A caption appearing on page A6 of the Sunday edition incorrectly identified a cross section of a human abdomen as a picture of a brain made by a CT scanner.

The physicians attending the conference were amused at the naivete of the two medical technology salesmen. They had just told the several hundred dollars in the audience that they expected to sell no more than five or 10 of the devices, which they were marketing, in the United States.

The machines sold for about $350,000, but the physicians at the conference were aware that the price was no obstacle. The device the salesmen were pushing, a sophisticated X-ray machine linked to a computer and known as a CT scanner, promised to revolutionize the study of the brain and perhaps the body as well.

Four years after that conference at George Washington University, several American cities - including Washington - have as many CT scanners as the salesman thought they would be able to sell in the entire country. More than 350 are in operation and at least that many more are on order.

The computed axial tomography or CT scanner, introduced in this country only five years ago, is being hailed as a revolutionary development, perhaps the most significant advance in diagnosis since the discovery of the x-ray itself in 1895.

At the same time it is being cited as the latest example of technology run amok, a phenomenon that is driving up the cost of medical care locally and nationally because of unnecessary duplication and unnecessarily high costs.

Between 1965 and 1974, according to a congressional estimate, half of $27 billion increase in hospital care cost could be accounted for directly or indirectly (See MACHINES, A6, Col. 4> by the introduction of new medical technology.

The trend in American medicine has been one of ordering more equipment, more tests and more personnel. There has been no effective restraint on such spending and health costs have soared accordingly.

In 1966, $42.1 billion - 5.9 per cent of the gross national product that year - was spent on health care. By fiscal year 1976, health care spending had more than tripled - growing to $139.9 billion - and consumed about 8.6 per cent of the gross national product.

That means that we as a nation are now working one month of every 12 just to pay our collective medical bills. And a study prepared by the Department of Health, Education and Welfare estimates that by 1980 medical care spending will have grown to $230 million - 10 per cent of the projected gross national product.

Despite these large increases in cost, there is no data showing that more spending has resulted in improved health.

The CT scanner boom typifies so well a number of problems in the American practice of medicine that its defenders charge that the machine has become a whipping boy for critics. Nevertheless, it provides a good example of the kind of intractable problems the Carter administration faces in trying to curb rising health care costs.

The Washington area already has 18 scanners in operation or on order in hospitals and private clinics. Another four hospitals in the area are considering ordering scanners. Eventually the metropolitan area will have more than twice the number needed according to the most generous estimates of doctors and others medical interviewed.

A survey by the Congressional Office of Technology Assessment last summer found that the nationwide there were about 500 in operation and another 500 estimated to be on order for installation by the end of this year. Some forecasts predict that there will be as many as 2,500 scanners in operation in the United States by 1980.

This rapid spread of the machine is occurring before careful attention has been given to precisely when and under what circumstances the use of the machine is beneficial and when it is virtually impossible to determine how many are needed.

A scanner can cost anywhere from $325,000 to $700,000, exclusive of financing charges and preparation of the room where the scanner is to be used. The annual operating cost - depending upon how many technicians are used, how many hours the machine is operated, whether or not a physician is present and other factors - can cost $300,000 more. The OTA survey estimated that the annual CT scanner bill war $200 million. With charges running between $400,000 and $500,000 per machine CT scanners could exceed $1 billion a year by the end of the decade.

The issue with the CT head scanner is not whether or not the machine is a valuable diagnoatic tool. Everyone agrees that it is. But the issue is whether the number of tests that will be performed are necessary.

Even if a consensus existed about how many scanners were needed in the Washington area - or nationally - no effective means yet exists for preventing their spread. The District of Columbia's procedure for approving hospitals' purchase of new technology is considered weak. Maryland and Virginia have stronger procedures, but none applies to private physicians' offices, where CT scanners are now appearing.

One obvious reason for their spread is clearly that physicians believe that the machine gives them information more quickly without pain or danger that previously possible.

A less obvious reason is the pressure brought by physicians on hospitals. According to Dr. David Davis, associate chairman of George Washington University Hospital's radiology department. "The medical situation is a competitive one by its nature. In other words, if group A gets Brand X, then group Y in order to stay up to date is going to try to get the same thing so that they'll be able at least to match, so that they don't lose a great number of referrals."

"The second thing," Davis said, "is that hospitals are the same way. How can a hospital not come up to speed as far as technology is concerned and stay competitive? There's no way they can do it. You're really facing the fact that the medical care, hospital care situation is dispersed and it's competitive. That, I'm sure, must generate a certain amount of wastefulness."

Patients may find the prices hospitals charge alarming but patients usually do not pay their hospital bills directly. Roughly 99 per cent of the total charged every year in this country for hospital care - the largest part of the national health bill - is paid either by private or public health insurance.

With insurance companies - most importantly Blue Cross and the federal government through Medicare - guaranteeing to pay hospitals their costs, there is little economic incentive for a hospital not to purchase the equipment its doctors say they must have.

