Fairview lost sight of its core values: Bill collection must hew to institutional principles.

The controversy over bill-collection tactics at Fairview hospitals has tarnished one of the most trusted medical brands in Minnesota and has delivered a sobering hit to Minnesota's stellar health care reputation.

A state long thought of as a medical pioneer must now lead the way forward in finding answers to the difficult questions created by our increasingly unaffordable health care system:

When is it appropriate to ask patients to pay for their procedures? And who should be entrusted to ask this question?

The recent headline-grabbing report from Minnesota Attorney General Lori Swanson not only highlighted Fairview's disturbing collection practices, it thrust into the spotlight today's uncomfortable health care realities.

Those who are insured often have high-deductible health care plans, resulting in upfront medical costs. And those who can't afford insurance or choose to go without still need medical care. They eventually get it, often at emergency rooms where federal law requires staff to evaluate and stabilize patients regardless of means to pay.

That's a system that too often leaves providers with unpaid bills. In Minnesota alone, the amount of uncompensated care (charity care and bad debt) now stands at $311 million a year -- up 106 percent over the past six years. The cost gets shifted in part to those who do carry insurance.

We don't begrudge hospitals' efforts to collect debts, or their growing use of lower-cost contractors such as Fairview's choice, Accretive Health, to recover these funds.

It's worth noting, however, that even with a growing unpaid-debt burden, Twin Cities hospitals recently posted a solid financial performance. In 2010, according to analyst Allan Baumgarten's most recent report, the metro's nonprofit hospitals reported net income of $450.9 million, or 5.9 percent of net patient revenues. Less than 10 percent of earnings came from patient-care operations, while $500 million came from other sources, such as investments or grants.

Hospital management teams have an obligation to ensure that bills are collected in a manner consistent with the institutions' long-held values -- and that contractors like Accretive hew to these principles. Fairview executives and the hospital's board failed to live up to that responsibility.

Swanson's report does not levy criminal charges, but it paints an unflattering portrait of Accretive's practices at Fairview. Particularly disturbing are allegations suggesting that patients were hassled in the emergency room for payment and that Accretive's numbers-driven culture became a distraction from patient care. Accretive has aggressively challenged Swanson's allegations and has pointed out that it provided a variety of services to Fairview.

Fairview's leaders have acknowledged mistakes. The hospital also terminated contracts with Accretive. That's a worthy step, but doubts about Fairview leadership remain.

This week, Board Chairman Charles Mooty downplayed a poor decision: The board approved Accretive's hiring even though sons of two prominent executives worked there. The relationships were disclosed to the board, but it was still a conflict.

The outrage over the Fairview situation sent a clear challenge to hospitals across the nation: They must strike the difficult balance of collecting what they're owed without violating their community-service commitment.

Minnesota's world-class providers have an obligation to be at forefront in addressing this challenge.