BEDFORD, INDIANA: WHOSE AMBULANCE WILL GET THERE FIRST?

Hospital care in Bedford, Ind., is an odd case of capitalism in action--maybe even hyperaction. Should you get into a car wreck on Highway 50 as it passes through town, two local hospitals can send ambulances to compete for your business. If you are sufficiently alert, you can choose between Dunn Memorial Hospital and Bedford Regional Medical Center. To avoid unseemly tugs of war, the city requires that the hospitals alternate pickups of victims not well enough to state a preference. And the police are on hand to sort things out. "They'll back off when it's not their turn," Bedford chief of police Bill Haverly says matter-of-factly. "There's never been a real fight as far as I can remember."

All the same, competition to deliver medical care in Bedford can get fairly heated. When the two hospitals aren't squabbling over roadside opportunities, they are engaged in a larger struggle for the sick and elderly in this town of 15,000. Their philosophies are at opposite extremes of today's health-care debate. Bedford Regional has eagerly embraced managed care and linked itself to a statewide hospital chain. County-owned Dunn is sticking to an almost Norman Rockwell vision of traditional health care. The hospital war being waged nationally is taking place here in microcosm; it is at institutions like Dunn that traditional medicine may be making its last stand.

Bedford is a torpid southern Indiana stone-quarry hamlet where the politics are dull, racial disputes are rare, and crime is so infrequent that Mayor John Williams boasts that his home has no lock on the front door. But bring up hospital loyalties--an allegiance some Bedford families have solemnly passed down for three generations--and townspeople are likely to get agitated. "You don't get the care you need there," 86-year-old Martha Terrell, a Dunn patient of 50 years' standing, says of the institution she won't patronize. "Whenever anyone new moves to town, I tell them to be sure to come to Dunn."

There is broad agreement in Bedford that a merger would make sense. Services at the two hospitals overlap, and beds go empty. A study predicted that by 2001 Bedford will need only 65 beds, 95 fewer than it has now. "Those numbers are probably going to drive where we go with this whole thing," says John Birdzell, CEO of Bedford Regional. Dunn's CEO, Richard Hahn, does not disagree. "There's been a consensus that one hospital would be a good goal to strive for," he says. But over the past 15 years, four attempts to merge have failed when the two sides could not agree on whether the new hospital would tilt toward a group practice of salaried doctors or the classic system of independent ones. At Dunn, doctors are all self-employed and work for patients on a fee-for-service basis. "The worst thing that has happened in medicine is the HMO," says Dr. Lawrence Benham, a grandfatherly 84-year-old in his 47th year of practice at Dunn. "There are 30 people standing around a pile of money, and what they don't spend at the end of the year they get to split with the CEO." Dunn makes a point of not rushing patients out the door. The average length of stay for a normal birth is two days, compared with 1.3 at Bedford Regional. And the stay is also longer at Dunn for conditions like heart failure and shock, atherosclerosis and diabetes.