When the developers of "Spring-wood at Leesburg" were seeking state approval to build a private psychiatric institution in the Virginia hunt country, they described plans for a moderately priced community facility that would serve Loudoun County and surrounding areas.

However, when Springwood opened late last year, the facility announced it would be an exclusive, approximately $270-a-day center where VIPs, politicians, corporate executives and the rich would be safe from fear of publicity.

That divergence has caused considerable dismay among health planners and some members of the psychiatric community and has raised questions about the strength of state laws controlling the health industry.

As a result, Loudoun County health officials say they will apply to the state for permission to build a 20-bed psychiatric addition to the county hospital in Leesburg to fill a need that regional health planners said they thought would be filled by Springwood.

Tha purpose of health planning laws in Virginia and elsewhere is to prevent duplication and unnecessary construction of hospitals and other healthfacilities. The extra construction results in higher bills for patients because the cost of unused hospital rooms is passed on to them, often in the form of higher insurance premiums.

"Many people feel they were misled" about Springwood said Dean Montgomery, executive director of the state's regional Health Systems Agency of Northern Virginia, a group that reviews plans and the need for more health facilities in the area.

"When I testified on behalf of their plan," said Dr. Stephen R. Baker, Loudoun County mental health director, "it was a general psychiatric facility that would definitely serve our community . . . There is no way that I would have supported the facility (as it exists)."

"My feeling is that it was a sham," Baker said. "The facility should be required to comply with the certificate of need," which is a state planning permit necessary before a hospital can be built or expanded.

State Health Commissioner A.B. Kenley, however, said he has no problem with the developments at Springwood. "They are providing those beds. They said they were going to open 30 beds and they have done it. They have not changed the service," he said.

"This is a democratic process. This is a dynamic moving thing, not something that is fixed. This (hospital) has been modified," Kenley said. "I imagine the whole issue will be explored if there is another certification request coming in from that area."

Spokesmen for Springwood and its parent organizations, Psychiatric Institutes of America Inc. and the Psychiatric Institute of Washington, refused to answer almost all questions about the hospital, its fee structure, its directors or the apparent disparity between the application and the operating reality.

"The doctors met and discussed that issue of confidentiality and decided that publicity for the hospital might breach the confidentiality of patients. Therefore, they decided not to talk with the press wbout the hospital," said Stephen Winter, spokesman for Springwood.

Earlier, however, before thedoctors decided against publicity, Winter and Dr. Robert E. Strange, former head of the Navy's psychiatric branch and now Springwood's medical director, talked with reporters about the hospital's pins for treating VIPs.

"Contrary to popular opinion, the prominent person - someone who is either rich or famous or both - often receives less effective psychiatric care than people who are treated more like everybody else," he told the Associated Press.

Ernest Hemingway spent time at a psychiatric hospital in which "unfortunately, it appeared that the hospital staff was so busy getting his autograph that they never got around to giving him the treatment he needed," Strange said.

The same thing happens with high level business and government leaders, physicians and famous actors. "This is because of who they are, what the public expects from them and what they themselves expect from life," Strange told the AP. "The whole idea behind our new hospital is to give these special patients the kind of treatment they need without denying them their specialness."

Springwood provides private rooms and baths at the 30-bed facility on a 45-acre site near Leesburg, according to its literature.

"A putting green is located on the hospital grounds, and indoor tennis and riding stables are available nearby," the brochure states. Limousine service is available from Washington-area airports and meals are seved by waiters in a dining room in a remodeled 1840 manor house.

The daily fee is about $270, according to several health planners and psychiatrists familiar with the facility. Springwood officials refused comment about the accuracy of the $270 figure.

In its initial application to state officials in 1973, "Leesburg Institute," the corporate name for Springwood, gave the following answer to the question, "Estimate projected rate schedule for services, if any."

Not yet finalized, approxiamtely $50/day for adolescent residential treatment, $85/day for adult milieu care and treatment.

In 1978, the Psychiatric Insitute of Washington charges a basic fee of $155 a day, while Sheppard and Enoch Pratt Hospital, a highly regarded psychiatric facility in Baltimore, charges $130, according to persons familiar with their rate schedules."

The Springwood application was signed by JacK Durrell, M.D. Durell is listed in Virginia and D.C. records as president of both Leesburg Institute and the Psychiatric Institute of Washington and as a director of Psychiatric Institutes of America.

The three corporation have interlocking boards of directors and officers, withg Dr. Leon Yochelson, John Petrou and Louis M. Kaplan serving on all three and several other men serving on two of the three. Dr. Edward S. Fleming, president of Psychiatric Institutes of America is on the Springwood board.

Fleming and Yochelson were among a group of doctors from George Washington University's department of psychiatry who initailly put together the Psychiatric Institutes business structure, according to news accounts about the institutes.

