Case Analysis Of Healthsouth

879 Words 4 Pages
Problem Overview
HealthSouth’s former leadership engaged in unethical behavior has placed the company and its stakeholders in a position that has impacted the company’s future viability. The following analysis will provide an understanding of the negative behavior that caused the issues currently faced by HealthSouth and recommendations on the changes necessary to correct the course of the company.
Idealized Influence
The leadership by HealthSouth’s founder and former leader, Richard Scrushy, shows a pseudo-transformational style that idealizes power and position even at the expense of their followers’ achievements (Bass & Steidlmeier, 1999). Pseudo-transformational idealized leaders see themselves as honest and committed to their
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Scrushy publicly displayed inspirational leadership and offered his followers a sense of empowerment. Privately he was known to gather the doctors from the various HealthSouth clinics to instruct them on how to give faster service by stating, “I want all my doctors at work at 8 a.m. We’ll diagnose on Monday, operate on Tuesday and start rehabbing on Wednesday” (Mead, Werhane, & Collier, 2005). His public leadership talk offered empowerment, yet he actually was seeking control and treated these health professionals as if they were small children that needed his direction in order to function (Bass & Steidlmeier, 1999). This type of behavior not only denies the health professional staff the level of respect they deserve, it also places the patient in a situation where they may not receive the best level of …show more content…
Scrushy during the required 2002 implementation of the new Medicare predetermined payment rate system (PPS), shows his ability to use logic to create false assumptions to overcome the uncertainty that surrounded the situation (Bass & Steidlmeier, 1999). In the 2002 Annual Report, Mr. Scrushy stated that the new PPS reimbursement system would reward HealthSouth’s innovative cost reduction efforts of inpatient care and that the company’s profits would double (Mead, Werhane, & Collier, 2005). This unrealistic goal not only misleads the public and investors, it adds pressure to continue the unethical and fraudulent activities that would inevitably cost the company millions in lawsuits and ruin its public image.
Prior to 2002, Mr. Scrushy had already engaged the company in fraudulent activities to increase company profits, as well as showing his blatant disregard for transparency by ignoring his responsibility to properly disclose information, by purchasing medical equipment from GG Enterprises, a related company owned by Mr. Scrushy and other family members. The purchases from GG Enterprises were above the costs incurred and inflated the reimbursements received by HealthSouth (Mead, Werhane, & Collier,

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