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The program is selective, taking only about three out of eight applicants, most of whom are referred to the home by school and parish youth counselors, juvenile police and court workers and other youth-care agencies. The first requirement is that the youngster has to want to enter the home.

After an initial screening process, each child is given a battery of psychological tests costing $370. The tests serve to eliminate anybody with an IQ of less than 80, a level below which an individual cannot comprehend or respond to the home`s therapeutic methods. They also eliminate anybody with psychotic problems the home is not equipped to treat. With a program that costs $90 a day per resident, the home is willing to accept only those children who in its judgment can respond to its methods of treatment.

Drug- and alcohol-addicted youths who appear to be good prospects are first shipped off to ”detox” hospitals for anywhere from one to three months at a cost of up to $8,000, paid by the home. The youths allowed to enter the program do so only after agreeing to several non-negotiable rules.

Drugs, alcohol and gang membership are infractions that are grounds for immediate expulsion from the home. Each youth has to go to school, which can be any one of 26 public and private high schools in the metropolitan area. They are not allowed, at least initially, to take part in extracurricular activities, including varsity sports, because they have to be at the home at night for therapy.

The boys` home on West Jackson Boulevard, though built along institutional lines at the turn of the century, has been rehabbed and given as homey an atmosphere as possible. The boys are assigned two to a room, though each has his own partitioned space he can decorate as he wants.

Two years ago the Walgreen family gave its mansion at 116th Street and Longwood Drive to the home, enabling it to begin accepting girls. Twelve girls now live in the 80-year-old mansion, following a regimen identical to that of the boys.

FROM THE TIME OF ADMISSION, residents know the staff`s diagnosis of them. Each signs a contract agreeing to a short list of goals he or she must work to attain-usually altering unacceptable behavior and confronting psychological issues contained in the diagnosis.

Those who require it must undergo individual psychotherapy with a staff or an outside specialist. The bulk of the therapeutic work, however, is done within the floor units. Staff and residents are together for much of the waking day outside of school, and the behavior and activities of each child are duly noted in a staff log throughout the day.

The log serves to keep everybody on the staff alert to mood and behavioral changes of each resident on a constant basis. It is also used as the basis for a sort of point system that rewards and punishes the youngsters for positive and negative behavior over a week`s time. Positive behavior gets rewards such as extra weekend time off; negative behavior can result in weekend groundings and curtailment of privileges.

The residents and staff come together in their respective units every night, and each unit holds an extended group-therapy session at least once a week. The sessions are intense, no-holds-barred affairs in which everybody is open for criticism and evaluation. As such, virtually nothing about an individual-resident or staff-remains a secret very long. The dirty linen gets aired, and the guilt, shame, anger or whatever emotions that might lurk beneath the surface are exposed, analyzed and dealt with.

Theresa Gossman, director of the home`s residential programs, speaks of breakthroughs, moments when both the staff and the child discover and confront some pivotal event in the child`s past that causes continuing anguish. One boy, for instance, automatically turned on a TV set whenever he entered his unit`s lounge, turning the volume up to a deafening level, though he rarely watched the set.

”We found out his father was a drug addict,” Gossman says, ”and he got into the habit of turning up the television volume at home to drown out the sound of vomiting when his father went into withdrawal. We had to get him to talk about it, to cry about it, before he could start to heal.”

Gossman, one of the prime movers within the staff to establish the therapeutic concept at the home, says the program is designed to go beyond changing negative behavior. The therapy gradually forces kids to confront their personal torments with the support of the staff and the other kids at the home. Once they do, she says, they begin to respond better to those around them, to salvage what is good from their past and to create positive human experiences they never had before.

”We teach people to love,” Gossman says. ”We always knew that we could change behavior here, but what good would it do if they then left here still carrying all this emotional crap inside? We realized we had to reach deep inside of them. It opens a lot of pain, but once it`s on the table and the staff can begin to deal with it, people start to grow and to function as adults.”

The process, according to the staff, is grueling for both residents and staff. Under it, each staff member has to be fully aware at all times of the staff-agreed prognosis, therapeutic aims and progress of each resident. Thus there is a universally consistent approach applied to each resident, lessening his opportunities to play one staff member off against another.

