State can’t reverse ruling on certificate, attorney says

COMPETITION: Imaging Associates of Providence is in dispute with hospital,
state.

By BECKY STOPPA
Anchorage Daily News
Published: March 14, 2007

PALMER – State law bars the state Health Department from reversing a decision
last year to exempt Providence Health Systems from operating a medical
imaging office that competes with Mat-Su Regional Hospital, an attorney for
Providence said Monday.

Imaging Associates of Providence, a partnership between Providence and a
group of radiologists, opened at the Glenn and Parks highways interchange just
six months after Mat-Su Regional opened nearby.

Imaging Associates, which provides many of the same diagnostic services that
Mat-Su Regional provides, such as magnetic resonance imaging, X-rays and
ultrasound imaging, now awaits an April decision by a hearing officer.

Imaging Associates appealed a recent Health Department decision requiring the
group to obtain a state certificate of need. An unfavorable decision could force
Imaging Associates to close its branches in the Mat-Su and Anchorage.

The state issues a certificate of need to health care facilities with capital
investments totaling more than $1 million. The Legislature in 2004 amended the
law to require independent diagnostic testing facilities to adhere to certificate-ofneed
requirements. The amendment left physicians’ offices exempt.

State Health Commissioner Karleen Jackson twice in 2006 deemed
Providence’s Mat-Su facility a physicians’ office and exempted it from the
certificate of need requirements.

Mat-Su Regional from the start protested the Providence presence. The hospital
questioned Jackson’s decisions to exempt Providence from the certificate. A
certificate is predicated on the idea that by reducing the number of service
providers, the cost of service is kept down, David Pierce, the state certificate-ofneed
coordinator, said in January.

Jackson in August changed her mind after a Superior Court judge’s ruling in
Fairbanks.

In that case, Banner Health Systems, which runs Fairbanks Memorial Hospital,
filed suit against the commissioner and Alaska Open Imaging. The health
commissioner also had exempted Alaska Open Imaging from a certificate of
need for its Fairbanks facility.

Superior Court Judge Niesje J. Steinkruger found the commissioner ignored
legislative intent in doing so. That intent was to level the playing field between
hospitals and independent diagnostic testing facilities, according to the original
legal complaint filed by Banner Health Systems.

According to Steinkruger’s ruling, the Legislature intended that Alaska Open
Imaging and "similar imaging facilities" be subject to certificate-of-need
requirements.

Jackson then said the state would revise its certificate-of-need policy and
ordered Imaging Associates of Providence to apply for the permit for its facilities
in Mat-Su and Anchorage.

The phrase "similar imaging facilities" in the court ruling, Jackson said, makes
clear the state should consider the array of services provided by a facility, not just
the ownership of a facility. As such, she said, the Providence imaging centers are
independent diagnostic testing facilities, not physicians’ offices.

Imaging Associates appealed Jackson’s order and was granted an administrative
hearing. A decision is expected by mid April, according to documents on the
state certificate-of-need web site.