"Under the circumstances," Davis said, "there are a lot of pressures that will cause (scanners) to be purchased and if you did not have those pressures, and everything were centrallized, it's very possible that the number needed would be less."

It has been argued that the CT scanner can reduce the necessity for performing other tests on patients and will reduce the necessity to hospitalize them.

No comprehensive study has been done to test this theory. In fact, according to a draft report on the CT scanner prepared by the Office of Technology Assessment, some hospital staffs reported that patients were being admitted unnecessarily in order to get them scanned more quickly.

The Neurology Center, a private partnership of physicians in Bethesda that owns two CT scanners, has estimated that it saved its patients - or their insurance companies - about $600,000 annually in hospitalization costs of patients referred to it by using the CT scanner.

At the same time, the center estimated that its charges for tests increased by roughly the same amount - almost all of it because of CT scans performed.

A separate three-year study of the economic and procedural impact of the CT scanner at George Washington University Hospital - to be published in July by the journal "Medical "Care" - found that the cost of neuroradiologic procedures increased from $321,000 a year before the use of the scanner to $1,314,000 after its introduction - with 93 per cent of the increase attributable to the scanner.

The George Washington study does not discuss profit margins. But the Neurology Center calculates its cost for each scan to be $188.25. With the charge to patients for head scans performed ranging from $220 to 290 depending upon what is done, the center, according to Dr. Marvin Korengold - one of the center's partners - realizes an annual profit of about 18 per cent on its investment in its scanners.

The center's charges for scans are roughly the same as though charged by other institutions. "We have figured out our costs and the cost (of a scan) can come down," Dr. Howard M. Silby, another of the center's physicians, said in an interview.

Silby said the center, along with other institutions, has been discussing the charges for CT scans with the Washington-area Blue Cross-Blue Shield, the major health insurance company in the Washington area.

"The only question is what's a reasonable profit," Silby said. "From our point of view, it's as much as it can be. From Blue Cross-Blue Shield's point of view, it's as little as it can be."

Although the CT scanner has virtually made unnecessary the use of one test - the painful, dangerous procedure known as the pneumoencephalogram - it has not caused the elimination of other procedures.

According to Roemer's Law - named after Milton I. Roemer, a physician and professor of health service administration of CCLA's school of public health - technology and facilities, once installed, tend to be used. Supply creates demand.

Physicians, in the words of Dr. James R. Cowan, executive vice president of the greater New York Blue Cross plan, "pride themselves on being up to date and, all other things being equal, will make use of the most sophisticated resources available to them to treat patients."

Another reason that physicians tend to use the scanner and other new technology available to them is defensive - protection against malpractice suits.

"If there's no risk to the test and the test may add intermation - positive or negative - to help solve the problem. I think the average doctor is leaning toward defensive medicine," Korengold said. "He's leaning over a little bit. If a person is hit on the head in an industrial accident - a piece of lumber falls on his head and he's sent here for a consultation . . . Nobody's wasting any time even if they can't find a bruise on his head. Nobody wants to take a chance because how could they defend that? You know how could you say they overlooked doing such a simple procedure? What was there to gain? I think everybody is very conscious of this."

Focusing on the cost of CT scanning, however, leaves aside the equally important question of benefit. "CT scanning has made the diagnosis of serious illness easier and more certain," the George Washington University Hospital study states. "It has also increased the specificity with which a physician is able to assure a patient and his family concerning the absence of disease. This has no doubt reduced the anxiety of many 'worried well' and improved their quality of life."

Silby said that one of the great benefits of having a CT scanner available was it enabled a physician to evaluate a patient's problem immediately. "Boy, the emotional relief is tremendous," he said. "That's a very crucial thing," to be able to tell a patient that he or she does not have a brain tumor.

But the nagging question is how much is that worth?

"It's gotten to the point where, if the patient enters with a headache, the first order of business for many doctors is a brain scan," Dr. Howard Hiatt, dean of the Harvard School of Public Health said in an interview. "There are 6,000 people a year who turn out to have brain tumors, and of those 6,000 probably we can't do much about 5,800 no matter when we diagnose them. Then the question is, do we look for those 6,000 or do we look at the 16 million people who consult doctors with headaches each year? I think it's terribly critical that we introduce into medicine a much more rigid kind of evaluation approach than we have before."

A panel of health experts appointed by the National Academy of Science's Institute of Medicine recommended in a report issued last week that the federal government and private health insurers adopte measures that would restrict the spread of CT scanners by establishing standards for their use and by withholding payment for tests performed when the standards are not met.

The study called for three crucial measures to control the spread of CT scanners. Each machine, the study recommended, should be required to perform a minimum of 2,500 scans a year. S cans performed should be examined by a utilization review committee to make sure that tests done were necessary. And no machine, the study recommended should be installed in a private clinic except "when placement in full-service hospitals is not practical."

The institute's study recognized, as have other reports, that CT scanner is not an isolated example of expensive technology being wastefully duplicated.

The fact, is, that without changes in federal law and tighter planning and control at the local level, more expensive technology - machines, facilities and procedures - will be purchased and performed, whether necessary or not. And the public will pay the bill.