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HealthSouth Problems Lead To Job Cuts At Health Care Firm

Apr 2, 2003 | AP

Source Medical Solutions said it has reduced its work force by about 20 percent, largely because of the collapse of HealthSouth, its biggest customer.

The health care technology firm said Tuesday it would cut 30 jobs in Birmingham and 110 across the company. The company now has 445 employees at offices in Alabama, California, Connecticut, Texas, Utah, New York and Canada.

"Part of our growth strategy was tied to HealthSouth's growth strategy," company spokesman Mike Ragsdale told The Birmingham News. "We took proactive steps to prepare for the fallout of recent events."

Source Medical, which produces software and technology for patient records, billing and payments, started as an operation within HealthSouth before becoming an independent company in November 2000.

With HealthSouth officials as its founding investors, Source Medical has maintained ties to HealthSouth while seeking to add contracts with other health care companies and acquire other technology firms.

Ragsdale said HealthSouth has not informed Source Medical Solutions that it plans to cancel existing contracts or will not require its products and services. He said Source Medical Solutions is anticipating less HealthSouth business because of current difficulties.

Recent events include guilty pleas from three former HealthSouth executives as part of a case being compiled against former CEO Richard Scrushy, who was fired Monday. Other guilty pleas are expected.

Securities regulators claim Scrushy and HealthSouth falsified the company's earnings by at least $1.4 billion since 1999 in order to inflate the stock price. HealthSouth was unable to make $367 million in bond and interest payments that were due Tuesday, making bankruptcy more likely.

Ragsdale said restructuring will enable Source Medical Solutions to rely less on one company for its business. "We are going to come out of this a stronger company," he said.

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