In a direct challenge to Canada's government-run health system, the province of Alberta said today it would turn to private, for-profit hospitals to provide some surgical services.

Premier Ralph Klein, a conservative, said the use of private facilities could help shorten waiting times for surgery, lower costs and encourage innovation in a system that has been slow to change and suffered from extensive budget cuts in recent years.

"There are some who would try to make you think that having a private provider delivering a public health service is somehow bad," Klein said. "That's nonsense."

The new policy was immediately met with skepticism from the province's doctors and health care unions as well as federal Health Minister Alan Rock, who vowed to "oppose at every turn any effort to create a parallel private health system in Canada."

Rock's comments reflected the widely held view among Canadians that even modest steps toward privatization put the country on a slippery slope toward a U.S.-style system in which the rich would soon get better health care than the poor and the needs of shareholders would be put before the needs of patients.

The move is almost certain to prompt a national debate about the future of Canada's 32-year-old health system, in which all citizens receive free health care from private physicians and nonProfit hospitals paid for by the government.

For many years it was a point of pride with Canadians that their system delivered better health care at substantially lower costs than the largely private U.S. health system. But a steep rise in government health expenditures in the 1980s finally led to drastic budget cuts in the 1990s, resulting in hospital closures, overflowing emergency rooms, nurses' strikes and the flight of talented doctors to the United States.

In a recent survey by Harvard University's School of Public Health, more than half of Canadians agreed that "fundamental changes" were needed in the health system.

The most commonly cited problems were long waiting lists for many surgical operations. In Alberta last year, for example, a survey by the Fraser Institute, a conservative think tank, found that it took four weeks for a cancer patient to go from diagnosis to chemotherapy, 17 weeks to get an MRI and 36 weeks to have a hip or knee replaced.

But while Klein argued today that contracts with private facilities will help reduce those waiting times, opposition leaders in Alberta said the waits could disappear overnight if Klein would simply restore some of the funds he cut from the public system.

Klein has been trying, with limited success, to inject private sector competition into Alberta's health system since he became premier a decade ago. An earlier plan to allow wealthy citizens to opt out of the public system by paying for services was ruled illegal by the federal government. Since then, the province has moved gradually to contract out services.

Now Klein wants to extend the process to overnight hospital stays at for-profit clinics such as the Health Resource Center, located on the newly renovated third floor of the old Grace Hospital in Calgary that was closed by the province several years ago. Backed by 65 investors who put $7 million into the enterprise, the center claims it can offer overnight stays for a range of orthopedic and plastic surgical procedures at $460 a night--30 percent less than the average nightly cost in Alberta's nonProfit hospitals.

But health policy experts such as Raisa Deber of the University of Toronto said most of the supposed savings would be a result of performing easy, high volume procedures, leaving the nonProfit hospitals with reduced budgets and higher costs for the remaining hard-to-treat cases.

"What you get from this policy is the worst of both worlds," said Richard Plain, a health economist at the University of Alberta.

CAPTION: Premier Ralph Klein says for-profit hospitals can offer some services.