Introduction This paper will cover the HealthSouth Corporation. After a humble beginning and a stunning growth in the healthcare industry, HealthSouth was rocked by corporate scandal. HealthSouth is now trying to recover from this devastation that brought the company to the doorstep of ruin and continue to do what is outline in its Mission Statement. o Founded in 1984 o Operates a network of nearly 1,700 facilities, including outpatient surgery, rehabilitation and diagnostic imaging centers, as well as rehabilitation hospitals and acute-care medical centers o The only healthcare company operating facilities in all 50 states o Operates healthcare facilities outside the United States in the United Kingdom, Australia, Puerto Rico, Canada and Saudi Arabia o Employs approximately 50,000 medical and business professionals o Works with more than 85,000 referring physicians Recently this growing company was rocked by corporate scandal, as the top executives were part of a suit filed by the SEC, for overstating earning and manipulating stocks. Table of Contents Company History and Background 4, 5, 6, 7 Company's Organizational Structure 8, 9 Current CEO, Senior Officers and Annual Compensation 10 - 16 Company's 10 year Monthly Historical Stock Price 17 Evaluation of Company's Effectiveness 17, 18 Analysis of Change programs 18 Aspects of Communication, Leadership and Motivation Programs 19, 20 Potential Future Organizational Structure 20 Forecast of Company's Future Effectiveness 21 Summary 21 Reference List 21, 22 Company History and Background 1984 Five men pooled their resources and formed a company that would restructure the rehabilitation industry in less than a decade. HealthSouth began its mission led by one the finest management teams in the industry, with a vision of how patients should move smoothly through a logical healthcare system that offers highly technical, less-invasive, cost-effective procedures in the most cost-efficient manner possible. During its early years, HealthSouth established itself as an industry leader by providing high-quality, cost-effective rehabilitative services.

Its extensive, user-friendly network attracted the business of the nation's largest managed care organizations, insurance companies and employers. It also received the approval of millions of consumers who experienced HealthSouth's superior care. 1990 HealthSouth expanded to 50 outpatient locations. 1994 The total number of outpatient locations grew to approximately 250, making HealthSouth the nation's largest provider of comprehensive rehabilitative services.

In the same year, the Company expanded its continuum of services, becoming a substantial participant in the diagnostic market. 1995 The outpatient division grew by more than 250 facilities to over 500 locations in the US. HealthSouth became the nation's largest provider of outpatient surgical services with 126 locations throughout the country. Work commenced on the $4 million HealthSouth Sports Medicine Center at the Colorado Springs Olympic Complex, where Olympic hopefuls will receive the most advanced training and sports medicine care available anywhere in the world. HealthSouth announced nearly $2.5 billion in acquisitions that would - when completed - give the company more than 850 facilities across the country and more than 32,000 professional and clinical employees. 1996 Development efforts continued, resulting in a national network of nearly 700 outpatient facilities.

With a nationwide system including diagnostic services, outpatient surgery, and inpatient and outpatient rehabilitation services, the Integrated Service Model (ISM) became a reality. 1997 HealthSouth moved into its new corporate headquarters at One HealthSouth Parkway in Birmingham, Alabama. HealthSouth acquired Horizon / CMS Healthcare Corporation in Albuquerque, N.M. -the country's second largest operator of rehabilitation hospitals-which included 30 inpatient rehabilitation facilities and approximately 275 outpatient rehabilitation locations. The company also purchased ASC Network Corporation, the nation's second-largest independent operator of outpatient surgery centers, and Health Images Inc., which added 55 imaging centers, including six in the United Kingdom.

HealthSouth made its first Australian venture with the acquisition of Cedar Court Physical Rehabilitation Hospital, a 71-bed facility in Melbourne. 1998 HealthSouth continued expansion by purchasing more than 30 ambulatory surgery centers from Columbia / HCA Healthcare Corporation, and acquiring National Surgery Centers Inc.'s 40 outpatient surgery centers in 14 states. Facility openings included the 90,607-square-foot Kerman-Jobe Integrated Medical Plaza in Los Angeles, and the 60,000-square-foot HealthSouth Integrated Medical Plaza of Pecan Valley in San Antonio, Texas, which is considered the prototype IMP and houses diagnostic, occupational medicine, outpatient rehabilitation and surgery services. The company opened a 17-bed rehabilitation unit at University Hospital in Rio P'edras, Puerto Rico, near San Juan -- the first of its kind in that country. 1999 HealthSouth became the official healthcare provider for the PGA Tour and Senior PGA Tour on January 25, 1999. The company provided full-time rehabilitative and preventive care at most PGA Tour and Senior PGA Tour events, as well as personal conditioning programs for the players.

