Kenneth W. Kizer, the former California emergency room physician who revolutionized the way the nation cares for its ailing veterans, decided yesterday not to seek a second term as the top doctor in the Department of Veterans Affairs.

Kizer, 48, took charge of the VA's far-flung network of 172 hospitals in 1994 and devised a controversial plan to move patient care out of the hospitals and into hundreds of community-based medical clinics. When Kizer arrived in Washington, the number of veterans was declining rapidly and soaring medical costs had taken their toll on the quality of VA hospital care. At the same time, private hospitals were pioneering the use of cheaper outpatient care.

Kizer's plan, initially resisted by some VA officials, fundamentally reshaped the federal government's largest hospital system. "He did nothing less than save the veterans health care system," said VA spokesman James Holley, reflecting a widespread sentiment in the department.

Kizer's "Prescription for Change" called for the VA to aggressively offer veterans preventive health care services and treat them when possible outside of its large hospitals. Some veterans, however, feared that reducing the role of the hospitals was a sign of a lessening of the government's commitment to them.

"I don't necessarily need those big buildings," Kizer once said. "But to some people, those buildings have a lot of symbolism."

Among the groups that complained the loudest was the Paralyzed Veterans of America. The organization told Congress last year that under Kizer the VA was neglecting care of veterans with spinal injuries, who need long-term hospital care.

Kizer denied that, but critical senators were able to delay his renomination to a second four-year term as the VA's undersecretary for health. Instead they granted Kizer, a registered Republican, a six-month reappointment that expires today. Sen. John F. Kerry (D-Mass.) also had put a hold on his confirmation because of planned cutbacks at hospitals.

Yesterday, Kizer asked the White House to withdraw his renomination, citing the possibility of yet another fight over his confirmation. "I promised both my family and myself that I would not repeat that scenario," Kizer said in a two-page letter to President Clinton.

His family has remained in California while Kizer, a former California state health director, worked at the VA. Aides said his family was a key factor in his decision to leave the department.

In the letter to Clinton, Kizer said he had met his mandate to "reengineer the veterans health care system so that it could effectively function in the 21st century."

"Indeed, without reservation I can tell you that no other health care system in the United States has changed as rapidly or as dramatically as the veterans health care system," he told Clinton.

Those changes "have not been without controversy or their critics," he acknowledged. In addition to criticism from the paralyzed veterans group, his changes increasingly attracted fire from government unions unhappy over a decline in hospital jobs.

However, some veterans groups, including the American Legion, applauded his efforts. "We're very pleased at his efforts at enrolling veterans for health care," said Carroll Williams, the Legion's director of veteran affairs and rehabilitation. "Our only question is whether the budget will allow those veterans to be served."

The Clinton administration has proposed a VA budget that depends on new sources of revenue, such as Medicare and private insurance carriers, to meet the department's growing health care budget and reduce the planned layoffs of VA workers. That approach has brought sharp criticism of the VA from Democrats and Republicans on Capitol Hill.

It is certain to be a major problem for Kizer's successor. He has promised to remain on the job "for a short period of time to assist with an orderly transition." By law, the VA must assemble a search committee to begin reviewing candidates for the next undersecretary.

CAPTION: Kenneth W. Kizer reshaped the Department of Veterans Affairs' health care system.