Health South: The Scrushy Way

Abstract

The case presented in the book talks about the ethical dilemmas faced by and fraud committed by Health South under the management of CEO, Scrushy. Scrushy must be looked at as the single man who was dealing with the well being of all those working for him and running a company whose shares went from $1 to $31 in a matter of the time between 1986 and 1998. This was considered to be one of the most growing stocks at the time. The case presents the unethical behavior and conduct of not just the leader Scrushy but also others who have been convicted of malfeasance. The fabrications in the accounts of Health South statements reflect this. The paper discusses the implications of this fraud on the stakeholders as well as the outcomes and fairness of punishment to people involved in the fraud. Such instances create a sense of distrust among public in that they do not know which organizations to trust and which organizations not to trust. To sum up the three major reasons behind the collapse of Health South and Scrushy are greed, fraud and absence of good governance.

Table of Contents

Introduction1

Impact on Stakeholders1

The impact on the leader2

Affect on the management team3

Impact on Employees4

Impact on Patients5

Impact on government6

Impact on Board of Directors7

Impact on Auditors8

Outcome and Fairness of Punishment9

Conclusion11

References13

Health South: The Scrushy Way

Introduction

People say crime does not pay. This could not be farther from the truth, if we were to consider the case of Health South. The case presented in the book talks about the ethical dilemmas faced by and fraud committed by Health South under the management of CEO, Scrushy. Scrushy must be looked at as the single man who was dealing with the well being of all those working for him and running a company whose shares went from $1 to $31 in a matter of the time between 1986 and 1998. This was considered to be one of the most growing stocks at the time (Jennings, 2005). The CEO Richard M. Scrushy is a case study in himself. He was a distinct leader in that he led by coercion and he also led through charisma. He had a knack for getting things done. The case presents the unethical behavior and conduct of not just the leader Scrushy but also others who have been convicted of malfeasance. The fabrications in the accounts of Health South statements reflect this. The paper discusses the implications of this fraud on the stakeholders as well as the outcomes and fairness of punishment to people involved in the fraud.

Impact on Stakeholders

There are several stakeholders, both internal and external who could not escape the consequence of the fraud committed by Health South team. These include Scrushy and his management team, the employees, patients, government, shareholders as well as the board of directors. The impact on each of these is discusses hereunder (Nevins, 2007).

The impact on the leader

Richard Scrushy was a skilled man and a school dropout. He graduated from University ...