Association's board of directors had no choice: it voted to begin phasing out workers in preparation for a closing in January.

The six remaining residents will be allowed to finish the school term at the public schools they attend. Then, some will return home or be sent to other facilities by the social services department. Those who have been found delinquent by juvenile courts will be moved by the state juvenile services department.

For professional reasons. Stern is saddened. "State institutions may be a problem now," he said. "But I think there's a legitimate need for institutions as well as group homes - private institutions.

"Some kids just need structure. They need the anonymity and discipline that they get in an institutional setting. After all, they're here because they couldn't hack it in a home in the community."

The prospective closing has been a dizzying blow, too, for the German Orphan Home Association. So far, the group has not decided what direction it will take in its 100th year, though Kriemelmeyer said proudly, "We won't turn into just another charity."