News | June 16, 1999

HealthSouth Plans to Split Outpatient and Inpatient Operations

HealthSouth Corp. (Birmingham, AL) announced that its board of directors has approved in principle a plan to split its inpatient and outpatient operations into separate public companies. The inpatient company would be called HealthSouth Hospital Corp., while the outpatient company would be called HealthSouth Corp.

HealthSouth Hospital Corp. would operate HealthSouth's existing inpatient rehabilitation locations and acute-care hospitals, the company says. HealthSouth would own substantially all existing outpatient rehabilitation centers, surgery centers, diagnostic centers and occupational health centers. The companies would have the following profiles, according to a company release:

HealthSouth Hospital Corp.

128 inpatient rehabilitation locations

Four acute-care hospitals

HealthSouth Corp.

1,200+ Outpatient Rehabilitation Centers

222 Outpatient Surgery Centers

119 Diagnostic Centers

119 Occupational Health Centers

Each company would have its own separate board of directors and senior management team. However, the companies would expect to enter into a variety of agreements that would allow them to continue to benefit from coordinated managed care contracting, purchasing, insurance and other shared services for a period of time after the spinoff, according to the company.

With outpatient locations in all 50 states and the United Kingdom, HealthSouth would remain the nation's largest provider of healthcare services geographically. HealthSouth Hospital Corp. on would initially have operations in 33 states, Puerto Rico and Australia, and would be the nation's largest provider of inpatient rehabilitation services. Certain outpatient rehabilitation locations associated with the company's rehabilitation hospitals will be included in the spin-off.

The company currently expects to complete the transaction, subject to various conditions and approvals, by year-end.