Even the cooks and the janitors, who naturally come to know the kids through normal daily contact, are pulled into the therapy process.

For example, a female cook at the home quite naturally becomes a surrogate mother figure to many residents who sometimes are inclined to talk more openly with her than with the professional staff. One might mention to her some school triumph, such as making the honor roll, but not to anyone else. The cook is expected to report that sort of information to a care worker so that it can be discussed in the wider community of the home, just as she would be expected to report, say, a child`s threat of suicide.

Residents are thus under constant scrutiny by both the staff and their peers and begin to realize that their words and actions leave them open to praise or rebuke from the entire Mercy community. Obviously, it is an onerous process and not a rapid one. Ideally, a child stays in the program for years, not just weeks or months. Some staffers maintain that it usually takes about three months for an individual to begin to respond and participate, and 1 1/2 years to make significant progress.

It takes a staff far different from the one Father Close inherited in 1973 to run such a program. When it was a traditional orphanage, the home relied heavily for staffing on priests, nuns and brothers from various religious orders. They were often magnificently successful in imparting the love, values and ethics that allowed their orphan charges to succeed later in life, but without formal child-care training, their presence counted for little with various state licensing regulations that demanded formally trained youth workers.

Of the home`s staff, now numbering 92, only Close is an ordained priest. There are two Christian Brothers and five nuns, but as with their lay colleagues at the home, who may be Catholic, Jewish or Protestant, they are on the staff not for their religious affiliation but as trained professionals with a strong commitment to religious ethics.

One of the nuns is Dr. Kim Mis, a psychologist and the director of residential services, who says that whatever the religious beliefs of any of the staff members, they are not there to proselytize or convert their young charges. But religious faith, she adds, serves to foster a desired spiritual bonding among the staff members themselves.

”We don`t hire people here because they just want a job but because of their values,” Mis says. ”There`s a certain solidarity here in terms of staff that transcends our treatment of kids.”

AS IN ANY HOME, THE MERCY children eventually have to leave and try their own legs in the real world, doing so generally by the time they are 18. Though it is rather unusual with such institutions, Mercy maintains a link with the kids through its aftercare program. The door remains open, space is always made available and the staff stands ready for kids who suffer setbacks after they set out on their own.

For those who go to college, the link is an assurance that if they run into a problem, be it personal, financial or otherwise, the home will be there to help. Each college student receives a telephone call from the home once a week and gets a periodic package in the mail containing toilet sundries, candy and snacks. Many of the students return to the home for the Christmas holidays.

Increasing successes have now pushed Mercy into a new phase. Beginning this year, the home has started its own think tank as a child-care research center, with consulting psychologist John Mayer serving as executive director of the research unit. Nobody on the staff is suggesting that their therapy program is the only or the best way to provide long-term care. But there is a palpable sense at the home that they are onto something good. The per-child cost is comparable to that at other long-term-care facilities, and it is far lower that those at controversial adolescent wards in many private mental hospitals that charge up to $500 a day for short-term, insurance-financed treatment.

”We need to do research and study what it is that we`re doing,” Mayer says. ”Why is it working? Why is there no significant vandalism within the home when it is so prevalent in other programs? Why isn`t fighting a major problem? This is a hell of an atmosphere at this place that I haven`t seen anywhere else. We can`t tell you yet why it works, we can only speculate.”

In the end, stripped of the modern psycho-jargon that has creeped into child-care facilities, what they are doing at Mercy in 1990 perhaps is not so different from what they did in 1890. The old-fashioned verities that the priests and nuns sought to impart to the kids at the orphanages are the same verities the Mercy staff is now working to instill in their modern-day charges: Love. Community. Self-respect. Honesty. Hard work. Self-reliance.

”Realizing my parents had abandoned me, I felt I belonged to no one,”

wrote one young woman from the girls` program in an autobiographical letter she composed to apply for college. From being one of five children deeply wounded by parental alcoholism and neglect, this Mercy alumna is now one of the home`s ”giants,” a student now at one of the nation`s elite

universities. ”I kind of feel like a real kid now. I believe the relationship I have gotten into with Mercy Girls` Home has helped me deal with anger and sadness in my life. I don`t feel so cheated, now that someone, somewhere, is making an investment in me and cares about me.”