When the Health Maintenance Organization known as Maxicare suddenly closed its Utah operation earlier this month, it was a shock to the 20,000 people who found themselves without insurance coverage. Other HMOs are arranging to pick up the slack, but questions remain in the minds of many about the dependability of HMOs in general.

Maxicare's demise was surprising because the company has been growing rapidly across the nation. In 1985, when Maxicare insured 687,000 people nationwide, it made a $20 million profit. In 1986, the Maxicare membership reached two million, and profits fell by 75 percent. Last year, with 2.3 million insured, the HMO lost a total of $70 million.As Malcolm Gladwell of The Washington Post so neatly put it: "If Maxicare gets any more popular, it could go out of business."

In Utah, it has gone out of business. But why would a company that is growing so fast have such problems?

The answer lies in the nature of the HMO business, which is experiencing rapid growth and heavy competition. The growth itself is a problem, with many HMOs expanding faster than they have been able to manage their costs - especially since medical costs themselves have been rising at 20 percent or more each year.

Every area - and Utah is no exception - has a jumble of HMOs, some independent, some run by hospitals, some by doctors, some by insurance companies. All are operated differently and the competition keeps many from getting a big enough share of a local market to be profitable.

While the total numbers nationwide may look impressive, it is on the local level, state by state, where the competitive struggle is being waged. And there are far more losers than winners in any given locality.

The most successful HMOs are the ones who tightly control the access to doctors and limit the freedom of choice of patients. National figures indicate that the more freedom of choice, the more expensive the HMO costs. This is borne out in Utah, where FHP - which offers little freedom of choice to patients, except among a limited staff of doctors - is the only really profitable HMO in the state.

Yet freedom to choose almost almost any doctor as the care provider is the most popular method among consumers.

This is raising a three-sided conflict. Employers often prefer the limited HMO because it tends to be less expensive as a package deal. Workers want freedom of choice. And the limited-access HMOs are the most successful in keeping costs down.

This appears to be leading toward a time when more and more people are going to find themselves with less say about who their family physician might be. Such regimentation may be one of the inevitable prices that will be paid as a way of keeping the lid on medical costs. Those who insist on keeping that choice may be asked to pay a larger share of their own medical costs.

Clearly, medical care, its cost, the way it is provided, and the quality of such care, are in for some serious challenges. What the end result will look like is still an open question.