The company announced plans to invest $1 billion in capital expenditures and related items over the next three to five years in areas such as technology updates, facility upgrades, maintenance and expansion, and improvements to management information, collection and billing systems. In addition, HealthSouth would increase the rate of development for new surgery centers and Integrated Medical Plazas, as well as explore acquisition opportunities in outpatient services and expand the company's Internet presence. Also included in the initiative was the rollout of the HealthSouth Clinical Automation Program (HEAP). HealthSouth consolidated the management of all outpatient-related lines of business in September, enabling the company to better integrate its services in major markets. Regional and local market leaders were established to oversee operations, development and managed care activities, which allows the company to respond more quickly to new opportunities in local markets and ensure that it remains in touch with the particular needs of each market. In the first partnership of its kind, WebMD, HealthSouth and Tenet Healthcare Corporation offered free mammogram screenings throughout October 1999 in observance of Breast Cancer Awareness Month.

The free screenings, given regardless of insurance status, were scheduled every weekday during the month at 184 locations throughout the United States. 2000 HealthSouth broke ground for its 100,000 square foot, state-of-the-art integrated medical plaza in Colorado Springs, Colorado. The company announced its expansion into Saudi Arabia through an agreement with the Sultan Bin Abdul Aziz Foundation to develop and manage one of the largest rehabilitation facilities in the world. HealthSouth became the official sports medicine provider for the National Football League's New England Patriots and Washington Redskins, as well as Major League Soccer's New England Revolution. Along with the American Stroke Association, HealthSouth launched a nationwide stroke rehabilitation awareness campaign. As part of the campaign, free stroke screenings were offered in designated parts of the country.

HealthSouth signed an agreement with Delta to provide ergonomics training for up to 20,000 flight attendants in 16 hubs throughout the U.S. and India. HealthSouth launched its new enhanced website with a more dynamic and interactive experience for patients, physicians, and health care consumers. The new site offered a physician and facility locator, online appointment requests, a personal health journal, and a comprehensive medical library. The company's stock closed up 203 percent for the year and earned HealthSouth recognition as a top-five performer in the S&P 500 (Healthsouth. com).

Company's Organizational Structure EXECUTIVE OFFICERS As of: March 24, 2003 Age Position Officer since Gordon, Joel C. 72 Acting Chairman of the Board 2003 May, Robert P. - Acting Chief Executive Officer, Director 2003 Foster, Patrick A. 55 President -- Inpatient Services 1997 Taylor, Larry D. 43 President -- Ambulatory Services - Horton, William W. 42 Executive Vice President, General Counsel, Assistant Secretary 1994 Hale, Brandon O. 52 Senior Vice President -- Administration and Secretary 1986 Jones, Susan M. 37 Senior Vice President -- Reimbursement - McVay, Malcolm E. 40 Treasurer 1999 Carman, Thomas W. 50 Chief Development Officer - BOARD OF DIRECTORS As of: March 24, 2003 Age Position Director since Gordon, Joel C. 72 Acting Chairman of the Board 1996 May, Robert P. - Acting Chief Executive Officer, Director 2002 Chamberlin, John S. 73 Director 1993 Givens, C. Sage 45 Director 1985 Hanson, Jon F. - Director 2002 Newhall, Charles W. 57 Director 1985 Stripling, Jr., Larry D. 72 Director 1999 Strong, George H. 75 Director 1984 Watkins, M.D., Phillip C. 60 Director 1984 Current CEO, Senior Officers and Annual Compensation Joel C. Gordon Acting Chairman Joel C. Gordon was named as Interim Chairman of the Board of Directors on March 20, 2003, and has been a member of HEALTHSOUTH's Board of Directors since 1996. He served as Chairman of the Board of Directors of Surgical Care Affiliates, Inc. from its founding in 1982 until January 17, 1996, when SCA was acquired by HEALTHSOUTH. Mr. Gordon also served as Chief Executive Officer of SCA from 1987 until January 17, 1996. Mr. Gordon is a private investor and formerly served on the boards of directors of G enesco, Inc., an apparel manufacturer, and SunTrust Bank of Nashville, N.A. He currently serves on the boards of The Vanderbilt University Medical Center and The Vanderbilt University Technology Center. He is also a Director of the Nashville Community Foundation and is former chairman of the Tennessee Performing Arts Center and a member of the Board of the Nashville Agenda. Robert P. May Acting Chief Executive Officer Robert P. May was named Interim Chief Executive Officer of HEALTHSOUTH Corporation on March 20, 2003, and has been a member of HEALTHSOUTH's Board of Directors since October 2002.

