The medical community has become engaged in a high-stakes battle, both locally and nationally, over whether midwives, skilled nurses and psychologists should be allowed to work independently at hospitals, where they say they are excluded by doctors who cannot take the competition.

"Physicians are paranoid because of the almighty dollar . . . it has nothing to do with patients," says nurse-practitioner Sallie Eissler, who works with expectant mothers at Greater Southeast Hospital. Eissler knows just how intense the feelings on both sides of this subject can be: married to a physician, she and her husband had their own debate on the subject at home last week--and were barely speaking days later.

"For better or worse, physicians are the only professionals who are educated, trained and indeed licensed to provide total patient care," said Dr. Dennis S. O'Leary, president of the D.C. Medical Society, in a newsletter to society members. "This structure of care has existed for the protection of the patient, not the medical profession."

The D.C. City Council is set to enter the battlefield this week as it holds committee hearings on legislation to open up hospitals to qualified alternative health-care providers. Council staff members expect a full house at the hearings Thursday, with 40 to 50 groups and individuals set to testify.

Patients are in the middle of this medical civil war, with both sides claiming to have their interests at heart.

The nonphysician health-care providers say they can offer care at a lower cost, and that they are trained and licensed to do most of what a doctor can do.

Doctors say that opening up city hospitals would cause the quality of care to suffer, and more providers would mean more hospitalizations and more costs.

The bill being considered by the City Council would prohibit hospitals from discriminating against nurse-midwives, nurse-practitioners, nurse-anesthetists, psychologists and podiatrists as a class. It would require hospitals to consider them--based on education and training--for full hospital privileges and staff membership. The bill was introduced by council member Polly Shackleton (D-Ward 3) and cosponsored by a majority of the council.

D.C. hospitals are backing the doctors. At least one major labor group--the Metropolitan Washington Council, AFL-CIO--is supporting the alternative providers. Blue Cross/Blue Shield, as a major insurer that pays for health services, says it is in no position to take sides but questions the cost-saving claims of the proposed bill.

According to the medical society, no alternative-care providers now practice independently at D.C. hospitals, though some can do their work in hospitals under doctor supervision. The society supports this supervised approach.

But supporters of the City Council bill say this can mean even higher costs for patients who then have to pay for two health-care providers, even if the nonphysician is licensed to provide all the services necessary.

Nationally, the Federal Trade Commission also is looking at the issue of discrimination against nonphysician health professionals at hospitals and its antitrust implications. Only last year, the FTC won a bitter fight against the American Medical Association over the commission's right to police the trade practices of doctors, and this issue could be one of the first it considers under its reaffirmed authority.

The FTC's bureaus of competition, consumer protection and economics already have supported giving hospital privileges to qualified nurse-midwives, nurse-practitioners and nurse-anesthetists.

"Access to . . . the hospital by nonphysician providers in appropriate circumstances may lead to substantial consumer benefits," the FTC bureaus said in comments to the Tennessee licensing board when it considered the issue. These include more options on care, improved quality of care and lower costs, they said.

But Blue Cross/Blue Shield, which has a vested interest in keeping health costs down, questions whether the alternative providers would be less expensive once they got into the hospitals.

"There is nothing in the world to keep them from charging the same thing" as physicians, said Barry P. Wilson, vice president of public affairs for Blue Cross/Blue Shield of the National Capital Area.

The D.C. Hospital Association, for its part, is backing the doctors solidly.Agreeing with the doctors' group that costs would not be lowered, a draft position paper of the association also says a hospital would be exposed to more lawsuits--both from practitioners who were not admitted and from patients claiming negligence.

If the city wants the hospitals to let more health-care providers in, the city should accept the liability as well, the group says.

But some of the nonphysician providers say much of the reason hospitals oppose the change is because it would mean more work for them in getting credentials for their staffers and because doctors have so much control over hospitals through their ability to refer patients.

Faith Tanney, president of the D.C. Psychological Association, said that physicians would boycott hospitals that allowed nonphysicians to practice unless the hospitals were legally compelled to consider alternative health-care providers.

The issue of midwives has come up before, most recently last year when physicians at Columbia Hospital for Women voted not to extend delivery room privileges to certified midwives. Two years earlier, the obstetricians at the Washington Hospital Center did the same at the end of a pilot project there.

"It's an economic question," said Kathleen McIntyre of the D.C. Nurses Association. "In D.C., with all the physicians we have, to have middle-class women using midwives--it's taking away the doctors' bread and butter."