This story originally appeared in the September 8, 1997 issue of Fortune magazine.
Darla Moore fell hard for Richard Rainwater the moment he told her, "I view you like an equity investment."
"It was the ultimate compliment," says Moore, a woman who believes that business and love are similar games.
She was then the highest-paid woman in banking. He was renowned as one of America's most ingenious investors. Since they merged matrimonially, Moore has taken charge of Rainwater's stock portfolio as well as his life. In 3 1/2 years as CEO of Rainwater Inc., she has nearly tripled her husband's net worth, to $1.5 billion.
What's more, she has eagerly adopted a crucial role that Richard has always loathed that of the tough-guy, dissident shareholder. When the couple bought into Mesa last year, it was Darla who booted the oil and gas company's founder, the once notorious corporate raider T. Boone Pickens. And, in this year's biggest business drama, it was she who forced out Columbia/HCA CEO Richard Scott after the health-care giant got slammed with a massive criminal investigation.
"I've harassed guys all my life," Moore says, surveying the view from the back patio of the Rainwaters' hillside villa in Montecito, Cal., a few miles south of Santa Barbara. It was here, overlooking their vast gardens, that Darla dished it to old Boone, and where she strategized with Columbia board members to run off Scott. Darla isn't currently on the board, but she and Rainwater together own about $260 million of Columbia stock—an investment that certainly isn't out of the woods yet just because of Scott's departure. They agreed to talk exclusively with Fortune about the mess at the world's largest health-care company, which Scott and Rainwater started a decade ago by each pitching in $125,000 to buy two Texas hospitals.
Among their revelations, Moore and Rainwater say they clashed over whether Scott should stay or go as CEO. She won. As federal agents canvassed Columbia, Scott defiantly refused to acknowledge the trouble, and Moore campaigned for his departure. " Darla was a responsible shareholder who did what had to be done,"says Columbia's new CEO, Dr. Thomas Frist Jr., who was Moore's anxious ally.
To get a picture of Darla Moore, imagine, say, a cross between the Terminator and Kim Basinger, with a wicked South Carolina drawl. Upon first meeting, she can come across as a prima donna, tough and aloof. As she warms up she can turn fun and flirty, even girlish, though the shift is deceptive. "She's a cutthroat killer underneath," says her friend Martha Stewart, with admiration.
Like most women who reach the heights of corporate America—a rare breed—Moore is paradoxical. She collects 18th-century French furniture and rare books (her favorites: tomes by Adam Smith and de Tocqueville). She also hangs out at hot-rod events with Rainwater, who owns the world's fastest street car. Riding shotgun in his modified red '57 Chevy, Moore has gone from zero to 60 in 1.2 seconds. "The thrill of my life," she says.
Darla isn't usually one to sit back and let others drive. Last year at a New York Knicks game, she caught an errant ball. When the ref asked for it, she took aim at the basket instead. It was an air ball. "If I didn't have blonde hair and blue eyes and hadn't been dressed the way I was, I would have been hopped out of Madison Square Garden in a second," she says.
Rainwater agrees, telling his wife, "You pull off everything you try to do."
A charming and free-spirited opportunist, Rainwater, 53, seems able to handle Moore, 43, just fine. He has astutely turned over the heavy lifting to his cunning and stunning queen of capitalism—"Little Precious," he calls her—so that he can focus on the big picture, relaxation (he has reduced his golf handicap from 30 to 12), and, of course, Darla . When he meets her friends, he introduces himself this way: "Hi, I'm Richard, the househusband." In this unique partnership he remains the investment visionary, choosing industries into which the Rainwater money flows. (See "Rainwater's Investing Strategies" for his tips.) Darla and Richard together, with the help of only two associates, select the companies. Then Darla , whose ambition seems limitless, executes the deals. "My wife wants to rule the world," says Rainwater, only half facetiously.
Her test of true grit came with Columbia/HCA, a business Rainwater started with Rick Scott in 1987, a few years before Darla (or "B.D.," as Rainwater says). At the time, Rainwater was a Fort Worth investor, having just struck out on his own after 16 years with Texas' Uber-rich Bass family. He had made the Basses billions by acquiring big stakes in distressed companies like Disney and Texaco when their stocks were really cheap. Having helped recruit Michael Eisner to Disney in 1984, Rainwater had made some $100 million for himself and was on the hunt for new ways to invest it. He met Scott, a scrappy 34-year-old lawyer who specialized in hospital mergers and acquisitions, and found they shared a vision—to build a national multiservice health-care chain. To attract the best practitioners, they came up with the idea of selling doctors equity in the business.
