Business
HealthSouth taps HCA exec to take over company helm
■ The new CEO has experience with corporate overhauls.
By Katherine Vogt — Posted May 24, 2004
- WITH THIS STORY:
- » Related content
HealthSouth has hired a longtime hospital chain executive -- who has firsthand experience in a corporate turnaround -- to become its new leader as the outpatient services company tries to recover from a massive accounting scandal.
Jay Grinney, 53, who led a 100-hospital division of HCA Inc., was unanimously elected by HealthSouth's board to become the company's new president and chief executive officer. The move was effective May 10, a week after it was announced.
Leaders hope that Grinney's experience both with HCA and as an executive with a hospital system in Houston will help him steer HealthSouth at a critical time for the company.
"Jay has broad operating and financial experience and is recognized as one of today's outstanding leaders in the health care industry," said Interim Chair Joel C. Gordon in a written statement. "He brings with him not only a wealth of practical know-how built over a 23-year career, but also a real vision of the opportunities and challenges in today's health care industry."
Grinney replaces Robert P. May, a board member who has served as interim CEO since March 2003, when HealthSouth founder Richard Scrushy was ousted as chief executive as the accounting scandal began to unfold. May was to remain on the board.
HealthSouth has been accused by federal prosecutors of overstating earnings by $2.7 billion or more to meet Wall Street expectations. Since the scandal broke, 17 former employees have agreed to plead guilty to various criminal charges, and Scrushy is awaiting trial for fraud.
In the aftermath, the company has been undergoing a major restructuring effort and leadership overhaul that has included changes to its board and several new executives. Grinney said HealthSouth had made progress.
"HealthSouth has made an impressive turnaround over the past year, and I am confident that it has a future of solid growth and profitability," he said in written remarks.
Grinney has experience being a leader with a company that is trying to recover from near disaster. He was an executive with HCA in the 1990s while the hospital chain was at the center of the government's largest-ever Medicare fraud investigation. HCA has subsequently undergone a dramatic overhaul, changing its leadership and slimming down in size.
Since 1996, Grinney served as president of HCA's Eastern Group, a division that has annual revenues of nearly $10.5 billion.
Sheryl Skolnick, a health care analyst with Fulcrum Global Partners, said Grinney's experience with HCA likely bolstered his leadership skills.
"You get tested when you have to manage through a lot of change," Skolnick said. "In this case, HCA has gone through some very significant structural and cultural changes, and Jay was there for that.
"One thing that HealthSouth is going to get is someone who is experienced at managing a very big business," she added. "I mean $10 billion, you don't sneeze at that. That is the kind of experience that HealthSouth will need to continue its transition to whatever future it has."
HCA said HealthSouth was getting a talented leader.
"This is a great opportunity for Jay," said Jack Bovender, HCA chair and chief executive, in a written statement. "In his years at HCA he has proven to be an intelligent, principled and tenacious leader who is focused on patient care. These qualities will serve him well as a chief executive."
HCA said it would name Grinney's successor soon.