HealthSouth in Rehab

By Staff

Athletic Management, 15.4, June/July 2003, http://www.momentummedia.com/articles/am/am1504/wuhealthsouth.htm

HealthSouth, one of the nation’s largest providers of athletic training and rehabilitation services to high schools and small colleges, is in financial trouble, raising concerns about whether it will change its relationship with schools.

The Securities and Exchange Commission and U.S. Justice Department have been investigating HealthSouth since February, and court documents filed in the matter say the company may have overstated its earnings since 1997 by as much as $2.5 billion in order to continue to meet Wall Street expectations and maintain its stock price. Several of its top executives have either pleaded guilty or been charged with accounting fraud.

When the company could not make $367 million in bond and interest payments in March, its credit line was frozen, and its stock sank from nearly $16 in mid-2002 to pennies on the share. At least one creditor has sued for back payment, and the contractor on a new hospital for HealthSouth stopped work out of fear of not being paid.

The key question for athletic administrators is whether HealthSouth will scale back its outreach athletic training to cut costs. So far, HealthSouth has announced it will cut about 20 percent of its headquarters staff but leave patient-care jobs alone. If the company files for bankruptcy, creditors may demand HealthSouth sell certain parts of the company to raise cash, or HealthSouth may restructure.

The company says it is carrying on as usual with outreach athletic training because it leads to revenue-generating business for its clinics. “HealthSouth sports medicine outreach programs provide a service to the community and serve as a referral source for our operations,” spokeswoman Laura Smith told Athletic Management. “Our relationships with local high schools have proven to be mutually beneficial. We’ve been doing this for years now and have no plans to change it.”

Jon Almquist, specialist for the athletic training program in the Fairfax County, Va., Public Schools and Chair of the National Athletic Trainers’ Association’s Secondary School Athletic Training Committee, says the situation presents an opportunity for schools using clinic outreach services to start funding athletic training differently. He suggests beginning a small fund, perhaps increased gradually each year, for athletic trainers’ stipends so that services provided by an outside entity can be brought in-house.

“Public schools should be working toward obtaining ownership of that employee,” Almquist says. “Two thousand dollars, even in a small system, should be able to fly under the radar of the chopping block. Do it when it’s not going to cause a school board member to have a heart attack.”