Grinney Visit 2016Jim Collins, author of Good to Great, and an expert in company sustainability and growth, says that it is not only the quality of leadership that makes companies great, but the continuity of leadership that matters. Jay Grinney, chief executive officer of HealthSouth Corporation, demonstrated that to students in the combined MBA and undergraduate capstone class “Strategic leadership through the eyes of the C-Suite,” when he made a return visit to the class on November 1, 2016.

HealthSouth is a major player in inpatient rehabilitation services, serving 28% of all patients receiving such services nationwide. Among free-standing inpatient rehabilitation hospitals, HealthSouth’s market share is over 50%. In 2015, the company vertically integrated further into the post-acute health care rehabilitation services market when it made two major acquisitions of home health/hospice agencies, Encompass Home Health and Hospice and CareSouth Health System, Inc. HealthSouth is headquartered in Birmingham.

After 12 years as HealthSouth’s CEO, during which he led a dramatic turnaround following discovery in 2003 of a massive accounting fraud at the company, Grinney announced just a few days before he visited the strategy class that he planned to retire at the end of 2016. The company announced at the same time that chief operating officer Mark Tarr would become CEO. (Tarr visited this strategy class in 2013.)

Grinney told students that he considered the development of future management to be one of his most important responsibilities as CEO. He noted that Tarr, who is 55, as well as other members of the management team after Grinney’s departure, had significant experience with the company and had participated in development of its strategic plan and fully embodied the company’s values. By many measures, the company’s strategic plan has been producing superior results for several years. For example, the company’s adjusted earnings per share have grown by a cumulative average rate of nearly 17% since 2011.

A team of students who had studied the strategy of HealthSouth in depth made a presentation to Mr. Grinney and made several recommendations, including that the company consider commercializing its various information technology systems. Those systems have been crucial in enabling HealthSouth achieve the scale necessary to be a low-cost provider. Grinney responded by noting that he considered those systems to be among the “secret sauces” of the company, that he thinks helps gives it a sustainable competitive advantage.

“Strategic leadership through the eyes of the C-Suite” is taught by Collat School of Business professor Stephen Yoder, and features visits from “C Suite” executives from public or other large complex organizations who discuss their organizations’ strategies and how they are developed and implemented.

[Pictured left to right: Vishal Patel, Andres Caceres, Mr. Grinney, Claire Hughes, Matthew Ashburn]