HealthSouth is actually all over the map as one of the largest rehabilitation services providers in the nation. Its facilities include inpatient rehabilitation hospitals, outpatient centers, and home health care agencies that provide nursing and therapy to patients who are recovering from brain and spinal cord injuries, cardiac, and pulmonary conditions, or neurological disorders (stroke, aneurysm). Operating in more than two dozen states and Puerto Rico, HealthSouth owns or leases more than 120 facilities with roughly 6,400 beds. Most of HealthSouth's income is derived from its inpatient hospital operations, which are concentrated in the eastern half of the US and in Texas.
HealthSouth has committed to focus on providing post-acute care services, primarily inpatient rehabilitative care. Its growth efforts in recent years have included the acquisition of small inpatient rehabilitation facilities. In 2012 it acquired the 36-bed inpatient adult rehabilitation unit of CHRISTUS Santa Rosa Hospital - Medical Center (San Antonio, Texas), and plans to relocate the unit into its existing HealthSouth Rehabilitation Institute of San Antonio. Later that year HealthSouth agreed to acquire the 60-bed Walton Rehabilitation Hospital in Augusta, Georgia.
During 2011 it went for more organic growth with the construction of new hospitals in Florida, Ohio, Texas, and Virginia. Going forward, the company intends to continue to focus on organic growth through construction, as well as bolstering the services it offers through program development.
HealthSouth is also investing in both clinical information technology and rehabilitation technology to keep it competitive in a rapidly advancing arena. The company has developed a therapeutic device called the AutoAmbulator designed to help patients who are having trouble walking become ambulatory. It is also implementing a clinical information system developed in-house.
As the final move to focus on inpatient rehabilitation hospitals, in 2011 HealthSouth sold five of its long-term acute care (LTAC) hospitals. Long-term acute care hospital operator LifeCare Holdings paid $117.5 million to acquire the five facilities, and HealthSouth will use the money to pay down debt and fund its new expansion efforts. The company's sixth LTAC hospital in Houston was closed and HealthSouth plans to sell the related property. It used the proceeds to pay down debt.
Government-funded health programs are the largest source of revenue for HealthSouth; 70% of inpatient revenues are paid by Medicare, making it sensitive to changes in Medicare reimbursement policies. Any downward adjustment to rates, or other pricing declines, for the types of facilities HealthSouth operates could cause financial problems for the company. Washington's efforts at health care reform are also likely to affect HealthSouth's future.
The company's revenues have grown steadily and modestly in recent years. In 2010 HealthSouth saw a boost to its net income as a result of an income tax benefit of some $741 million. By 2011 its net income had gently floated back down to previous levels, but it still enjoyed strong cash flows to continue its growth habits.