Healthsouth: The Rise And Fall

Running head: HEALTHSOUTH: THE RISE AND FALL

HealthSouth: The Rise And Fall

Abstract

Richard Scrushy (Scrushy) had a vision and was driven by his leadership and entrepreneurial abilities. Scrushy was the mastermind and major creator of HealthSouth Corporation (HealthSouth). Scrushy served as chairman and Chief Executive Officer (CEO) of the corporation for more than 20 years. A Biographical Sketch: Richard Scrushy and HealthSouth. Retrieved March 22, 2005, from the World Wide Web: http://www.richardscrushy.com/biography.aspx. The U.S. Securities and Exchange Commission charged HealthSouth Corporation and CEO Richard Scrushy with fraud, alleging the earnings of HealthSouth have been extremely overstated since approximately 1999. Bassing, T. (2003, March 19). SEC charges Scrushy; 41.4B civil fraud alleged. Birmingham Business Journal. Retrieved March 23, 2005, from World Wide Web: http://birmingham.bizjournals.com/birmingham/stories/2003/03/17/daily30.html?t=printable. Scrushy has been replaced Jay Grinney (Grinney) who recently accepted the position of President and CEO of HealthSouth. Grinney has a vision for HealthSouth and is confident he will succeed in restoring the corporation to its original status of leadership in the world of healthcare.

HealthSouth: The Rise and Fall

Richard Scrushy (Scrushy) was born in Selma, Alabama in 1952. He had two siblings which consisted of an older sister and a younger brother. Scrushy was raised by two working parents and the family attended a local Methodist Church located in Selma. As a young boy, Richard was always able to find a job making money. His entrepreneur endeavor's emerged during his teenage years and continued there after. A Biographical Sketch: Richard Scrushy and HealthSouth. Retrieved March 22, 2005, from the World Wide Web: http://www.richardscrushy.com/biography.aspx.

Scrushy chose to continue his education beyond high school and was graduated from college, but not before marrying his first wife and becoming the father of two children. During his years in higher education, he became interested in respiratory therapy and enrolled in the respiratory therapy program at the University of Alabama at Birmingham (UAB). Scrushy was intellectually gifted, had excellent leadership abilities and quickly began climbing the corporate ladder of success which required leaving UAB and moving to Wallace State Community College in Dothan, Alabama. One year later, Scrushy accepted a position with Lifemark and began a flourishing rise in the corporate world. Scrushy had dreams of his own and during his successful ascend, began planning a new company. He visualized a rehabilitation corporation with outpatient centers, clinics and hospitals. These centers, which were only a dream, would swiftly move patients through physical rehabilitation and permit them to return to work, jobs, and home at a much quicker pace than individuals were accustomed. Scrushy's vision became a reality and would emerge in the world of health care as HealthSouth. A Biographical Sketch: Richard Scrushy and HealthSouth. Retrieved March 22, 2005, from the World Wide Web: http://www.richardscrushy.com/biography.aspx.

HealthSouth began operation in 1984 with five employees who shared a one room office. Scrushy supplied the majority of the money, paid payroll and business expenses out of his own pocket until spring of 1984. Twelve years after its founding, HealthSouth was named to the Fortune 500. HealthSouth had quickly become a major leader in rehabilitation, surgery, and diagnostics with operations in all fifty states. Centers were strategically placed in numerous countries outside the United States. The centers operated by HealthSouth and under the leadership of Scrushy were regarded highly for the outstanding service, commitment, and state-of-the-art technology. A Biographical Sketch: Richard Scrushy and HealthSouth. Retrieved March 22, 2005, from the World Wide Web: http://www.richardscrushy.com/biography.aspx. HealthSouth Corporation advanced as a thriving business and Scrushy was making millions of dollars. In 1996 Scrushy's pay consisted of the following: $3.4 million in salary, $8 million in bonus and $16.2 million in stock sales for a total of $112.3 million. By 2002, Scrushy's pay reached $112.3 million and consisted of: $3 million in salary, $10 million in bonus and $99.3 million in stock sales. Retrieved March 22, 2005 from the World Wide Web: http://www.al.com/specialreport/birminghamnews/healthsouth/scrushypay.jpg

Currently, HealthSouth has more than 50,000 employees nationwide and has facilities in all 50 states, Puerto Rico, United Kingdom and Australia. Retrieved April 5, 2005 from the World Wide Web: http://www.healthsouth.com/medinfo/home/app/frame.

At the height of Scrushy's career, he owned $278.7 million worth of homes, cars, boats, airplanes, art, jewelry and other possessions. Retrieved April 5, 2005 from the World Wide Web: http://www.al.com/specialreport/birminghamnews/healthsouth/index.ssf. In addition to the numerous monetary items Scrushy accumulated, he has been married three times and has nine children. Retrieved April 5, 2005 from the World Wide Web: http://www.usatoday.com/money/industries/health/2004-10-25-scrushy-cover_x.htm.

Scrushy surrounded himself with an empire that consisted of possessions most people can only dream of, but never have the opportunity to own or experience. Life as Scrushy had become accustomed was about to change as his empire began to crumble as lies, deceit, and money laundering through Medicare fraud surfaced. On March 19, 2003, The Securities and Exchange Commission (SEC) filed accounting fraud charges in federal court against HealthSouth Corporation and Richard Scrushy. The Commission alleged Scrushy falsely overstated earning of HealthSouth by at least $1.4 billion in order to meet or exceed Wall Street earnings expectations. Retrieved March 22, 2005 from the World Wide Web: http://www.sec.gov/litigation/litreleases/lr18044.htm.

The investigations of HealthSouth, Scrushy, and his entourage were conducted by the FBI-Birmingham Field Office, the Internal Revenue Service-Birmingham Division, and the United Stated Postal Service. A total of 19 individuals, including Scrushy, were charged with crimes during the on-going investigation with the government securing 17 guilty pleas among the individuals. Retrieved