HealthSouth to keep flagship
HealthSouth Corp. said it would hold onto its flagship facility, 151-bed HealthSouth Medical Center in Birmingham, Ala. The embattled rehabilitation giant, accused of massive accounting fraud, announced in a June 5 letter to employees that it believes the hospital's "future potential far outweighs any immediate benefit from selling the facility." HealthSouth, mired in about $3.3 billion in debt, earlier had announced a plan to seek buyers for its flagship facility 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 to help raise cash but will hire additional staff and devote more resources to maintenance and capital expenditures in its hometown, where HealthSouth is building a 219-bed replacement facility for the downtown medical center near its headquarters south of Birmingham. Federal authorities are continuing an investigation into allegations of an accounting fraud totaling at least $2.5 billion at HealthSouth. Eleven former executives have pleaded guilty to charges of accounting or bank fraud.
Edwards joins reform debate
Presidential candidate Sen. John Edwards (D-N.C.) joined the healthcare reform debate with a proposal that would overhaul how Medicare purchases prescription drugs, among other elements aimed at moderating prescription drug costs. Edwards would eliminate the average wholesale price method of setting Medicare payments for drugs and instead would have the government negotiate prices directly with drugmakers. The average wholesale price, or AWP, is intended to make sure Medicare receives the market's best price, but federal prosecutors allege that many drugmakers have manipulated the AWP to their advantage. Edwards said he would ask the U.S. Justice Department to investigate the prices charged to Medicare and fine companies that break the law. Other elements of the plan include revising patent law to keep drugmakers from blocking the entry of generic products and enhancing truth-in-advertising standards.
Former CFO surrenders
The U.S. attorney in Miami announced the unsealing of a two-count criminal indictment against Patricia Mahaney, the former chief financial officer of the four-hospital, Fort Lauderdale, Fla.-based North Broward Hospital District. U.S. Attorney Marcos Daniel Jimenez announced that Mahaney surrendered on charges of theft from a federal program (See related stories, p. 8). She allegedly deposited a $7,896 hospital check written to her former married name of Patricia Victores into her personal bank account in February 1998 and in March of that year deposited another check for $5,876. Mahaney faces up to 10 years in prison and fines of up to $250,000 on each count.