HealthSouth Corp., Birmingham, Ala., showing signs of modest financial recovery, said it will hold onto 151-bed HealthSouth Medical Center, Birmingham, and continue work on an "all-digital," 219-bed replacement for the hospital. The rehabilitation giant, whose future has been in question since federal charges of massive accounting fraud in mid-March, announced in a June 5 letter to employees that it believes the Birmingham hospital's "potential far outweighs any immediate benefit" of selling it. HealthSouth, with about $3.3 billion in debt, had earlier planned to seek buyers for the hospital and a second acute-care hospital, 157-bed HealthSouth Doctors' Hospital, Coral Gables, Fla. Officials said they are proceeding with the "possibility" of selling the Florida facility.
HealthSouth continues to seek a partner for the digital hospital. "The company expects to proceed with development of the replacement facility," HealthSouth spokesman Andy Brimmer said. "We're actively exploring ways to accomplish this on a cost-effective basis." Federal authorities are investigating alleged accounting fraud at HealthSouth totaling at least $2.5 billion. Eleven former executives have pleaded guilty to charges of accounting or bank fraud. -- by Michael Romano