Paper- Health South: The Scrushy way
Richard Scrushy, Chief Executive Officer of HealthSouth transformed the Health care community by creating the nation’s largest outpatient and rehabilitation center and revered at one point as the “King of HealthCare." However, his Cooperate governance and hiring practices along his disregards of his social responsibility to his invertors and stockholder proved to be a lethal combination that not even the king of health care could recover from.
Health South CEO
Richard Scrushy, Chief Executive Officer of HealthSouth, one of the largest privately held health care companies in the United States, boasting revenue of more than $4.3 ...view middle of the document...
184). This type of behavior is unusual for CEOs, as their primary responsibility is not accounting, but it is to carry out the strategic plans and policies as established by the board of directors.
Charitable Donation & impact of on the community
As CEO of the HealthSouth, Scruchy created a culture of fear; crushing any subordinates who dear to challenge his rulings or decisions, causing employees to relinquish their principles in fear of losing their source of income. As an individual, he was known for the charities, he sponsored or donated to. Some of the more prominent charities were, the Guiding Light Church located in his home state that received 1.05 Million dollars and the Lawson State Community College receiving one Million between 2002 and 2003. (http://www.milliondollarlist.org/donors/richard-m-scrushy-charitable-foundation) Other, significant contribution such as constructing the Richard Scrushy Parkway, the Richard Scrushy Campus at Jefferson State community college (now known as the Shelby-Hoover-Campus), the Richard Scrushy building in down town Alabama and the Richard Scrushy Library are all building used to improve the community in which he belong to. It is un-doubtful that, during Richard Scrushy’s reign as “King of Health Care” the people of Alabama and the nation benefited immensely, through the creation jobs when he took a single room office and turn it into a fortune 500 company and made world calls health care access, possible for people across the nation. The company’s destruction, resulting from cooperate greed caused lay off thousands of workers, workers whose lives and families have been thrown into disarray. Millions of families had their health care disrupted or threatened HealthSouth and the company’s subsequent downsized. In addition, consider that, as of Dec. 31, 2001, HealthSouth’s employee pension plan held approximately 3.3 million shares of HealthSouth stock. Now, following indictments of its top executives, including some who are pension trustees, HealthSouth stock now trades on pink sheets at $0.165 per share in mid-April 2003, From a $31 high in 1998”(Jennings, 2012, p. 184) forecasting a remarkably bleak future not only for families invested in HHHealthSouth’s pension plan but also, for the millions of retires who’s financial advisors invested in that company as well.
Charges & Investigation
On March 19, 2003, the SEC charged HealthSouth and CEO, Richard Scrushy, with accounting fraud. The SEC complaint alleged that HealthSouth had systematically overstated its earnings by at least 1.4 billion since 1999.(Weld et al., 2004, p. 44) and further asserts that HealthSouth's standard operating procedure under the direction of Mr. Scrushy was to manipulate the company's earnings to create the impression that the company was meeting Wall Street's expectations. The SEC complaint aroused, when a CFO reported to the authorities that HealthSouth had misrepresented their earnings to the SEC since...