Moore got involved in early 1994, when she became CEO of Rainwater Inc. and replaced her husband on Columbia's board of directors. This was Rick Scott's heyday. In two years he nearly tripled Columbia's revenues by merging with four other companies, including Hospital Corp. of America (HCA), a big Nashville chain that Rainwater was a major investor in. Darla and Richard, in fact, convinced Tommy Frist, the courtly surgeon who was then HCA's chief executive, to let Boy Wonder, Scott, be CEO of the combined companies.
From Darla 's perspective, she spotted trouble early on at Columbia. When she resigned from the board in early 1996—because the Rainwaters' investment in Magellan Health Services posed a conflict of interest—she felt uneasy about Rick Scott's management style. The Columbia board meetings were typically limited to two hours; Scott would present a litany of issues—scripted—and leave little time for debate. Darla kept up with the industry scuttlebutt, which was that Columbia was horribly difficult to deal with. And the press started hammering the health-care provider, charging that its cost cutting compromised quality medical care. Yet whenever Moore and Scott talked, which was every few weeks, he always told her not to worry, that "everything's great."
Moore did worry, though. Late last year she started voicing her concerns to Rainwater and Frist, Columbia's vice chairman and largest individual shareholder. Neither of them was losing faith in Scott yet, however. After all, profits were going up some 20% a year. The stock was rising steadily. And Columbia, with $20 billion in revenues, was America's most admired health-care company, according to Fortune's annual survey.
But Moore trusted her instincts, which proved to be right. She says, "My single greatest strength is seeing through the smoke into chaos, and operating where everything is exploding." In March federal agents, suspecting that Columbia was overcharging Medicaid and Medicare, raided company offices in El Paso. The day the news hit the papers, Moore talked to Scott on the phone. He assured her the company had done nothing wrong. "Rick was disdainful" of the investigation, Moore says, even though the federal government supplies about a third of Columbia's revenues. She adds, "You don ' t spit on Uncle Sam."
Her wisest strategy, she decided, was to strengthen her ties with Frist, who by this time was feeling completely shut out by Scott. A few weeks after El Paso, Frist gave Scott a nine-page letter outlining Columbia's problems and possible solutions. Scott never acknowledged the letter. "I didn't know what to do," Frist recalls. "It was the most perplexing thing in my career." He thought about quitting. Darla urged him to hang on.
Rick Scott didn't know it, but the noose around his neck tightened just before the July 4 weekend. In Montecito, Moore got a surprise visit from Frist, who said he was too angst-ridden to enjoy his holiday in Aspen. They spent all afternoon on the patio devising a plan. Rainwater sat in for a half-hour, mostly to challenge the practicality of their ideas. Really, Rainwater just wanted to stay out of the way. He dreaded turning on Scott, his friend and partner. "Great executives make mistakes, and usually they recover," he says. "My hope was that Rick would alter his stance of righteous indignation. I felt he could carry on in the job."
And if he couldn't, well, as any good capitalist knows, Wall Street would take care of the Rick Scott problem by forcing a shakeup.
Moore wasn't willing to wait. She wanted to merge Columbia with the industry's No. 2, Tenet Healthcare, and install Tenet's CEO, Jeffrey Barbakow, as chief executive of the combined company. Not only did the deal make sense financially, but it would also allow Scott to depart Columbia with relative dignity—Rainwater's biggest concern. Frist designated Moore as the intermediary for a Columbia-Tenet merger. Her role was unusual and remarkable, says Columbia board member Michael Long, a partner at Brown Brothers Harriman: "Even though she wasn't a company officer or a director or a big fund manager, she was so insistent. She got us to listen to her."
It seemed only a matter of time before Scott would be gone. But the moment came sooner than anyone expected. On July 16, the feds seized documents from Columbia locations in seven states. Early the next morning ( Darla and Richard were still in bed), Scott called her in Montecito. "How ya doin'?" she asked.
"Great," Scott said, true to form. "I'm doing great."
Darla begged to differ. "Rick," she said, "it's over."
