O'Brien said the advantage of capitation lies in outpatient care. For example, the city might now spend $50 to send a nurse from a neighborhood health center for a personal consultation rather than spending $300 "for emergency-room care and unnecessary hospitalization" later.

In announcing the reorganization, city health officials cited the difficulties patients face in accessing facilities and trends in national health-care reform.

O'Brien said a rapidly expanding case load necessitated a revamping that would direct the system's resources toward patients. The city hospital received around 100,000 ambulatory visits in 1987, but is expected to get more than 230,000 this year, O'Brien said.

"It can be very fragmented for patients, despite the fact that the quality of the care is very, very high," O'Brien said. "We feel we can do a superior job and be a model nationally."

O'Brien said the new network will help Cambridge remain at the forefront of health-care reform. In 1993, Cambridge Hospital won a coveted prize for community service from the American Hospital Association.

O'Brien said the increased popularity of private hospitals made the revamping of the city's only public hospital imperative.

"Public hospitals are significantly in danger and they're closing at a pace exceeding any other division in health care," the administrator said. Only four public hospitals remain in Massachusetts: Hale Hospital in Haverhill, Boston City Hospital, Quincy Hospital and Cambridge Hospital.

Estelle Paris, chair of the city's Health Policy Board, said the reorganization reflects a trend in health-care reform to simplify management. "Reorganization is nothing new," Paris said. "It puts us in line with what's happening in health care reform."

Some city officials, however, said the restructuring was vague and not specific enough.

"It sounds like a good idea, but it's not at all clear to me how this will work," said City Councillor Francis H. Duehay '55. "This has not been presented in any detail to the council, and it seems to me the language is very general."

Duehay added that the restructuring would probably require the formal approval of the council.