Mr. May has served in various senior management and executive positions during the past 30 years. At Cablevision Systems, Corp, where he was chief operating officer and a director, Mr. May was part of the executive team that helped transition the company through new operating strategies and the use of new technologies. From 1973 to 1993, Mr. May held a variety of executive and operational positions at Federal Express Corporation, most recently he was President, Business Logistics. Currently, Mr. May provides strategic business consulting services as a principal of RPM Systems. Malcolm E. "Tadd" McVay Executive Vice President and Treasurer Tadd McVay joined HEALTHSOUTH in September 1999 and was named Senior Vice President and Treasurer in February 2000 and Executive Vice President and Treasurer in August 2001. As Treasurer, Mr. McVay played a major role in refinancing substantially all of HEALTHSOUTH's long-term debt and refinancing the Company's bank credit facility.

A former commercial banker, Mr. McVay previously served as Chief Financial Officer of Capstone Capital Corporation and as Senior Vice President of Investor Relations at Caremark Rx, Inc. Thomas W. Carman Executive Vice President, Mergers and Acquisitions Thomas Carman joined HealthSouth in April 1985 as a Director of Corporate Development. Prior to joining the Company, he was Director of Corporate Development at Medical Care International in Houston, Texas. Prior to that, he served as an assistant administrator at Children's Hospital of Alabama and senior health planner at the Health Systems Agency in New Orleans, Louisiana. Carman moved up to Executive Vice President of Corporate Development at HealthSouth in 1989. As such, he oversees the addition of all product line facilities through acquisition, start-up, and joint ventures.

Since 2001, Carman has served as the Executive Vice President, Mergers and Acquisitions. A native of New York, Carman received his bachelor's degree from Antioch College and his master's degree from Tulane University. William W. Horton Executive Vice President and Corporate Counsel Bill Horton joined HEALTHSOUTH in July 1994 as Group Vice President - Legal Services and was named Senior Vice President and Corporate Counsel in May 1996 and Executive Vice President and Corporate Counsel in March 2001. Before joining HEALTHSOUTH, Horton practiced corporate, securities and healthcare law with the Birmingham, Alabama-based law firm now known as Haskell Slaughter Young & Redi ker, L.L.C., where he served as Chairman of the Healthcare Practice Group. In 1985-1986, he served as a law clerk to a federal district judge in Birmingham. A native of Demopolis, Alabama, Horton is a graduate of Vanderbilt University and the Duke University School of Law.

He is a frequent speaker on healthcare and securities law topics and holds leadership positions with the American Health Lawyers Association and the American Bar Association's Health Law Section. Brandon O. Hale Executive Vice President, Administration and Secretary A native of Florence, Alabama, Brad Hale joined HealthSouth in 1986 as Vice President of Human Resources, working his way up to Group Vice President. In December 1999, he was named Senior Vice President of Administration, and in May 2002, he was promoted to Executive Vice President and Corporate Secretary. In addition, Hale also serves as HealthSouth's Corporate Compliance Officer, overseeing the corporation's compliance program, in addition to his responsibility for several other departments, including Human Resources, Risk Management, Internet Services, Payor Contracting and Support, and Conference Center Operations.

Hale's previous work experience in the Human Resources field included stints at Southern Natural Gas Company, ITT, and Saunders Systems. He is a graduate of Auburn University with a degree in Business Administration. Larry D. Taylor President and COO, Surgery Division Larry Taylor currently serves as the President and Chief Operating Officer of HealthSouth Corporation's Surgery Division. He is responsible for the operation of all surgical and acute care facilities in the United States.

