HealthSouth

Encyclopedia : H : HE : HEA : HealthSouth

HealthSouth Corporation NYSE: [HRC], based in Birmingham, Alabama, is the US's largest healthcare services provider. Best known for its rehabilitation services, HealthSouth has more than 1,900 facilities in fifty states, Canada, Australia, and Puerto Rico. It has both inpatient and outpatient rehabilitation facilities and outpatient surgery centers, including more than 330 hospitals. HealthSouth was involved in a corporate accounting scandal in which its CEO Richard M. Scrushy was accused of directing company employees to falsely report grossly exaggerated company earnings in order to meet stockholder expectations.

Contents

1 Company beginnings
2 Accounting scandal
3 Affiliated companies
4 External links
5 References

Company beginnings

HealthSouth was incorporated in Delaware in 1984 by its founder Richard M. Scrushy. The company went public with its IPO in 1986. Scrushy became chairman and chief executive officer in 1994.

Accounting scandal

See also: creative accounting and List of corporate executives charged with crimes

On March 20 2003 HealthSouth and its founder/CEO Richard M. Scrushy were accused by the U.S. Securities and Exchange Commission (SEC) of an accounting scandal where the company's earnings were falsely inflated by $1.4 billion. In 1996, Scrushy allegedly instructed the company's senior officers and accountants to falsify company earnings reports in order to meet investor expectations and control the price of the company's stock. In certain fiscal years, the company's income was overstated by as much as 4700 percent. The $1.4 billion represents more than 10 percent of the company's total assets.

In June of 2005, Scrushy was acquitted on all 36 of the accounting fraud counts against him, most notably one count in violation of the Sarbanes-Oxley Act, which casts doubt on the enforceability of the law. But in June 2006, he was convicted on bribery charges, having stood accused of arranging $500,000 in campaign donations in exchange for a seat on a state hospital regulatory board.[link]

Affiliated companies

Offspring companies:

MedPartners Inc. — a physician practice management company founded by Scrushy, today the company is known as Caremark Rx
Capstone Capital Corp. — a real estate investment trust founded by Scrushy
Source Medical Solutions — healthcare technology systems

Other affiliated companies:

GG Enterprises (Hoover, Alabama) — founded by Scrushy's mother and brother
21st Century Health Ventures (Birmingham) — founded by Scrushy and former HealthSouth CEO Michael Martin
MedCenterDirect.com (Atlanta) — HealthSouth bought 6.4 million shares of this hospital supplies company
Integrated Health Services Inc. (Sparks, Maryland) — a nursing homes and rehabilitation center company that Scrushy was a director of in the 1990s
HealthTronics Surgical Services Inc. (Marietta, Georgia) — Michael Martin was director while CFO at HealthSouth

External links

[HealthSouth corporate website]

References

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