The Accounting Scandal of Healthsouth - Essay

906 words 4 pages
The Accounting Scandal of HealthSouth

HealthSouth Corporation is based in Birmingham, Alabama, it is the largest provider of rehabilitative health care services. It operates in 26 states in the United States of America and in Puerto Rico. HealthSouth provides rehabilitation hospitals, long term heightened care hospitals, outpatient rehabilitation satellite clinics and home health agencies.
HealthSouth was found by Richard Scrushy in the year 1984 and was called Amcare, Inc. It opened its first facility in Arkansas and later on that year another one in Birmingham. In 1985 the company changed its name into HealthSouth Rehabilitation Corporation, in 1990 the company expanded to 50 facilities around the US.
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At the trial some of the former executives of HealthSouth testified against Scrushy claiming he ordered the accounting manipulation, but these officials were pleaded guilty so they agreed to testify against Scrushy to lower their sentence; therefore prosecutors could not come up with evidence to tie Scrushy with the fraud. Judge Karen then dismissed 49 charges out of the 85 against Scrushy, Scrushy however faced further court action, and in 2006 he was convicted of conspiracy, mail fraud and bribery. He was sentenced in 2007 eighty two months of prison and 3 years of probation and ordered to $150,000 of fines and costs of his confinement.
Ever since the accounting scandal was revealed and found, HealthSouth have taken many steps to turn the company around to the better and into becoming a stronger company. It got a new senior management team and the directors working in the company when the fraud occurred have been fired. HealthSouth was able to avoid bankruptcy by selling assets and by renewing contracts. Hundreds of experts were brought to help in reconstructing the company’s record, improve the accounting policies and more.
HealthSouth even got approved by the NYSE in October of the year 2006, as part of corporate restricting plan; the company also sold its diagnostics division, surgery division and outpatients divisions on 2007. With this new structure for HealthSouth firmly in