HealthSouth to slim down, settle with government

HealthSouth Corp. Chief Executive Officer Jay Grinney told investors that the company plans to sell or close 41 facilities in the fourth quarter and expects to settle charges resulting from a federal investigation of accounting fraud by year-end. Grinney said he believes the company can recover from the multibillion-dollar scandal in three to four years. HealthSouth, Birmingham, Ala., has not filed complete financial reports for the third quarter ended Sept. 30 because of a restatement of its books. Grinney told investors the company was performing about as expected, earning $148.6 million in the third quarter, compared with budgeted gains of $154 million, and earning $483.9 million in the nine months, compared with budgeted gains of $492.7 million. HealthSouth lost $6 million in the third quarter to hurricanes that swept the Southeast and $1.3 million in the quarter to the 75% rule for rehabilitation, Grinney said. The rule changed how hospitals qualify for rehabilitation payments. -- by Joseph Mantone