Bankruptcy might not be all bad news

Physician partners with scandal-ridden HealthSouth worry about its future, but some may be able to benefit from its troubles.

By Katherine Vogt, AMNews staff. June 2/9, 2003.

A HealthSouth bankruptcy filing could bring pain -- or opportunities -- for physicians affiliated with the outpatient services giant, some experts say.

For example, if the company has to sell some surgical centers, physician groups may be able to buy them for a good price. And if contracts are threatened, physician groups may be able to explore options with other companies. But any benefit could require a lot of time and work.

No bankruptcy plan has been filed as of press time, and Birmingham, Ala.-based HealthSouth insists it can avoid that action. Still, its chief restructuring officer made public comments recently indicating that a prepackaged Chapter 11 bankruptcy filing was a solid possibility this summer.

HealthSouth is $3.3 billion in debt and faces federal allegations of overstating expenses by $2.4 billion. At least 11 executives, including all five former chief financial officers, have agreed to plead guilty to criminal charges. About 330 nonclinical corporate positions have been eliminated. Ousted chief executive Richard Scrushy faces civil insider trading charges and has been accused of urging employees to overstate earnings.

"We would hate to see what we worked so hard to build become unraveled because of someone else's misdeeds," said Randall Dryer, MD, medical director at the HealthSouth Surgical Hospital of Austin in Texas. "There's nothing I'm aware of that we can do until they either say we're bankrupt or they announce a restructure plan and then we can react. Right now, it's business as usual.''