Introduction This report will attempt to clarify the culture at HealthSouth with Richard Scrushy as the CEO; how his management style contributed to the company’s ethical and financial damages and his own downfall. There will also be an analytical comparison of other companies and CEO’s who had similar company cultures. The adverse impact on HealthSouth stakeholders will be discussed along with an analysis of the judicial outcome and fairness of punishments, with a conclusion on how ethics played a role in the government’s responsibilities and actions. Amcare, Inc. changed its name to HealthSouth in 1985. HealthSouth had a four step service model: diagnosis, surgery, inpatient and outpatient rehabilitation, this distinguished the company as “the hospital of the future”. (Jennings, 2012, p. 184) Sports celebrities: Michael Jordan, Tara Lipinski and Shaquille O’Neal were just some of the celebrities that used the company’s surgical, inpatient and outpatient rehabilitation centers. Celebrity endorsements helped HealthSouth gain an esteemed reputation, and profits of $5 million in revenue. CEO Richard Scrushy held executive meetings every Monday morning. He seized his underlings with a flamboyant, manipulative and harsh influence while he was the CEO of HealthSouth. In one meeting, Mr. Scrushy said “Shine a light on someone- it is funny how their numbers improve”. This is one example of his management technique; to induce fear in the executive team members to ensure they would fix the companies numbers in ways that Scrushy would approve. He paid his loyal subordinates well yet threatened critics with severe reprisals. (Jennings, 2012) HealthSouth went public in 1986, when profits were reported at $1.1 million. By 1990, Health... ... middle of paper ... ...BOARD MENTALITY ON ETHICS AND GOVERNANCE. Corporate Finance Review, 11(6), 44-48. Retrieved from: http:search.proquest.com/proxy1.ncu Jennings, M. M. (2012). Business Ethics, Case Studies and Selected Readings (Seventh edition.). Laufer, W. S. (2010). Corporate Bodies and Guilty Minds: The Failure of Corporate Criminal Liability [EReader]. Retrieved from: http:search.ebrary.com/proxy1.ncu MacLaren, B. (2009). The Inductees: Charles Keating. Retrieved March 27, 2012, from: http://www.thehallofinfamy.org/inductees.php?action=detail&artist=charles_keating Markham, J. W. (2005). Financial History of Modern U S Corporate Scandals [EReader]. Retrieved from: http:search.ebrary.com/proxy1.ncu Schilit, H. (2010). Financial Shenanigans : How to Detect Accounting Gimmicks and Fraud in Financial Reports (3 ed.) [EReader]. Retrieved from: http:search.ebrary.com/proxy1.ncu
Scrushy, and it is now one of the largest healthcare providers in the United States. HealthSouth offers many services across 35 states and Puerto Rico through its inpatient rehabilitation hospitals, home health agencies and hospice agencies. The company went public in 1986 after Scrushy, who was the CEO at the time, and Aaron Beam who was the chairman, had sufficient investment. By 1996, HealthSouth had a market value of over $12 billion and around 1800 facilities across the United States. HealthSouth had consistently reported high profits and revenue; hence they were highly reputed and people were encouraged to buy shares in HealthSouth. However, in 2003, it was discovered they were creating inaccurate financial statements which overstated their revenue. Their revenue was overstated by between $3.8-$4.6 billion throughout 1992 to 2003. Forensic audits conducted by PricewaterhouseCoopers revealed this information, thus HealthSouth’s business declined for the next few years, many staff members lost their jobs and investors could not recover their
William Evan and Edward Freeman, in their essay “A Stakeholder Theory of the Modern Corporation,” argue that the objective of a company and its managers is not only to maximize profit for its owners and stockholders, but also to balance the benefits received or losses incurred by other stakeholders—employees, suppliers, customers, and the local community, all of whom may be influenced by company decisions. As the owner of MSO, your aim is ostensibly to maximize profits for yourself, but unlike most other indicted CEOs, you have not tried to obtain personal gains at the expense of the stakeholders of your enterprise. Rather, the charges that have been brought against you are for your dealings with another company; in this day and age where investors bemoan the lack of ethics of CEOs who use the power of their position in the boardroom to achieve selfish gains at the expense of their own company and its stakeholders, the charges of insider t...
Doctor Sidney Garfield and Henry Kaiser’s partnership that goes all the way back to the 1930’s became a revolutionary network of healthcare providers working with the insurance company. Kaiser Permanente’s formative years were amidst the Great Depression and Dr. Garfield was charged with task of supplying medical care to thousands of Los Angeles Aqueduct workers. Being the Depression, financing was very difficult so Dr. Garfield simply charged 5 cents a day for each employee to the insurance company of the contractor. This was the essential birth of prepayment in the health insurance system, but that alone was not enough. Due to the potential patient load, Dr. Garfield focused upon preventative safety measures rather than simply reactionary care. This fundamental philosophy of innovation and the focus on health as opposed to mending has been the hallmark of modern Kaiser Permanente. The advertising campaign and slogan “Live Well and Thrive” encourages this very philosophy a...
