Alaska Imaging Provider Faces Certificate-of-Need Scrutiny After the Fact

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State rules to regulate the health care market often pose a challenge to medical imaging facilities seeking to open a new location or expand their services. However, North Star Radiology in Fairbanks, Alaska, is in the unique situation of seeing their existing business being examined by the state’s Department of Health and Social Services.

North Star Radiology is a group of 14 subspecialty-trained radiologists providing imaging services in dedicated space at the Surgery Center of Fairbanks. According to its website, it has Fairbanks’ only 3T MRI scanner, as well as CT, ultrasound and x-ray imaging devices.

Jedidiah “Jed” Malan, MD, one of North Star Radiology partners, told the Fairbanks Daily News-Miner, that when he and his partners purchased the clinic three years ago, they noted that the previous owners hand not obtained a certificate of need from the state because the rules apply to independent testing facilities and not physician groups. Their attorney agreed that North Star Radiology would remain exempt from the certificate of need requirement after the purchase.

However, Jared Kosin, executive director of the Alaska Office of Rate Review, told the newspaper that in examining North Star Radiology, it meets more than one of the state’s criteria for when a certificate of need must be obtained, including having at least $1.45 million worth of equipment or purchasing a CT machine.

“It sure appears to the department that North Star Radiology falls right square in that definition,” Kosin told the newspaper.

Although it is unusual to hold an organization up to certificate-of-need scrutiny after the fact, the state held a hearing in Fairbanks and will be accepting comments until Dec. 30 on whether the radiology group should continue operating as it currently does. North Star Radiology has filed an application for a certificate of need, but also made it clear that it believes the rule is being improperly applied to a group that should be exempt.

Certificate of need rules are intended to prevent a wasteful over investment in medical services and devices in any one community, particularly in regards to expensive technologies such as CT and MR systems. More than half of all states have some form of a certificate of need policy for health care providers.

The Institute of Justice and Progressive Radiology are currently challenging a Virginia certificate of need rule in Federal Court. Read more here.