Corporate Wrong doing endangers nurses -- again.


    Associated Press
    HealthSouth Income Falls 32 Percent
    Tuesday November 5, 2:40 pm ET
    HealthSouth Third-Quarter Net Income Declines 32 Percent Amid Medicare Change

    BIRMINGHAM, Ala. (AP) -- HealthSouth Corp. said Tuesday its third-quarter net income fell 32 percent amid sluggish revenue growth, hurt by a change in Medicare billing. The nation's largest operator of rehabilitation centers posted net income of $53.6 million, or 13 cents a share, compared with $79.1 million, or 20 cents a share, a year earlier.

    Chief Executive William Owens said the company will make "meaningful" cost reductions as it struggles to recover from its financial woes.

    During a conference call, Owens did not reveal how much the cuts would total or where they would fall, except to say they would involve overhead and unit operations.

    The latest results included a pretax gain of $25.1 million for the early retirement of debt and a tax benefit of about $9.7 million. Excluding these items, the company said its operating earnings came to $38.3 million, or 10 cents a share -- well below analysts' expectations of 21 cents a share, according to Thomson First Call.

    Shares of HealthSouth fell 14.8 percent, or 72 cents, and were trading at $4.16 Tuesday afternoon on the New York Stock Exchange.

    Revenue in the third quarter inched up 1.7 percent to $1.09 billion from $1.08 billion a year earlier.

    In August, the health care company said a change in Medicare billing, issued May 17 and effective July 1, would reduce annual earnings by $175 million. A month later, the Securities and Exchange Commission began investigating the Birmingham, Ala., company over accounting and stock trading issues.

    HealthSouth said last week that a review by an outside law firm cleared Chairman Richard M. Scrushy of allegations that he sold stock in the months before the profit warning based on knowledge the change in Medicare policy would negatively impact earnings. The firm concluded Scrushy did not know about the change or its impact when he sold company stock May 14 and July 31.

    HealthSouth is the nation's largest provider of outpatient surgery, diagnostic imaging and rehabilitation services, with revenue of $4.3 billion last year. It has about 1,900 locations in the United States, Britain, Australia and Canada.


    Wanna guess where the "cost cutting measures" are going to be made?

    If you start to feel sorry for HealthSouth losing profits, check out this websites where corporation fraud is being investigated. And remember they are saying the loss is due to medicare changes, but the facts support that their revenue loss is because of steep drops in their stock prices after the SEC began an investigation into securities fraud reminicent of Enron.
    Last edit by Youda on Nov 5, '02
  2. Visit Youda profile page

    About Youda

    Joined: Nov '00; Posts: 931; Likes: 18


  3. by   oramar
    Oh my gosh, health South is advertising in Pittsburgh area all the time. I think the healthcare stock bubble is starting burst and the cause is corruption just like Enron. If you dig back 6 months to a year you will find a post where I predicted such a thing. Why does this keep on happening? Because stock holders make the same mistake CEOs make. Everything is bottom line, bottom line. I have only a mild knowledge of inner working of most healthcare institutions and I could smell something rotten. Health care is about people care, sooner or later when profit is the only motive things will go puff.
  4. by   WashYaHands
    The medicare billing practices that they are referring to consist of billing medicare for individual physical therapy reimbursement when in reality they were performing physical therapy with groups of patients, not individual PT/OT to patient 1:1 ratio. Richard Scrushy sold a lot of his stock just prior to the announcement that medicare would no longer reimburse them for individual therapy unless PT was provided one on one. This and the fact that stockholders suspected wrong doing is why the stock went down. I can only hope that they don't cut nursing staff, as I know the nurses already work short as it is, at least they do here.
  5. by   MK2002
    Having made a couple thousand trades over the past few years, including HRC (HealthSouth Corporation), I can promise you the recent change in sentiment towards healthcare stocks has less to do with corruption and more with the economy and the ever vicious bear market. Healthcare was one of the last safe places to hide. As the bear market continues the excuses for dumping stocks eventually migrated to healthcare.

    I use Level II software to monitor stock prices. The charting features are terrific, and much more sophisticated than any free web-based output. In examining HRC, it can be observed that the stock has been in a trading range for a few months since the big drop near the end of August. One thing that is not apparent is that money began flowing into the stock after mid September. The buying stopped at the end of October. This tells you that fund managers were buying shares for the long term. A healthcare stock that is presently near 4 could certainly be at 14 a couple years from now. HRC is a little below its 1999 level. Chances are it will come around again. It is only a matter of patience.

    To the uninformed a change in Medicare policy having an effect on earnings would come as a surprise. But someone who follows company earnings and possible impact would expect it. These things happen, like it or not. The same goes for drugs as they progress through their phases of clinical trials. Time after time a drug gets to Phase II or Phase III and then ends up not getting approved. The stock takes a hit on the news, and people are shocked. Why? Because they don't know any better.