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HealthSouth CEO says Obama plan may prompt ’limited’ closings

Bloomberg, September 22, 2011

HealthSouth Corp. CEO Jay Grinney said an Obama administration plan to target rehabilitation hospitals may force him to close facilities and would cost $26 million if it were in place now. The Birmingham, Alabama-based in-patient rehabilitation company fell $1.48, or 9%, to $15.02 at 4:03 p.m. in New York Stock Exchange composite trading, the lowest since Oct. 30, 2009. It's the third straight decline after the administration recommended to Congress $7 billion in cuts to the industry. HealthSouth has about $2 billion in annual revenue. Adoption of the proposal may force the company to shut a "limited number" of its 94 hospitals, 38 of which would comply with the plan, Grinney said. He called investors' reaction "just irrational fear," after Obama proposed Sept. 19 reviving a rule that hospitals show at least 75% of patients meet criteria for rehabilitation. The threshold is now 60%.