Alaskans for Medical Choice and Competition has filed a lawsuit naming the state and an Anchorage hospital, but says the ultimate goal is to do away with the system requiring government approval for new health services.

"It restricts consumers' choices on where they can go and it contributes to rising health care costs," former state commissioner and group president Paul Fuhs said in an interview.

The group argues the current system is unfair, unnecessary and poorly run.

The lawsuit involves Providence Alaska Medical Center, which received permission from the state to buy medical imaging equipment just before the state put a temporary halt on further approvals.

The suit names as defendants Joel Gilbertson, commissioner of health and social services, and the parent corporation for Providence Alaska Medical Center.

Before hospitals, nursing homes, kidney centers and other facilities can be built, expand or add expensive equipment, state law says they must justify that the service is needed. The intent is to control health costs by preventing excessive or duplicated services, state officials say.

Freestanding diagnostic centers and residential psychiatric treatment centers were brought into the certificate program this year. Projects costing more than $1 million must receive a certificate of need, or CON.

Fuhs argues that the market should govern what health services are added. In areas such as long-distance telephone service, more competition has lowered costs to consumers, he said. He points to a July report by the Federal Trade Commission and the U.S. Department of Justice that urges states to reconsider their certificate of need programs.

"The Agencies believe that, on balance, CON programs are not successful in containing health care costs, and that they pose serious anticompetitive risks that usually outweigh their purported economic benefits. Market incumbents can too easily use CON procedures to forestall competitors from entering an incumbent's market," the report said.

Still, 36 states now use a certificate of need system, and even those that don't have some way to manage the growth of new health care services, said Sherry Hill, spokeswoman for the state Department of Health and Social Services.

The state supports the certificate system but agrees the particulars of the Alaska program need work. In fact, Fuhs' concerns contributed to Gilbertson's decision to impose a moratorium, more than two months after Providence received permission for a new MRI, Hill said.

Gilbertson on Sept. 2 certified the need for Providence to build a 2,000-square-foot addition and to purchase an MRI unit costing a total of $4.7 million.

Fuhs attempted to appeal the decision on Providence's MRI administratively, but Gilbertson said he didn't have standing.