Madura, Jeff. What Every Investor Needs to Know About Accounting Fraud. New York: McGraw-Hill, 2004. 1-156
Gershon, H., & Pattakos, A., (2004). Creating market opportunities: Innovation is key. Journal of Healthcare Management, 49(1), 9-11.
Hospital Corporation of America (HCA). Staff Analysis Statement of Problem HCA, after following a conservative financial policy since its establishment, has entered the new decade preparing to make some changes in order to realign their financial strategy and capital structure. Since its establishment, HCA has often been used as a measure for the entire proprietary hospital industry. Is it now time for the market to realign their expectations for the industry as a whole? HCA has target goals that need to be met in order to accomplish milestones in the future.
With so many structural and financial changes expected in the healthcare market can HCA anticipate a future while adapting and expanding its services and continuing to prosper while it meets the healthcare needs of the community?
Financial Shenanigans was written by Howard Schilit. The main objective of the book is to show ways companies can alter their financial accounting reports to reflect a much attractive appearance of their company’s health and growth when indeed that company is running into severe trouble. There are different ways the company can accomplish this and the author gives us “Seven Shenanigans” that companies can change the investor’s point of view towards the performance of the company. Basically, he breaks up each chapter to the particular shenanigan and discusses different techniques for achieving each shenanigan. For example, the author used Priceline.com, Cendant/CUC, AOL, and Xerox to illustrate each shenanigan. Chapter 11 and 12 of the book discusses the analyzing of financial reports and how to use financial databases to discover warning signs. Then there is another chapter on finding shenanigans in the company’s annual 10K report and how to find hints for financial shenanigans.
Healthcare services have been on the rise for over 10 years now. According to a 2012 consumer alert, the industry provided $2.26 trillion in payments for more than four billion health insurance benefit claims in the year 2011(Fraud in Health Care). The bulk of the claims and the mainstream of fraud and abuse stem from the Medicare system professionals, who are knowledgeable about the process and persuade new clients into handing over their pertinent information in hopes of deception and illegitimate claims. Multiple and double billing, fraudulent prescriptions, are some of the major flaws in this organization that has made the healthcare services industry curdle. (AGHAEGBUNA, 2011) This is a non-violet crime and is often committed by very educated people including business people, hospital, doctors, and administrators.
Healthcare is considered of one of the most complex business models in the American Industry because it is one of the only industries where the consumer actually does not technically pay for the service he or she receives (Kudyba, 2010, p. 2). When consumers go to nail salons or hair salons, he or she pays the beautician for the specific service he or she asks for. In the healthcare industry it is totally different and most consumers do not understand the complexity of this business model. The consumer actually pays insurance companies and the insurance companies pay the provider/hospital based on negotiation arrangements from the data exchanges they receive (Kudyba, 2010, p. 2).
Managed care, managed care has become the dominant health care delivery source. Gaining popularity in 1990s, managed care increased from 27% in 1988 to 99% in 2009 and enrollment in Fee for Service plans decli...
Healthcare organizations are designed to meet the healthcare needs of individuals and promote a healthy community. The three healthcare organizations that interest me are: The Heart Hospital Baylor of Plano, Texas Health Center for Diagnostics & Surgery Plan, and Parkland Health and Hospital System. Due to the evolving healthcare industry, focusing on just patients and physicians is no longer a marketing strategy. According to Mycek (2015), “Marketing teams need to expand their consideration set and focus on the new 5 P’s of Healthcare Marketing” (p. 1).
Sandberg, J., Solomon, D., & Blumenstein, R. (2002, June 27). Accounting Spot-Check Unearthed A Scandal in WorldCom's Books. Retrieved from The Wall Street Journal: http://online.wsj.com/article/SB102512901721030520.html
In conclusion, this case described a company that started out very strong, but as soon as they seen a decline in stock prices they fell apart. When the stock prices fell the CEO, Kozlowski started making poor choices, such as falsifying financial information and stealing from the business. From my observation, companies that give out large bonuses for reached goals find themselves fighting with executives that put their morals aside for
The Tyco accounting scandal is an ideal illustration of how individuals who hold key positions in an organization are able to manipulate accounting practices and financial reports for personal gain. The few key individuals involved in the Tyco Scandal (CEO Kozlowski and CFO Swartz), used a number of clever and unique tactics in order to accomplish what they did; including spring loading, manipulating their ‘key-employee loan’ program, and multiple ‘hush money’ payouts.