Richard Scrushy and HealthSouth Essay -- Business Analysis

Introduction HealthSouth is one of the nation’s largest healthcare providers specializing in rehabilitation. HealthSouth was founded by Richard M. Scrushy in 1984 and went public in 1986. Scrushy served as its Chairman of the Board from 1994 to 2002. The company was incorporated in January 1984 as Amcare Inc. before its name was changed to HealthSouth Rehabilitation Corporation in May 1985. In January of 2003, Mr. Scrushy reassumed the position of CEO. HealthSouth grew rapidly during the 1980’s and 1990’s. This growth was largely due to acquisitions. HealthSouth owned more than 330 hospitals worldwide. It was also during this time that Scrushy became known as one of the highest paid CEOs in the United States. The HealthSouth business model stresses four basic steps from diagnosis to rehabilitation and this model served as its mark of distinction among other healthcare providers (Jennings, 2012, p. 183). From 1987 through 1997 HealthSouth’s stock rose 31 percent per year and Mr. Scrushy told analysts that HealthSouth had matched or exceeded earnings for forty-seven quarters in a row (Jennings, 2012, p. 183-184). Problems at HealthSouth were being uncovered in 2002. In early 2002, Scrushy sold over $75 million dollars worth of stock and an additional $25 million back to HealthSouth. It was also disclosed in August of 2002 that a new Medicare payment policy would greatly lower reimbursements and consequently the stock would lose more than half of its value. Shareholder lawsuits were filed alleging that Scrushy acted on insider information when selling his shares of stock earlier in the year. Most of Scrushy’s alleged misconduct occurred prior to the enactment of Sarbanes-Oxley (SOX). To sum... ....proquest.com/docview/216236868?accountid=28180 Lublin, J. S., & Carrns, A. (2003, April 11). Directors had lucrative links at HealthSouth. Wall Street Journal. p. B1. Retrieved from: http://search.proquest.com.proxy1.ncu.edu/docview/398944990?accountid=28180 Mokhiber, R. (2003). Ill feelings at HealthSouth. Multinational Monitor, 24(11), 7-8. Retrieved from: http://search.proquest.com/docview/208878914?accountid=28180 Solieri, S., Felo, A. & Hodowanitz, J. (2008). Richard Scrushy - The rise and fall of the king of healthcare. p. 337-353. Retrieved from: http://www.soliericpas.com/attachments/2008MarRichardScrushy-TheRise&FalloftheKingofHealthcare.pdf Weld, L. G., Bergevin, P. M., & Magrath, L. (2004). Anatomy of a financial fraud. The CPA Journal, 74(10), 44-49. Retrieved from: http://search.proquest.com/docview/212312866?accountid=28180