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%.

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