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Healthsouth : the rise and fall of the scrushy Empire - Case Study Example

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The rise and fall of the Scrushy Empire Instructor: The rise and fall of the Scrushy Empire Leadership and entrepreneurial abilities acted as the driving force for Richard Scrushy and he had a vision that saw him solely mastermind the creation HealthSouth Corporation which he served as its chairman and chief executive officer for more than twenty when a fraud scandal hit the corporation and the securities and Exchange Commission charged the corporation and its Chief Executive Officer Richard Scrushy with fraud, with an allegation of extreme overstatement of the corporation’s earnings…
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Healthsouth : the rise and fall of the scrushy Empire
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Wall Street served as a measure for Scrushy and he would do anything to level or exceed its expectations. The corporation trades in the stock exchange market and employs more than 50,000 people in all its centers in all the 50 states, Puerto Rico, United Kingdom and Australia. It is approximated that the corporation treats an approximation of one hundred thousand patients daily. The fraud case impacted on all its stakeholders from the primary stakeholders to the secondary stakeholders. The primary stakeholders include the patients, the families of the patients, and the employees while the secondary stakeholders include shareholders (current and future), associated firms and the immediate community.

The patients are the most important stakeholders and are customers to the corporation as it is a profit making corporation. The scandal exposed the use of unqualified staff for physical therapy and using aides and trainees instead of qualified personnel. The scandal brought to light how the corporation asks for financial reimbursements from the patients for services that were never performed by the facility. Patients after the revelation are bound to look elsewhere for quality services from qualified personnel at the predetermined costs.

The patients from the revelation of one of them on the use of unqualified personnel felt cheated by the corporation and they were not getting value for their money. The subsequent closure of some of the facilities that were not making profits also cut short the relationships between the facility and the patients from those areas where facilities were closed. The families to the patients felt they had let down their kin by taking them to the facility that did not give value for money. It is an obligation of family members to take care of their kin in times of sickness.

Then scandal to a large extent was a bombshell on the employees as they were the ones that carried out the daily operations of the facility. To begin with, the large scale closure of branches of the corporation saw to the showing of the door of many employees. Many of the employees bore the blame of the senior official as they did what they were asked to do or else they would have lost their jobs. The CEO sanctioned the ‘fixing’ of the statements that was then carried out by the employees in the finance department.

Many of the former employees were aligned in court following the fraud revelation and were sentenced according to the law. Former CFO Michael Martin pleaded guilty to fraud and testified to have followed orders from Scrushy to inflate the statements to meet the expectations of Wall Street. Another former CFO Tad McVay also testified to have carried orders from the CEO to inflate the statements. Former president of the firm James Bennett was indicted on 30 counts including fraud, insider trading and money laundering on February 2005.

The moral stature of the employees was greatly bruised and their ethical values are highly questionable in times of seeking employment elsewhere based on the fraud scandal. To the eyes of the public, the employees were part and parcel of the fraud and the community feels betrayed

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