HealthSouth's Inpatient Rehabilitation Facilities: How Does Their Performance Compare With Other For-Profit and Nonprofit Inpatient Rehabilitation Facilities?

Abstract

McCue MJ, Thompson JM. HealthSouth's inpatient rehabilitation facilities: how does their performance compare with other for-profit and nonprofit inpatient rehabilitation facilities? Objectives To assess the financial and operational differences in freestanding inpatient rehabilitation facilities (IRFs) that are operated by HealthSouth Corporation relative to other for-profit and nonprofit system-affiliated ownership groups. Since 2003, when it faced fraud charges and financial penalties, HealthSouth has experienced new management and refocused its business strategy. Because HealthSouth is the largest provider of freestanding IRF services, it is important to understand how their performance may differ relative to other ownership groups. Design We used the Mann-Whitney U test to assess differences in median values for financial and operational variables of HealthSouth-owned IRFs compared with other for-profit system IRFs and nonprofit system IRFs. Setting System-affiliated freestanding IRFs in the United States. Participants Sixty-four HealthSouth IRFs, 18 nonprofit system-affiliated IRFs, and 18 for-profit system-affiliated IRFs. Interventions Not applicable. Main Outcome Measures Net patient revenue per adjusted discharge, operating expense per adjusted discharge, salary expense per full-time equivalent, and cash flow margin. Results HealthSouth IRFs had significantly lower net patient revenue per adjusted discharge and operating expense per adjusted discharge; however, its cash flow margin was significantly higher than other comparison groups. HealthSouth IRFs treated a higher case mix of patients relative to these comparison groups. Conclusions The financial and operating performance of HealthSouth IRFs is stronger than other ownership groups. Strong cash flow will enable HealthSouth to pay down long-term debt.