Alexandria Hospital this week won tentative approval to open an eight-bed kidney dialysis center, while a nearby clinic in Fairfax, Bio-Medical Applications of Arlington, tentatively was denied permission to expand its dialysis center by three beds.

The action by the Health Systems Agency of Northern Virginia (HSA) came following two nights of public hearings on the proposals.

In the Washington area, approximately 1,000 patients with kidney problems receive dialysis. The three-hour treatments, which remove wastes from the blood of persons with malfunctioning kidneys, usually are administered three times a week and cost $20,000 to $25,000 a year for each patient.

The lucrative dialysis business has been the focus of both local and national controversy over both the costs and allegations that some centers run a virtual monopoly in their communities.

In this area, patients are treated at one of 14 centers. Bio-Medical Applications, at Rte. 50 outside the Beltway, is leased and operated by National Medical Care Inc., a Boston-based chain that operates 11 Washington area centers and 100 dialysis centers throughout the nation. Last year, the chain treated more than 8,000 of the nation's 50,000 dialysis patients.

A major difference between the Bio-Medical clinic and the proposed unit at Alexandria Hospital is that the Bio-Medical center is "closed" -- only the clinic's six doctors may prescribe and administer dialysis treatments, and collect the Medicare funds that pay most of the costs and physicians' fees for dialysis patients. The proposed non-profit unit at Alexandria Hospital would be "open" allowing any qualified physician to supervise the treatment of his or her patients.

The decisions both approving Alexandria hospital's dialysis unit and disapproving the Bio-Medical expansion hinged upon the openness question.

"It's intolerable to have monopolies handed out and have physicians unable to follow their patients into clinics," said Mark Melcher, chairman of the review committee for the HSA of Northern Virginia at the hearings on the application.

However, he was the only one of the five review board members to vote against the hospital application, because, he told more than 50 people at the hearing, "I feel I'm being pushed into voting for it in order to bring pressure on the other facilities" to become open.

The health agency staff urged approval of the hospital application not on the openness issue but because additional dialysis facilities will be needed in the next few years.

Melcher, who called closed clinics "almost as good as having a McDonald's franchise," said if the HSA "continues to turn down closed units I'm certain there will be a clamoring to open open units."

Opal Pennington, a 57-year-old Alexandria woman with damaged kidneys, is one of several residents who supports the Alexandria Hospital application.

"I now must go to the Northern Virginia Dialysis Center on Duke Street (also part of the National Medical Care chain)," Pennington said before the hearing. "But I want my own doctor to treat me and he's allowed in there."

Pennington's doctor, Robert E. Greenspan, who now heads a new "open" center in Woodbridge, was fired from the Duke Street staff and recently lost a lawsuit in which he sought to have the court order the clinic to allow him and other physicians treat patients there.

At the HSA hearing, Dr. Barry Strauch, medical director of the Bio-Medical clinic, said the clinic has ended its closed staff policy but insisted that the open versus closed issue is a "controversial one" that is up to each clinic to decide. He said there presently is no legal requirement that dialysis clinics be open to other doctors and that more than 60 percent of the nation's clinics are now closed. He said, however, the closed concept is not new to the medical profession and that radiologists and other medical specialists have long operated closed facilities.

Strauch said he feels the real issue is money, and that statistics show that for-profit outpatient clinics such as Bio-Medical charge less than non-profit hospitals. o

Officials at Alexandria Hospital say they plan to charge $123 per dialysis treatment, compared with $138 charged at Bio-Medical. But Strauch insisted, "They're not going to do it. They're going to be more expensive. Even if they swear up and down it will be $123, within six months they will be asking more . . . maybe $160 to $180. statistics show most hospitals charge more than $150."

He said the hospital is "dramatically underestimating the costs" and that spending $350,000 to create a new dialysis unit at the hospital is wasteful when the demand can be met more cheaply by expanding existing outpatient clinics.

The HSA committee voted 3-2 against the Bio-Medical expansion and 4-1 in favor of permitting a new dialysis unit at Alexandria Hospital.

The full, 30-member HSA regional board, which determines the need for new or expanded hosptials and clinics here, is to vote Monday on the two requests. The board is expected to reject the Bio-Medical request, as as it did three months ago.

The final decision will be made by the Virginia commissioner of health, but the state rarely overrules the decisions of area-wide health planning agencies.