NEW YORK, May 3 (Reuters) - HealthSouth Corp. (Other OTC:HLSH.PK - News) on Monday said HCA Inc. (NYSE:HCA - News) executive Jay Grinney would be its new chief executive, a move meant to further the company's turnaround after a massive accounting scandal.
Grinney said in an interview he hopes to present a strategic plan to the company's board in the third quarter or fourth quarter of this year.
The Birmingham, Alabama-based operator of rehabilitation and outpatient surgery centers said Grinney would take the helm on May 10, replacing interim CEO Robert May.
At HCA, the largest U.S. hospital company, the 53-year-old Grinney served as the president of the eastern unit of hospitals since 1996.
By hiring Grinney, HealthSouth may be able to restore some confidence in the company following last year's accounting scandal in which 15 company executives have pleaded guilty and founder Richard Scrushy has been indicted for fraud.
"I want to do what I can to restore credibility with our various external publics. I plan to meet with business leaders, government leaders, legislators and try to put a new face on the company," said Grinney, who will also serve as HealthSouth's president.
Grinney's unit at HCA has about 100 hospitals and generated annual revenue in excess of $10 billion. Before he joined HCA, he worked for Houston's Methodist Hospital System for nine years.
He serves as chairman of the board of the Federation of American Hospitals.
As an HCA executive, Grinney has gone through corporate turmoil before. In 1997, the company, then Columbia/HCA Healthcare Corp., was hit by a Medicare fraud scandal that prompted a company shake-up and the ouster of its CEO.
"I don't know if the situations are identical. But clearly from an operational standpoint, there are parallels," Grinney said.
"There are some strategic parallels as well. It's the same game plan in terms of building volumes, making sure you're adequately paid for the services you are providing, controlling costs," he said.
The HealthSouth scandal, in which the company deliberately overstated earnings and assets by billions of dollars over several years, left the company in default on some of its loans and battling to avoid bankruptcy.
But the company has overhauled its board of directors, ousted Scrushy, and is working to restructure its debt, leaving analysts more confident it has put the worst behind it.
"One of the first things I want to do is to begin the process to fill some of the key senior management positions, most notably the chief financial officer position. I'm also interested in getting out and learning as much as I can about the company and where it can grow," Grinney said.
He declined to comment about some of the internal business considerations at HealthSouth, saying it was too early.
But he is hopeful that HealthSouth's operations will not be hurt by the taint of the scandal.
"For practically all the people who know HealthSouth, they know about it because of the local rehabilitation hospital or the local surgery center or the local outpatient imaging center that provides quality health care in the community," Grinney said.
When asked about the company's stock listing, which is now on the Pink Sheets, and its debt obstacles, Grinney said: "Those are going to be key issues that are going to have to be addressed and successfully resolved." (Additional reporting by Bill Berkrot)
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