While we believe it to have been well intended at its origin, Virginia’s method of regulating the health care marketplace is broken and in need of urgent attention by the General Assembly.

As the Times’ Stephen Faleski reported on last week’s front page, state Department of Health bureaucrats have recommended rejection of a “certificate of public need” for Riverside Health System’s planned 50-bed hospital on the outskirts of Smithfield.

Enacted in 1973, the certificate-of-need process requires state approval for construction or expansion of hospitals and other health-care services and facilities such as nursing homes.

Fortunately, Riverside, which made a compelling case for its Isle of Wight expansion plans and received hundreds of letters and comments of support at a hearing last month, will get another chance to talk some sense into VDH at an “informal fact-finding conference” on Dec. 10. The final decision, expected in January, rests with state Health Commissioner Dr. Norman Oliver.

Bureaucrats’ recommendation of rejection is rooted in the flawed logic that available hospital beds in faraway Norfolk and Virginia Beach render beds in Isle of Wight unnecessary. Norfolk and Virginia Beach are considered in the analysis apparently because they, like Isle of Wight, are part of Planning District 20.

That “south of the James” district provides poor context for such an important decision. VDH should only consider a reasonable radius around Smithfield, to include Hampton and Newport News, where Riverside is based. If Riverside, a private, nonprofit entity, has assessed northern Isle of Wight as capable of supporting a 50-bed hospital and is willing to risk tens of millions on its construction and future viability, that speaks volumes.

We don’t deny that the health care marketplace, much like public utilities, is complex, but we believe strongly that the principles of a free-market economy still apply: Consumer choices and, by extension, increased competition result in better quality and lower prices.