Convincing arguments have been made by proponents for a private hospital on Maui. The Valley Island would be well served by such a facility, a complement to its single, state-run medical center. Maui's population has mushroomed in recent decades, and it's an aging population. And the demand for healthcare services can only increase along with it.

Yet the State Health Planning and Development Agency felt compelled to deny the proponents of a second, privately- owned hospital a certificate of need, the state permit required to build it. What is wrong with this picture?

The problem seems to be the law and regulations governing how certificate of need applications are evaluated. States around the nation have been rethinking the healthcare regulatory process, and Hawai'i should be among them.

The critical issue is the appeal of the decision blocking the Malulani Health and Medical Center, a planned 150-bed acute care community hospital in Kihei. Permission was denied last month, and a request for reconsideration was filed two weeks ago. The agency is due to issue a decision on the appeal in the next two weeks.

Opponents say they're unconvinced the hospital is needed, but the real barrier lies not in persuading them but in how the law seemingly bars any project that could adversely affect an existing institution — in this case, the state-subsidized Maui Memorial Medical Center.

The criteria the agency is supposed to weigh includes the probable effect of the proposal on the overall costs of health services to the community and its relationship to the existing hospital. On these points, the agency sided with those arguing that services would be duplicated, and costs would rise.

But it also cited a 2004 study that projected Maui will need 55-85 additional acute care beds by 2010, and observed that "The state may not have the capital to expand, replace or significantly upgrade MMMC to meet the future needs of Maui."

This is perplexing. How then could it be a bad idea to bring in a privately funded hospital that asserts it does have the capital to fill that need? One of the agency's review committees — the one based on Maui — supported the plan.

The whole review process originated with a federal act in 1974 — a law repealed 12 years later because Congress found it failed to effectively control healthcare costs. More than a dozen states have no certificate-of-need requirement, and a dozen more have limited the scope of the review process.

This state should rethink it, too, in the next legislative session. Surely, the intent of the law was to enable the development of a healthcare system that fills a need. If the letter of the law obstructs that intent, it needs to be changed.