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Birth of HealthSouth
- Richard Scrushy and Aaron Beam, along with others, create what will be the leading provider in physical rehabilitation.
- Leading to the fraud scandal: Scrushy wanted a different accounting method and only Earnst & Young to do HealthSouth's accounting.
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Mission Statement Contradictions
Integrity
We consider trust and integrity to be essential in all our relationships. We are committed to operating our business honestly, with financial integrity and in adherence with all federal, state and local regulatory obligations affecting the operation of our business.
Respect
... In addition, we respect our patients, physicians, shareholders, business partners and vendors, recognizing the valuable role each of them plays ... striving to communicate with them openly and honestly. -
Fraud Started
Suspected that HealthSouth's fraud scandal commenced this year (the year that the company started working with patients). -
Fraud Discovered From Within
"We're under certain pressures to make certain numbers. We have an obligation to stockholders and shareholders," - Scrushy to Maron Webster (HealthSouth auditor).
At court, Webster announced that he was fired for questioning HealthSouth's accounting. -
Heavy Earnings = Even More Profits
Geoffrey E. Harris joins HealthSouth in the midst of the scandal and earns the company billions. Due to these earnings, HealthSouth is allowed more bank loans. Harris had 'predicted' the amount of profits, in which the company's accountants had to produce to match. -
Birth of MedPartners
Scrushy, Beam, Larry House and others create MedPartners. HealthSouth does business with MedPartners, thus creating conflict of interest for these men on top. -
Birth of Capstone
Scrushy and two others from HealthSouth create Capstone, a company that buys buildings from others, including HealthSouth, then sells them leases. HealthSouth funded the company when it was created. -
HealthSouth in the Lead
HealthSouth now rules the rehabilitation industry within the United States, with 250 buildings across the country. -
Company Investments
- HealthSouth buys Caremark after that company settled on a fraud penalty in court
- HealthSouth buys Surgical Health, a company of which Scrushy was already an executive
- HealthSouth sells Capstone
- In total, HealthSouth buys approximately $2.5 billion worth in companies throught the year
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Birth of 21st Century Health Ventures
- As Caremark's court case is completed, MedPartners buys the rest of the company.
- Scrushy, Martin (former treasurer) and Hicks create a new company called 21st Century Health Ventures, in which HealthSouth invests (which would be another conflict of interest for Scrushy and others).
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Expansions and Falling
- HealthSouth is so powerful that no one questions the company about its finances.
- Scrushy has HealthSouth expanding into Australia and the UK, as well as in companies closer to home.
- MedPartners expanded too quickly to sustain itself, thus Larry House leaves the company for Scrushy to sustain. The company spends another $200 million, even when in trouble themselves.
- Martin takes over as CFO from Beam at HealthSouth but does not stop the fraud scandal.
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HealthSouth On Top
HealthSouth has funded several halls, stadiums, etc., including the Olympic Committee's Medecine and Sports Science Centre. Scrushy is appearing more and more as if he will get into politics for his next career move. -
New Medicare Policies
HealthSouth's business not doing well at all due to new regulations from new Medicare insurance policy leading to share prices dropping by 93%. Scrushy does not appear worried though he later must admit to shareholders that they are not doing well. The shareholders are not pleased and accuse the company of insider trading. Patient treatments are suffering. -
Fraudulant Behaviour, Business Suffering
HealthSouth accused of overcharging patients and charging for treatments that were not provided. Allegedly the company also did not provide treatments up to standard, and in addition, these treatments were performed by illegitamate physiotherapists. With the new policies, HealthSouth has removed their home care treatment option due to financial problems. -
Downfall of All
- HealthSouth spends one billion dollars to buy stocks back, as well as closing several hospitals.
- MedPartners sells its company in Europe, only to keep stay in the U.S. under Caremark, after losing $1.26 billion.
- Government made MedPartners go bankrupt
- HealthSouth goes public that it is not making much profit and thus is planning on separating for in- and out- patient businesses
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Shares Increasing
- Both Caremark and HealthSouth share values are increasing.
- HealthSouth is in debt $3 billion but Scrushy insists they are not in any danger. Fraud continues within the company.
- Scrushy sold all of his shares with Caremark.
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HealthSouth Looking Up
As HealthSouth starts paying down its debts, Scrushy leaves his position at Caremark. -
HealthSouth plummets
- Share prices dropped 63% this year
- Scrushy only chairman now after leaving CEO position
- government gets involved with the fraud cases, questions of insider trading arise
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Scrushy Fired
SEC against HealthSouth for fraud, Scrushy was dismissed from the HealthSouth corporation. -
Scrushy Guilty
Scrushy accused in court of 85 criminal charges, though he still pleads innocent to all of them. Charges include money -laundering, fraud and conspiracy. -
Case Begins
Scrushy's court case begins, Scrushy denies involvement in fraud, though all other CFO's and executives plead guilty. It is evident of fraud having occured since at least 1997. Scrushy claims he was framed.
- Scrushy sold shares from HealthSouth for $170 million since 1991
- courts find out that Scrushy was an extremely harsh employer and that the company threatened employees jobs if patient numbers were not kept high enough (even if they should have received more intense treatment elsewhere) -
New but Fewer Charges
Scrushy's number of charges has dropped from 85 to 58, though added were charges for perjury and obstruction of justice. -
All Charges Dropped
Scrushy is a free man, with having all charges been dropped. -
HealthSouth Flourishing
After the fraud scandal was dealt with, HealthSouth underwent a changeover of executives. Employees were better treated and paid their due salaries and patients were treated by legitamate therapists. Today, HealthSouth is a flourishing company.