The nation's military medical school, the Uniformed Services University of the Health Sciences (USUHS), would be closed under a House appropriations bill provision that stemmed from a dispute over a $9 million project to educate the military about AIDS.

USUHS, an 18-year-old school nestled behind the National Naval Medical Center in Bethesda, is responsible for training 160 military physicians each year in the rigors of military medicine. Nearly 50 doctors deployed as part of Operation Desert Shield are alumni of the school, which has a $38 million annual budget.

The drive to eliminate the school arose from a clash between Rep. Martin Olav Sabo (D-Minn.) and the university over an interactive video designed to educate military personnel about AIDS. In 1987, Sabo introduced a provision that provided $9 million for the project in response to a request from Howard B. Camsey, a former Minnesota education commissioner and then head of Health Edutech Inc.

Camsey, who knew Sabo from their days together in the state legislature and a 1989 contributor to Sabo's campaign, had produced an interactive video and submitted it to the Defense Department for review. Sabo, an Appropriations Committee member, sought to ensure that any Pentagon grants for such material would go to companies that had such videos on the shelf and ready for use.

A military review panel, however, found the video inappropriate. The panel said the video, which did not include minorities or women, was "boring" and "outdated and in many instances not factual." The panel gave the $9 million grant instead to USUHS, which began producing the interactive video this year.

"I frankly wasn't aware of the USUHS until that happened," Sabo said. When a Pentagon inspector general report "raised some questions about the entire cost of the USUHS operation earlier this year, it called our attention to them again."

Sabo's concerns led to congressional hearings this summer and resulted in a provision in the House defense appropriations bill for fiscal 1991 that calls for a phaseout of the military medical school. Under the bill, the university's budget would be reduced by $5 million in 1991. One last class of students would be enrolled next fall, and the university would cease operation in 1995.

The move to close USUHS "is ill-advised, particularly in view of the fact that they bring out a product which our civilian medical schools do not, and that is the physician soldier," said Robert G. Petersdorf, president of the American Association of Medical Colleges.

"It is the only medical school in the nation which provides training in the management of high-velocity missile injuries, tropical medicine, recognition of combat stress, prevention and treatment of heat and cold injuries, chemical warfare agents and laser injury," said Harry Holloway, assistant dean of USUHS. "It's an inexpensive way to produce physicians with a unique capacity."

The school conducts research on such topics as tropical medicine. In addition to the 160 doctors it graduates each year, it trains 50 health professionals, including psychologists, biochemists and public health specialists. About half of these graduates also enter the military, and about 10 percent serve in the U.S. Public Health Service, where they practice in such underserved areas as Indian reservations.

If the university is closed, the Defense Department could turn to a scholarship program that pays tuition and a stipend for medical students to attend civilian medical schools. That would result in savings, Sabo said, because "the cost of educating doctors through DOD's own medical school is approximately 4.5 to 1 in comparison to the scholarship recipients."

USUHS Dean Jay P. Sanford agrees that shutting down the university would save money for the Pentagon, but disputed the amount.

Sanford and others argue that the school not only better trains physicians for dealing with war and natural disasters, but also provides a pool of doctors committed to a military career. USUHS graduates are commissioned officers who owe a minimum of seven years to the military. Payback begins after their residency programs, which take place in military hospitals, are completed.

Rep. Beverly B. Byron (D-Md.), who chairs the House Armed Services subcommittee on military personnel and compensation, concedes that USUHS needs closer oversight, but appears to be seeking a compromise to keep the school open.

A shutdown would set back efforts to "upgrade the quality of military medical care," she said, and throw a wrench into efforts to cut costs of the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS).

Military personnel and their dependents are eligible for free medical care at military hospitals. But they are increasingly being encouraged to seek care from private physicians and civilian hospitals. Part of the cost is reimbursed through CHAMPUS, which cost close to $3 billion in 1990, according to the Pentagon.

Sabo acknowledges that USUHS produces good doctors, but argued that there is no need in tight fiscal times for such a school. "My sense is that it is one of those organizations that exist but has never had that close a look from DOD or Congress."