HealthSouth Corp. was busy last week, and only some of the developments were related to the allegations that the company inflated profits by $2.5 billion.
HealthSouth said it would split its ambulatory services division into separate divisions for outpatient rehabilitation and diagnostic services. By splitting the ambulatory division, the besieged rehabilitation giant said it expects to be able to focus on the performance of its 127 diagnostic imaging centers.
During an investor presentation in July, Birmingham, Ala.-based HealthSouth said the company could sell the imaging centers if their performance did not improve. Spokesman Andy Brimmer said last week that the company intends to continue operating the centers. HealthSouth also announced that William Horton, executive vice president and corporate counsel, and Brandon Hale, executive vice president of administration and corporate secretary, have resigned.
Brimmer also confirmed a report in the Birmingham News that HealthSouth will have to write off a $2.2 million investment in MedCenterDirect.com, an online purchasing company whose investors include HealthSouth founder Richard Scrushy.
According to securities filings, in addition to that investment, HealthSouth also guaranteed $15 million in loans to Atlanta-based MedCenterDirect. Securities filings also show HealthSouth purchased a total of $174.6 million in goods, supplies and other services through MedCenterDirect in 2000 and 2001.
News of the write-off came less than a week after HealthSouth announced a 51/2-year contract to outsource purchasing with MedAssets HSCA, St. Louis.
In an unrelated development, the House Energy and Commerce Committee voted unanimously to grant subpoena authority in the panel's investigation of HealthSouth's accounting, Medicare billing and corporate governance practices. In his prepared remarks, committee Chairman Billy Tauzin (R-La.) said he expects HealthSouth hearings later this month.