HealthSouth, a chain of hospitals and rehabilitation centers, used its celebrity and sports figure patients as a means of marketing and distinction. Press releases touted sports figures' use of HealthSouth facilities, such as the press release when Lucio, the Brazilian World Cup soccer star, had surgery at a HealthSouth facility. 510 HealthSouth touted its new hospitals as something others would emulate. \({ }^{.11}\) The language in their annual reports and brochures was "the hospital model for the future of health care."

HealthSouth's website listed celebrities who have "used HealthSouth facilities: Michael Jordan, Kobe Bryant, Tara Lipinski, Troy Aikman, Bo Jackson, Scottie Pippen, Shaq O’Neal, Terry Bradshaw and Roger Clemens."512 Its service model, the four steps from diagnosis through surgery, through inpatient rehabilitation, and finally to outpatient rehabilitation, was also its mark of distinction from other health care providers. The four steps are still featured in a logo on the website as well as in its annual reports.

HealthSouth called its new hospitals "the hospitals of the future," and competitors began to copy those models. \({ }^{513}\) From 1987 through 1997, HealthSouth's stock rose at a rate of \(31 \%\) per year. \({ }^{514}\) The stock had gone from \(\$ 1\) per share at the time of its initial public offering (IPO) in 1986 to \(\$ 31\) per share in 1998. In April 1998, CEO Richard Scrushy told analysts that HealthSouth had matched or beat earnings estimates for 47 quarters in a row. \({ }^{515}\) It became a billion-dollar company through acquisitions. HealthSouth profits were restated in 2002 and 2003 to reflect \(\$ 2.5\) billion less in earnings, for periods dating back to 1994, with \(\$ 1.1\) billion occurring during 1997 and 1998 . Subsequent corrections reveal that HealthSouth's revenues were overstated by \(\$ 2.5\) billion, a figure \(2500 \%\) higher than what was reported from 1997 through 2001.516 The stock was trading on pink sheets at \(\$ 0.165\) per share in mid-April 2003, from a \(\$ 31\) high in 1998.517.....................

Discussion Questions 1. What in the culture of HealthSouth made it difficult for employees to raise concerns about the company's practices and financial reporting?
2. Find the common factors in the companies in this Unit and others.