Mark Eustis couldn't have known it at the time, but his downfall as president of Fairview Health Services began last summer with the report of a stolen laptop. Within 10 months, the incident had grown into a public relations nightmare that Fairview couldn't shake.

On Thursday, Eustis, 59, abruptly announced plans to retire, one day after Fairview's board voted not to renew his contract. It was just four weeks after Attorney General Lori Swanson released a scathing report about debt collectors badgering patients for money inside Fairview hospitals.

Initially, the board had said Eustis' job was safe. But criticism has mounted over Fairview's association with Accretive Health, the for-profit company Swanson blamed for the collection practices.

Eustis found himself at the center of the turmoil because he was instrumental in hiring Accretive and has a son who works for the firm.

On Thursday, Fairview board chairman Chuck Mooty acknowledged that the flap had damaged Fairview's reputation and distracted staff.

"The objective here is how do we get everybody back to focus on delivering wonderful quality care and concern for our patients," Mooty said. "We've got to figure out how to restore both trust and the brand and the experience with our patients and our employees."

In a statement Thursday morning, Fairview said that Mooty will serve as interim CEO beginning Aug. 1 and that a search for Eustis' successor will begin immediately.

Eustis, president and CEO of Fairview since 2007, declined to comment.

Questions about Accretive's role at Fairview first surfaced last summer, when an Accretive employee's laptop computer was stolen from a rental car in Minneapolis. The laptop contained personal data on thousands of patients at Fairview and North Memorial Medical Center.

The incident triggered Swanson's investigation into Accretive's activities at Fairview -- an inquiry that would last eight months and ultimately produce a six-volume report about alleged abuses of consumer protection and patient privacy laws.

Swanson declined to comment on Eustis' ouster, but she praised Mooty for providing "strong direction" in addressing the concerns raised by her investigation.

Accretive has accused Swanson of distorting its record. But her report, which attracted nationwide attention, prompted Fairview to cut its ties with the Chicago-based firm last month and has triggered at least two congressional inquiries.

If Fairview executives had hoped the controversy would blow over quickly, insiders say the opposite was true.

Barb Martin, a nurse at the University of Minnesota Medical Center, said employees have been "very concerned" about Swanson's findings. "We want our hospital to be well thought of in the community," said Martin, who is also a board member of the Minnesota Nurses Association. "This is pretty negative type publicity, and if the accusations are true, it's pretty ominous."

Last week, Martin said, an employee at a staff meeting asked managers whether Eustis would "take accountability for this" -- and got no answer.

"The whole experience has been demoralizing," said Dr. Gary Wygard, an orthopedic surgeon who has practiced at Fairview Southdale Hospital for years. He said the board's decision to cut ties with Eustis was "appropriate and necessary," and added that he hoped there would be no more fallout "because it's a wonderful hospital and the people there are devoted employees and doctors."

Dr. Steve Miles, a University of Minnesota physician and bioethicist, said the most disturbing revelations weren't just about heavy-handed debt collectors, but internal e-mails in which Accretive employees talked about patients as "lowlifes" and "deadbeats."

"If a doctor did that, the doctor would have been thrown out of the hospital instantly," Miles said. "This isn't about bill collecting. This is about an attitude toward patients as persons which is absolutely below the bar."

Ties to Accretive

Fairview, a $3 billion nonprofit, is one of the state's largest health care providers, with dozens of clinics and eight hospitals, including the University of Minnesota Medical Center. It traces its roots to the Lutheran Church more than 100 years ago.

In 2010, Eustis was the seventh-highest paid health care executive among Minnesota nonprofits, earning $1.46 million, according to public records. Accretive was hired that same year to try to improve the hospitals' financial performance; Fairview's core operating income has dropped from $110 million in 2009 to $16.6 million last year. Overall, the company lost $22.1 million in 2011, including investment losses.

Before joining Fairview, Eustis, who grew up in Edina, was a top executive at St. Louis-based Ascension Health, overseeing hospitals in Detroit and other cities, where he first worked with Accretive.

On Thursday, he released a brief statement in a message to employees, saying, "I believe deeply in Fairview and the vision we have set in motion."

An outspoken champion of health care reform, Eustis has led Fairview through a series of innovations, including changing the way hospitals and doctors are paid in an effort to reduce the cost of care. "I can retire knowing that what we have worked so hard to establish will carry forward," he said in the internal message.

Mooty said that it could take up to a year to find a new CEO and that he will not be a candidate.

Mooty, 51, is the former CEO of International Dairy Queen, and now runs Faribault Woollen Mills, a historic Minnesota company.

He said Fairview will be looking for someone who can "bring a sense of pride and leadership back to Fairview's organization and its prominence in the marketplace and in the country." 612-673-7384 • 612-673-4213