It's lunchtime at the 140-acre Melwood Farm in Olney. Staff members come down from their offices in the main house, stepping over Max, the 15-year-old German Shepherd asleep on the landing, on their way to the dining room.

Residents come from the guest house and the carriage house to eat chili, salad and the chocolate chip cookies Mary Copeland has been baking at Melwood for 22 years.

The names and the faces of the 20 or so residents of Melwood change often but they all share a common goal -- recovery from alcoholism.

Alcoholics have been coming to the farm for treatment since 1959, when Washington doctors W.F. Cresswell Jr. and Earl H. Mitchell purchased the circa-1829 estate from the Sanders family -- of the Hill & Sanders Ford dealership in Wheaton -- to open a residential alcoholism treatment center.

The doctors wanted to offer longer-term -- and, they said, "more dignified" -- treatment. At the time, alcoholics could go for one-week detoxification periods, mostly at private nursing homes, Cresswell said. Female alcoholics were often sent to mental hospitals, health experts said.

Mitchell and Cresswell were "front-runners," said Herb Winstead, chief of alcoholism services for Montgomery County. "They probably did more for alcoholism at that time than everybody else put together."

Since the late '50s, acceptance of the concept of alcoholism as an inherited or physiological disease -- rather than as an indication of moral degeneracy -- has erased the stigma attached with treatment. As a result, Melwood is no longer alone in its approach to treatment.

Treatment has become "a real big business," Winstead said. Melwood director Stuart Brownell said that today there are 29 other alcoholism treatment facilities in a 150-mile radius. Melwood has four competitors in Montgomery and one in Prince George's.

Cresswell -- who, like Mitchell, has kept up a private practice -- said the patient load, 60 percent of whom are referred by their employers, has varied at Melwood over the years. He said it hasn't made a profit off its patients since it opened. In some instances, medical insurance will not cover a stay at Melwood, but it will at hospitals, he said, an increasingly important factor in where people go for treatment.

A 32-year-old Montgomery County government employe currently staying at Melwood said he was referred to the farm by his "drinking buddy" who had "graduated" from Melwood last January. The employe said he visited his friend there in December and liked the "friendly, open atmosphere."

He was under pressure from his family about drinking, he said, and his boss had told him several times that "I was drinking too much and it was affecting my work," he recalled The county's employe medical insurance is paying for his treatment, which began last week.

After resisting offers to sell, the owners are now welcoming the advances of a big-time buyer, Washington Healthcare Corp., owner of Washington Hospital Center and Capitol Hill Hospital. Next month, Washington Healthcare's board of directors will decide whether or not to exercise its option to offer to buy Melwood Farm.

"The original owners have been in the saddle many years and there comes a time to transfer ownership," said Cresswell, who owns Melwood along with Mitchell and four other staff doctors and one staff counselor.

Washington Healthcare sees Melwood as "a superior program with a long track record," said the hospital corporation's vice president, Cheree Cleghorn. "We're not looking to go in and do a lot of radical things." She said the sale would bring Melwood "a lot of people with management expertise and financial strength."

Robert W. Witt, Melwood's industry liaison, said such financial strength would allow traditionally low-profile Melwood to advertise and market its services.

Among the strong new competitors to Melwood in Montgomery County is the Psychiatric Institute, which has had a 75-bed hospital in Rockville since 1981. The corporation that operates it, National Medical Enterprises of California, also operates hospitals in the District and Leesburg, Va., and about 400 health care facilities nationwide.

The facility in Rockville primarily treats alcoholics who have been diagnosed as having psychiatric illnesses.

Another privately owned treatment facility, the 20-bed Seneca House, has been in business in Poolesville since 1971. Housed in an old fisherman's hotel on the Potomac River -- which floods the facility periodically -- Seneca House plans to move further north in the county next year and expand, a spokesman said.

Local general hospitals, which in the past could only treat alcoholics on a short-term basis, recently have begun to offer longer-term treatment. In 1983, Bethesda's Suburban Hospital began a 28-day in-patient program with extended aftercare, including counseling and group therapy.

And services offered by the Montgomery County government, which got into alcoholism treatment in 1969 with two-day-a-week counseling clinics and an annual budget of about $2,000, have grown. Today, the county runs a 12-bed treatment facility in Takoma Park where patients can stay two to three weeks, and two halfway houses with a total of 32 beds in Rockville for working residents.

The county alcoholism program's current annual budget is $709,310. State grants bring that the total program budget to $1.2 million.

In Laurel, in Prince George's County, a 21-day, 20-bed residential treatment facility and two halfway houses for employable residents are operated with partial county and state funding by a private company. Payment at all three of those facilities is based on a patient's salary. The county's current annual budget for alcoholism services is $424,000.

The only purely private residential facility in Prince George's, St. Luke's in Suitland, is limited to members of religious orders.

Prince George's is currently constructing a 60-bed center for multiple driving-while-intoxicated offenders adjacent to the county detention center in Upper Marlboro. Multiple offenders will be sentenced there for seven to 21 days once the center opens in July. An after-care program of up to one year will be included in the program.

Patient charges at Montgomery facilities range from $137.50 a day at Seneca House to a base price of $286 or $418 a day for chemically dependent adults or adolescents at Psychiatric Institute. Daily psychiatric fees are extra at Psychiatric Institute.

Suburban Hospital charges $290 a day for the first week of detoxification and $215 a day for the three subsequent weeks of rehabilitation. Psychiatric fees are extra and could run about $1,000 for the 28 days, a Suburban official said. Melwood costs $200 a day and Montgomery County charges on a pay-as-you-can basis according to salary.

Before entering a long-term treatment facility, alcoholics undergo detoxification, a life-threatening situation in which vital signs are monitored and drugs are administered. Patients are admitted to a general hospital for that stage of treatment.

One's choice of a long-term facility can depend on setting, amount of insurance coverage, psychological needs, desire for family involvement, dual dependency on alcohol and drugs, length of after-care, adolescent care availability or preference for a hospital-based facility.

Advances in alcoholism treatment and increased local competition have spurred change at Melwood, where in the past, budgets were drawn up by phases of the moon -- since more patients appeared when the moon was full, a spokesman recalled. In the past, the two founding internists were the facility's sole doctors, and the farm was perceived as "a nice place to send drunks," said director Brownell.

Melwood's 24-member staff now includes psychiatrists, therapists and counselors. There is a structured program of education, therapy, family and after-care meetings, a schedule that doesn't leave residents many hours to fish in the spring-fed pond for perch and bass.

To work with local employers, an industry liaison director was hired three years ago. The facility's staff also has begun treating cocaine and sedative drug addiction.