A merger between Columbia and Tenet never came together. Pending the government findings, the two companies couldn't agree on the value of Columbia's stock. So Scott resigned, and the board elected Frist as Columbia's new CEO.
Rick Scott wasn't the first guy Darla messed with. Before Scott, there was Boone Pickens. The cantankerous oilman who terrified CEOs during the Eighties was by last year facing what some might call divine retribution: The stock of Mesa, the company he had founded at age 28, had sunk from $48 to less than $3, and Pickens was threatened by proxy fights and possible takeover. Smelling opportunity, Moore and Rainwater offered to help by buying some stock, selling new equity, and refinancing Mesa's out-of-control debt. To Pickens, this was a friendly partnership. He figured he'd stay at the helm for a while.
Before the deal was done, Pickens and his attorney flew to Montecito. On the Rainwaters' Power Patio, Darla told Pickens that he had to step down, that his reputation was a problem. "I tried to be as tactful as I could, but tact doesn't come easily to me," she says.
Pickens says he holds no grudge. Mesa is back on firm ground, and following a merger with another oil company to create Pioneer Natural Resources, Pickens' total holdings have doubled in value. The Rainwaters, meanwhile, have gained a $161 million profit on their $66 million investment.
Rainwater treasures his wife's sang-froid: "The difference between Darla and me is that I'll take a lot of time and effort to solve a problem without hurting people's feelings and reputation. By the time I'm ready to act, Darla will already have the job done."
Either he's naive or he's coy, but Rainwater says the source of his wife's rabid ambition is "a mystery." (Hence her allure.) Really, it isn't so difficult to fathom if you study Moore's past. Darla Dee, as she was known back then, grew up in the tiny tobacco hamlet of Lake City, S.C. (pop. 8,398). The first of two daughters born to Eugene Moore, a schoolteacher and coach, and his wife, Lorraine, who worked at the Methodist Church, Darla Dee spent weekends and summers at her grandparents' 125-acre farm just a few miles away; five black families were tenants there and worked the fields. "The environment embodied bigotry and control," Darla says, "but at the same time, it was warm and loving."
Eugene Moore, an all-star athlete in college, wanted his eldest daughter to excel at every sport. He had no sons nor sisters, and so, he says, "I treated Darla like a boy." He set up a track in front of the house and clocked her 50- and 100-yard sprints. He timed her laps in the swimming pool and coached her on the basketball court. He took her fishing and hunting; Darla shot rabbits and birds. Eugene Moore even made sure that, by age 8, his daughter knew how to map a football team's field formations.
Her mother pushed her too, but in other areas like music (piano) and academics. If Darla Dee brought home straight A's—and she did—Lorraine Moore figured she could be a nurse or a teacher, both good professions that allow a woman to follow her husband wherever he moves. "She kept telling me, 'I'll never do that. I'll do anything but that!' "her mother recalls. "We argued a lot, and I always lost." Darla 's sister, Lisa, was better at fulfilling mom's expectations: Lisa is a nurse, with a husband and two sons, in Boston.
In high school (all white, since Lake City was one of the last American towns to be integrated), Darla wasn't hugely popular. "I was on the fringe. I rejected what you do to be popular—the beauty queen/cheerleader/sorority thing," she says. "I must have had an air of superiority about me, but I felt destined for bigger things."
Her first big thing was a summer internship with Senator Strom Thurmond during college at the University of South Carolina. "It was so heady to be around power," she says. "It was my first access to people who had control of their lives."
After college, Thurmond got her a job as a researcher for the Republican National Committee. It was 1976, post-Watergate, and an awful year for the GOP. (Carter beat Ford.) Moore realized that politics wasn't her game. "It dawned on me that this is all borrowed power. The guy who's powerful one day is nobody the next. I found nothing gratifying about it."
She opted for business school, at George Washington University in D.C., though she hadn't a clue what she wanted to do with her life. Soon after graduating in 1981, Moore entered the training program at Chemical Bank in New York City with 31 other MBAs. She went into a hardball area of banking where few others wanted to go: the bankruptcy business. "A mentor had advised me, 'Find a niche and become the very best at it,' " she explains. "I saw the bankruptcy area as a career opportunity because it had no cachet, no protocols, and no women."
