Healthsouth Corp - the Enemy Within

HealthSouth Corporation-The Enemy Within
Fraud Examination

Each sector of the corporate health care marketplace has come to be dominated by a small number of high growth companies. In this marketplace, companies compete to take over competitors or else are taken over themselves. The most successful have expanded dramatically by taking over or merging with competitors. Vast empires and wealth go to those who compete most successfully in this. Those unable to do so do not survive. Investors and market analysts praised this consolidation of the marketplace.
This is a market where the source of legitimate income needed to fund this growth and dominance is limited by government funding and by insurers’ determination to contain costs. The companies that seemed to be successful in this field included Tenet Healthcare, Sun Healthcare, Vencor, and Integrated Health Services, as well as HealthSouth Corp and several others. However, things were not as they appeared to be. By early 1998, it became evident that most of these companies had built their dominant corporate empires in the strongly competitive healthcare marketplace by defrauding the system of payment, increasing returns by playing on the vulnerability of citizens, over-servicing and overcharging, cutting the costs of care by understaffing, under-resourcing and under servicing, or by a combination of these. Of those listed above, there was one company that seemed to be free from the deceptive practices which seemed to dominate the entire health services industry – HealthSouth Corp. Time would tell a very different tale about the health services mega giant.
HealthSouth was founded in 1984 by Richard Scrushy, Aaron Beam, and a number of Scrushy’s close associates. It was financed with venture capital from New Enterprise Associates of Baltimore. New Enterprise’s co-founder Charles W. Newhall III, a major figure in the venture trade became a HealthSouth board member, Aaron Beam became the Chief...