Healthsouth

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Mohamed A. Hassan
Ph.D Research Scholar
Introduction
From a business point of view, any organization works hard to achieve the highest ranking position among its competitors as well as working on showing loyalty to their customers’ base. However, in today’s business world, this is not the case as it has always been ever since the organizations started and existed in the world. Becoming competitive and the ability to retain a great base of loyal customers do not just happen with the blink of the eye (Jennings, 2009). Any organization needs to be compliant with many factors such as effective leadership, innovation and creativity, ethical behaviors and honesty, positive organization culture, openness and good practices among others. Having said that, there are some organizations that want to achieve more than is their normal operations capabilities so they can achieve a high set of goals and objectives and to gain bigger market share than their competitors at all the times. Such cases happened in the past with several companies such as Enron, WorldCom and others. In such scandals, the CEOs were accused of conducting illegal actions and unethical behaviors.

Health South: The Scrushy Way
Richard M. Scrushy, the former CEO of HealthSouth Corporation which owns a chain of hospitals and clinics, benefitted from some of the most well known celebrities that were associated with HealthSouth organization. The former CEO used the celebrities’ fame and reputation in order to gain more people and customers to enter the facilities and to seek their services. In addition to using such an unethical method to advertise and market their business, HealthSouth also used to list on their website some of the well know name of the celebrities and sports figures that used their services and facilities. In 2003, the Securities and Exchange Commission (SEC) accused HealthSouth and its CEO Richard Scrushy with overstating and inflating the earnings of the company. Also the federal grand jury charged Richard Scrushy on 85 counts including securities fraud, conspiracy and money laundering and others charges related to inflating HealthSouth’s earnings. Impact on Stakeholders

The dishonesty of Richard Scrushy and his management team had a negative impact on HealthSouth’s stakeholders including the employees, the customers, and the patients. Below I discuss the background of Richard Scrushy, the founder and CEO of HealthSouth; I also discuss impact on the stakeholders such as the employees, investors, and patients. Richard Scrushy

Richard Scrushy was a high school dropout, after completing his GED, he studied at the University of Alabama and earned a degree in respiration therapy in 1974. He worked as an instructor at the University of Alabama until 1979 then he left academia and accepted a position at a Texas health care management firm (Heylar, Cherry, & Neering, 2003). Between 1984 and 1997, Scrushy started HealthSouth after the firm he worked at was sold. HealthSouth grew from one facility to 2,000 facilities treating more than 120,000 patients each day, with earnings of $106 million (Solieri, Felo, & Hodowanitz, 2008). Richard Scrushy followed certain trends in HealthSouth business model, some of these trends were: making the employees work faster, lowering the medical care reimbursement, and emphasizing on rehabilitation services rather than surgery and he also changed the HealthSouth rehabilitation centers to a point that they looked like as if they were upscale clubs not hospitals. The company acquired many other rehabilitation businesses and eventually it became the largest provider of rehabilitation services in mid 1990’s. In 2003, the Securities and Exchange Commission (SEC) accused HealthSouth and its CEO Richard Scrushy with overstating and inflating the earnings of the company. Also the federal grand jury charged Richard Scrushy on 85 counts including securities fraud, conspiracy and money laundering and others charges...
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