Taylor joined HealthSouth in May 1987 as an administrator. He has also served as Area Manager, Regional Vice President, Group Vice President and Senior Vice President of Outpatient Operations. In addition, Taylor assisted with the initial development of HealthSouth's outpatient outcomes tracking, sports medicine outreach programs and the educational aspects of the "Go For It!" Roadshow. Prior to joining HealthSouth, Taylor was Director of Pine Islands Sports Medicine Center. He holds a bachelor's degree from West Virginia University in Morgantown, W. Va., and is a nationally certified athletic trainer. He serves as an Adjunct Professor for UAB, School of health related professions in the department of health services.

Patrick A. Foster President and COO, Inpatient Division Pat Foster currently serves as the President and Chief Operating Officer of HealthSouth Corporation's Inpatient Division. He joined HealthSouth in December 1993 and quickly moved through the ranks of the Inpatient Division, serving as Vice President, Group Vice President and Senior Vice President before being named President and COO of the Surgery Division in October 1997. Prior to joining HealthSouth, he worked for The Me diplex Group as senior vice president of the rehabilitation / medical division. Foster has extensive experience in the healthcare industry and has worked for companies such as Re Life, Inc. and Rehab Hospital Services Corporation. Foster received a bachelor's degree in accounting from Saint Bernard College and a master's degree in public administration with an emphasis in healthcare from the University of South Alabama. Daniel J. Riviere President & COO, Ambulatory Division Dan Riviere currently serves as the President and Chief Operating Officer of HealthSouth Corporation's Ambulatory Services Division.

He is responsible for the day to day operations of physical therapy and sports medicine facilities, all diagnostic imaging facilities and the outpatient specialty programs. Riviere joined HealthSouth in April 1987 as the Vice President in charge of HealthSouth's Medical Equipment Division. He was promoted to Group Vice President when he joined the Outpatient Physical Therapy Division in 1990. Since that time he has been promoted to Senior Vice President and operated a large region of the country in the Ambulatory Services Division.

Riviere was instrumental in the negotiations for HealthSouth to become the official medical provider for the PGA Tour, Senior PGA Tour, LPGA Tour, PGA of America, American Junior Golf Association and various professional sports teams. The following year, HealthSouth's business stumbled badly and the company's stock lost 44% of its value. A small number of workers were laid off and, in conjunction with the layoff, Mr. Scrushy announced a 22% reduction in his salary and received no bonus that year. Some might argue that a centimillionaire can afford such a move of solidarity; still, it is one that very few CEOs make. HealthSouth's healing continued earlier this year after the company amended its stock option plan so that 25% of stock option grants will be performance-based. This change was made in response to a shareholder resolution filed by the State of Connecticut pension fund.

OVERALL COMPENSATION Fiscal Year Ending: December 31, 2001 Total Annual Comp. Long- Term Incentive Plans All Other Fiscal Year Total Foster, Patrick A. $837,922 $0 $6,155 $844,077 Taylor, Larry D. $952,076 $0 $6,148 $958,224 Carman, Thomas W. $436,651 $0 $5,814 $442,465 DETAILS OF ANNUAL COMPENSATION Fiscal Year Ending: December 31, 2001 Salary Bonus Other Total Annual Comp. Foster, Patrick A. $337,922 $500,000 $0 $837,922 Taylor, Larry D. $452,076 $500,000 $0 $952,076 Carman, Thomas W. $361,651 $75,000 $0 $436,651 (yahoo. multexinvestor. com) Company's 10-year Monthly Historical Stock Price (yahoo. multexinvestor. com) Evaluation of Company's Effectiveness The New York Stock Exchange has recently delisted the stock of HealthSouth Corporation because of numerous criminal and regulatory investigations. HealthSouth was traded on the NYSE under the symbol HRC.

HealthSouth is now trading over the counter on the pink sheets under the symbol HASH. The stock of large nationwide provider of outpatient surgery and rehabilitative services had already plummeted from its highs. However the stock lost nearly all of its value when it was delisted from the NYSE after weeks on being halted. An announcement by the U.S. Securities and Exchange Commission, led the New York Stock Exchange to de list the stock. The company's stock has plummeted to 11 cents from a 52-week high of $15.90. In addition to the announced criminal inquiry, the SEC has filed civil charges accusing the company of inflating earnings by $1.4 billion since 1999 and overstating $800 million in assets (your lawyer. com).