In the 1973 application to Virginia, Psychiatric Institutes of America listed a "managed and co-owned" the Psychiatric Institute of Washington on MacArthur Boulevard and other facilities in Portland, Conn., Norfolk, Virginia Beach, Richmond and Chula Vista, Calif.

Psychiatric institutes of America is currently negotiating for the purchase of 55 acres on a plantation called Fenwick Hall, located outside Charleston, S.C., according to Robert Blanchard, son of the owner of Fenwick Hall, Claude Blanchard Sr. The younger Blanchard said this week that, "There's still some red tape to cut through and a certificate of need is necessary but we have made the basic agreement to sell 55 acres and the main house.

S. Eugene Hall, executive director of the Charleston Substantive Abuse Commission, said his board of directors had approved the possible sale, "since they would deal with a clientele very different from those we treat.

The Psychiatric Institutes network generally is considered to provide first-rate care at higher than average cost, according to numerous psychiatrists in Washington.

It also is considered to be a highly effective money-maker for its stock-holders, according to these psychiatrists.

In order to build Springwood, Leesburg Institute was required by a 1973 Virginia law to obtain a "certificate of need" from the state commissioner of health. In this process, regional planners, state reviewers and the health commissioner were required to determine whether the beds and services planned were actually needed.

Without the certificate, the facility could not be built. The Leesburg application called for a 60-bed unit for adolescents and 30-bed unit for adults. The primary source for adolescents would be the Washington area with the secondary source of adolescent patients from the middle Atlantic states.

The primary source of adults was to be Loudoun County and the secondary source Northern Virginia.

"The 30-bed adult unit to be developed at the Leesburg Institute (Springwood) is specifically designed to meet the mental health impatient needs of residents of Loudoun County and immediately adjacent areas (it should be noted that there are no existing inpatient psychiatric treatment programs in Loudoun County nor any planned for immediate future)," a description of the Leesburg Institute stated.

The project was warmly endorsed by Dr. Baker, local Loudoun physicians and a wide range of psychiatrists, including many with ties to the Psychiatric Institutes.

The staff of the Comprehensive Health Planning Council of Northern Virginia (the predecessor of the Health Systems Agency) recommended that approval be used on the condition that referrals be accepted from the county Social Services Department.

A cetificates of need was granted on Nov. 9, 1973. Leesburg Institute then ran into obtaining a sewer permit for more than 30 beds and construction was delayed.

With Leesbugh Institute unable to build more than a 30-bed facility and with progress on construction, the regional planning agency recommended on April 25, 1975, that State Health Commissioner M.I. Shanholtz not renew the certificate of need. The certificate was later reinstated because the state health board felt, "any beds anywhere were good for Virginia," according to a state official familiar with thesitutaion.

Springwood was completed and opened in November 1977.

Shanholtz, now retired, said that under the certification law, "I would think they (Springwood) are legally clear. In this world of private enterprise, they can charge all the traffic will bear. There is no law that controls the price."

Shanholtz, who had said that he had favored putting money into nonprofit facilities during his tenure, said, "In a free enterprise system these things happen. There is only so much you can do."

Loudoun mental health director Baker said however, "Last December through word of mouth I heard that it was a VIP facility. No one had alerted me to the change in plan.

"It will treat people with special needs because they have prestige and power," Baker said. "I have trouble with that. In the military we treated privates to colonels and up. It was not my impression that the treatment had to be changed."

Edward Kelly, outgoing chairman of the Health Systems Agency, said, "It looked like something that would serve very well. I'm damn sure that nobody said this was going to turn out to be gold-plated institution."

Kelly, Montgomery and state health officials pointed to what has happened as a weakness in Virginia's health planning law.

Certification does not have any impact of fee structure, they said. While the law is still unclear, it appears that the certification process ends when construction is completed, officials said. A privately owned facility, once built, can do almost anything except expand, they said.

The result for Loudoun County has been an extended number of years without psychiatric beds for the general population.

In the next few weeks, Loudoun County will do before the Health System Agency and ask for a certificate of need to allow construction of a 20-bed psychiatric unit at Loudown Memorial Hospital.

"I'm afraid the existence of Springwood will make it much more difficult to get certification for beds at our hospital," Baker said. "We might be told we have to wait to see what Springwood does."

Baker said that "Springwood didn't fill the hospital as quickly as they planned. They have opened three beds for people with insurance coverage at a lower rate."

"In a way," Baker said, "this creates more of a problem in getting a certificate of need at Loudoun Memorial."

Baker and his Loudoun group seeking to add psychiatric beds at the public hospital will have at least one argument to take with them.

It is a letter from Dr. Strange at Springwood: Springwood's potential to satisfy" I have been asked to provide information regarding community needs for psychiatric inpatient care."

"It is important to note that Springwood is not authorized to provide care for medicaid patients. Also Springwood has not and will not apply for authorization to provide inpatient care for Medicare patients.