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HealthSouth Corporation Case Study
Managerial Communication
Dr. Ben Busbee
Dwight Frazier
December 12, 2013

A. Executive Summary:
The paper highlights the case analysis on one of the big financial fraud which occurred from 1986-2003. The case of HealthSouth is based on fraud, greed and corporate governance. The HealthSouth case shows that unethical management cannot succeed; sooner or later the truth comes out. The case highlights many key points and the major reason for the fraud was the result of failures of various standard mechanisms of control including the external auditors, the underwriters, and the board of directors, the financial market regulators and the analysts.
HealthSouth was one of the country's largest providers of outpatient surgery, diagnostic imaging, and rehabilitation services, operating over 1,800 locations and reporting revenues of $4 billion. The company's management improperly accounted for some $2.7 billion of assets and earnings. Seventeen HealthSouth executives agreed to plead guilty to various charges in connection with this massive accounting fraud.

B. Statement of the Problem:
Thus, in the HealthSouth case, the research shows that it was close to the real life examples of the people who were “just employed”; however at the same time their transformation from the line of law-abiding citizens towards the law-breaking villains. Apparently the small compromises in morality and ethics led towards the greater compromises and as a result it turned into a full-scale commitment fraud (Johnson, 2005).

C. Causes of the Problem:
The structure of HealthSouth organization contributed to the fraud as it was run by top-down management strategies. The CEO was the one to decide on everything and the one that must make the final decisions then simply pass them down to his management team for executions. The financial scandal of...

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