Analysis of Change programs On March 31, 2003, HealthSouth ousted Chief Executive Richard Scrushy, the man accused by the Securities and Exchange Commission of masterminding a plot in which the company overstated earnings by more than $1 billion. Additionally, two former HealthSouth chief financial officers pleaded guilty to fraud charges and said they'd cooperate in the investigation into Scrushy (sec. gov). HealthSouth will eliminate approximately 165 non-clinical positions at its corporate headquarters. The company is providing normal severance benefits and is also offering support through resume assistance, Internet job searching options and courses in interviewing skills.

HealthSouth will also network with other employers in the Birmingham area to solicit job availabilities. HealthSouth is committed to ensuring that patient care services continue uninterrupted at its traditional high levels of quality. As the company gets back to the basic business of healthcare, it continues to assess resources and expenditures that do not directly impact patient care. HealthSouth employs approximately 3,500 people in Birmingham, including 830 on the corporate campus. Aspects of Communication, Leadership and Motivation Programs Although the science of measurement made many advances in the twentieth century, the debate over how to measure "quality" in health care settings continues.

Experts disagree on which particular set of measures can best define quality. HealthSouth uses many tools and instruments to measure and monitor the quality of care in our facilities. One of the most critical ratings is our patient satisfaction scores. Research shows that there are three primary or key indicators that cut across all healthcare settings: o Outcomes (Did I receive the results I hoped for in my treatment?) o Dignity and respect (Was the staff courteous and considerate?) o Coordination of the services (Did the staff and physicians communicate and plan my treatment effectively?) "Would you recommend" scores have proven to be an effective measure of a patient's satisfaction with the level of services they received. Patients do not tend to recommend facilities or providers that do not perform well in the key indicators listed above. HealthSouth takes great pride in our patient satisfaction results.

There is no better measure than to know that patients treated in a HealthSouth facility would recommend us to their families and friends (Healthsouth. com). HealthSouth offers its employees: o Competitive salaries and benefits packages o Tuition reimbursement o Continuing education opportunities o Advancement through our career ladder o Flexible scheduling These are just a few reasons some of the nation's top healthcare providers consider HealthSouth to be their smartest career move yet. Of course, working at one of HealthSouth's pristine, state-of-the-art facilities also has its advantages. HealthSouth offers student loan and scholarship buyouts.

The Company also has an MBA partnership program for its corporate employees in Birmingham, AL. through Sorrell College of Business at Troy State University. Potential Future Organizational Structure HealthSouth's organizational structure is one that is mainstream in large organizations. This is also what developed an environment for dishonesty. Richard Scrushy, former CEO and other top executives were able to manipulate numbers and stocks for personal gain. I believe that if the Chief Financial Officer & accountants reported directly to the Board Members, these problems could have been avoided. The Board could be given the power to order an independent audit, ensuring truth and honesty in reporting finances.

HealthSouth could also use a continuous change process model to ensure that the ancillary divisions of the corporations are kept in sync with the Headquarters division. Healthcare is a rapid changing field and this model would benefit the company by being able to change as new technologies and procedures are developed. Forecast of Company's Future Effectiveness HealthSouth's future is uncertain at this point. The SEC is currently investigating several top executives and much of the capital and assets a frozen until the outcome can be decided. The true financial standing of the company will take time to sort out. HealthSouth continues to operate its facilities and provide quality healthcare.

A new breed of dedicated officers is in place to try to salvage this corporation and infuse it with the spirit of success that made it a leader in rehabilitation healthcare. Summary HEALTHSOUTH provides comprehensive rehabilitative, clinical, diagnostic and surgical healthcare services on an inpatient and outpatient basis. For the nine months ended 9/30/02, revenues increased 4% to $3.39 billion. Net income before accounting change increased 63% to $218.9 million. Revenues reflect increased patient volume and increased fees from patients under the Medicare and Medicaid programs. Earnings also reflect decreased loss on asset sales (biz. yahoo. com).

The future of this company is in a tenuous position until the proceedings against it are cleared with the SEC and other plaintiffs. Reference list Style list for references (n. d.) Retrieved April 10, 2003 From: web web web web web.