HealthSouth: The Scrushy Way

Table of Content

Abstract3

Introduction4

Discussion5

Background5

Richard M. Scruchy's case5

HealthSouth case and the history of corporate fraud6

Oversight financial reporting to attract investors7

Real life example of breaking the law9

Today's CEOs and their company's finances: the Sarbanes-Oxley Act10

The consequences of unethical practices12

Importance of ethics in financial reporting13

Conclusion14

HealthSouth: The Scrushy Way

Abstract

This signature assignment aims to talk about the HealthSouth and CEO Richard Scushy case and the ethical issues involved in it. The motive here is to lime light and interpret the implications of Health South and Scrushy. This case is one of the most interesting ethical cases that occurred in the business world during recent years. Other examples of all the CEO's accused of misdeeds in past few years include WorldCom and Enron. Scrushy is one of those leaders who possess a charismatic personality that could inspire employees to follow them through charm and encouragement.

Thus, this paper aims to highlight all these unethical issues and to demonstrate a thoughtful consideration of ideas and concepts in order to present clear insights of the case. Further, the aim of this study is also to compare and contrast the approaches of the parties who influence business decision making as it relates to ethics and of those who are influenced by their decisions, and to analyze the conflicting objectives of business leaders who influence business decisions. Moreover, the paper also objects to evaluate the actions that the company Health South may take to meet ethical considerations relative to social performance, financial performance, and reputation. Further, the extent to which social, ethical and public issues must be considered in internal and external stakeholder relationships are also assessed. Finally, an evaluation is made based on the role of ethics in academics setting, particularly in regard to academic integrity and the code of conduct, as well as, on the consequences of ethical violations.

Introduction

HealthSouth Corporation is one of the largest operator and owner of inpatient rehabilitative hospitals of the nation. The company is based in Birmingham, Alabama, and is operating in 26 states across the country. The company serves numerous patients through its network of inpatient rehabilitation hospitals in Puerto Rico, its home health agencies, and its outpatient rehabilitation satellite clinics. The hospitals of HealthSouth provide a higher level of care in the field of rehabilitation to the patients who are getting recovery from conditions of neurological disorders, cardiac, pulmonary, and orthopedic conditions, strokes, and amputations. However, the ethical issue regarding the company started rising when the Chief Executive Officer of HealthSouth, Richard M. Scrushy, was found to involve in a corporate accounting scandal. He was also accused of directing the employees of the company to report company's earnings as exaggerated grossly and falsely, in order to meet the expectations of the company's stockholders. In 2003, the company was at its height and recorded revenue of nearly $ 4.5 billion. Further, HealthSouth also dominated in the surgery, rehabilitation, and diagnostic services market in the same year. It also employed more than 60,000 people in every state of the United States at almost 2,000 ...