Anchorage Daily News

WASILLA - The state a few weeks ago denied a permit Imaging Associates of Providence LLC needs to operate a radiology center in the Matanuska-Susitna Borough. Small problem: the center's been up and running, literally next door to Mat-Su Regional Medical Center, since 2006.

The company twice got word from a top-ranking state official it didn't need a certificate of need permit to operate centers in the Mat-Su and Anchorage.

The company - a joint venture of six radiologists and Providence Health System - argued the new center was a doctor's office and exempt from the process that ostensibly protects against unfair competition among big health care facilities.

They talked up their $12 million center that provides diagnostic scans - MRIs, mammograms, X-rays - as healthy competition for the new hospital that would keep prices down.

But based on a Fairbanks court decision in 2006, former health and social services commissioner Karleen Jackson reversed her decision. Imaging Associates needed to apply for the permit after all.

Now the state says there isn't enough demand for the two radiology centers that pre-dated the one built by the Providence partnership, much less three.

The company intends to appeal its case to a state administrative law judge.

NUMBERS NOT THERE?

The state did approve a permit for Imaging Associates' Anchorage center.

The difference: In Anchorage, there are enough patients getting MRIs and CAT scans to meet a state statute.

That law says any medical facility that costs more than roughly $1 million to build must be able to provide 3,000 MRI and CT scans within three years of operation.

In the Mat-Su, Imaging Associates doesn't meet the standard now and wasn't expected to meet it by 2011, according to the state's findings.

In fact, the two other Mat-Su imaging centers would not meet the standard, the state claims. The state says a total of 4,411 MRIs here shakes out to an average of 1,473 MRIs per year, well below the state-established minimum use level.

The Providence partnership "disagrees with those numbers," said chief executive Dave Pfeifer.

It's unlikely the state or a court would order the place closed as the case makes its way through the appeals process, said Peter Gruenstein, the Anchorage attorney representing the company.

Catherine Stadem, spokeswoman for the Department of Health and Social Services, said she couldn't confirm that because a state attorney familiar with the case was out of the office.

The appeal will focus on various contentions, chief among them the state's reversal on whether the centers needed to apply in the first place, Gruenstein said.

The state has always agreed with the contention made by Imaging Associates that its radiology centers are operated as doctors' offices rather than testing facilities, he said.

MANY WANT PERMIT GONE

Mat-Su Regional Medical Center originally pressed the state to require the permit. The center also offers radiology services and argued Imaging Associates would undercut that sector, potentially jeopardizing the only community hospital in the Matanuska-Susitna Borough.

Providence owns more than 40 acres of land surrounding the hospital, including the property where the radiology center sits.

Hospital CEO Norman Stephens was out of the country and could not be reached for comment.

The hospital is owned by Community Health Systems Inc., the largest network of publicly traded hospitals in the country.

Providence supporters say radiology patients in the Mat-Su will be the victims if the state's action does end up closing the center. Imaging Associates offers lower prices and provides a simpler admissions process without the need to walk into a hospital.

A third radiology center operates here too: Alaska Open Imaging Center LLC in Wasilla.

The center's chief executive agrees with others who want to do away with the certificate of need process, including the Alaska State Medical Association and Gov. Sarah Palin.

Open Imaging was at the center of the Fairbanks case that changed the state's position on Imaging Associates.

The company was forced to shut down its Fairbanks radiology center after a year of operation, Jeff Kinion, the chief executive of Alaska Open Imaging, said.

A judge told them to go through the certificate of need process or close. The company too had twice been told they were exempt.

Yes, Kinion said, he faces competition from other radiology centers in the Valley. And yes, he could always use more patients with a relatively small population and lots of expensive equipment to pay off.

"But the state, are they supposed to be the sheriff with that?" he said. "I thought this was supposed to be America."

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