Her boss, Bob Conway, believed Chemical could make a lot of money by actually soliciting business from bankrupt companies—imagine that—and offering them loans at really high interest rates. He sent his 30-year-old protegee knocking on the doors of lawyers, accountants, and investment bankers who specialized in bankruptcies. "Being a woman gave me a competitive edge," Moore says. "They would much rather have lunch with me than with other men."
It was part ingenuity and part luck, but Moore's timing was impeccable. This was the dawn of the LBO era, and when debt-ridden giants like Texaco, Macy's, Federated Department Stores, and Eastern Air Lines went bankrupt, they turned to Chemical, and to Moore, for help. Chase Manhattan vice chairman James Lee, her former colleague at Chemical, remembers Fortune 500 CEOs strong-arming Moore to get lower rates on loans. " Darla would turn to the CEO and say, deadpan, 'You are bankrupt,' " Lee recalls. "She's totally fearless."
She was hell to work for too intolerant of anyone who couldn't deal with problems as decisively as she. When Moore was 33, some of her subordinates quit on her. "You are a management problem," her boss told her. She eventually learned to hang on to good employees—business was booming, after all—but she always made sure everyone knew: You don ' t mess with Darla . She walked into one meeting with the senior management of a major retailer and announced, "Put on your rubber underwear, boys. It's going to be a long evening."
When Richard Rainwater bounded into Darla Moore's life, she was known in the banking industry as the Queen of DIP (debtor-in-possession financing), she was generating huge profits for Chemical (at least $100 million during her last years there), and she was earning more than $1 million annually. They met in Fort Worth on a deal to finance Farley Industries, an underwear company, of all things (Farley owns Fruit of the Loom). Their first two encounters were platonic, but sparks flew. "I thought I was going to hyperventilate and collapse," Moore says. "This was the most intense, complex guy I'd ever met. I thought, 'This cannot be.' " Trouble was, she was in a serious, long-term relationship with a man in New York. Rainwater, little did she know, had just separated from his high school sweetheart and wife of 25 years, Karen. (They have three children.)
Shortly after that second meeting, Rainwater called Moore at her Chemical office. When she picked up the phone, she blurted, "Well, do you miss me?"
"I do," he replied.
"I think we have a problem," she said.
"I think we do too."
He flew up to New York to see her. Sitting down to dinner that first night at the Regency Hotel, Rainwater told Moore, "I'm not interested in having an affair. I'll go forward with this only if you're interested in marriage."
She shot back, "You're too big. You have too much money. And you're going to ruin everything I've worked for."
Moore knew exactly what she was doing. As she says, "When I was 15, I announced to my peer group of girls that when I married, it would be royalty. What I did was marry the capitalist equivalent of royalty."
Like any smart executive, she wasn't about to be acquired easily. She told Richard and her close friends that she dreaded becoming "Mrs. Rainwater" and losing her identity. "It was the only time in my life I was certifiably unstable," Moore says. But Richard did "his wooing thing." He told her, "When I see a unique and remarkable opportunity, I commit quickly and I invest heavily, because if I don ' t , someone else will."
"I thought, 'This is my kind of guy. Where have you been all my life? You think just like I do.' "
They canceled a big wedding planned for January and married on the spur of the moment on a rainy Friday the 13th in December 1991 at Manhattan's Brick Presbyterian Church. From that day on, Richard Rainwater got everything he bargained for and more.
Back in Montecito, it's a gorgeous Sunday afternoon. Moore is in black spandex and Nikes. Rainwater, always Mr. Casual, is wearing an Indiana Pacers T-shirt (though he co-owns the Dallas Mavericks) and gym shorts. "We're just regular folks," Moore says. As if.
It sounds too California, but Darla and Richard share a particular passion: They're looking for the meaning of success and happiness. Around the time he married Darla , Richard had what you might call a midlife crisis, or maybe an epiphany. He quit working for a year. "Quit working? He quit functioning!" Moore says. He wrote reams of poetry to Darla . (A sample: "All we've imagined, shared. All we've hidden, bared. Out of ourselves at last, and into each other.") He became quite introspective—he and Darla are fans of The Road Less Travelled, the spiritual-growth book by M. Scott Peck. Through Crescent Real Estate Equities, a company that he started, he bought Canyon Ranch, America's No. 1 campground for the health-crazed rich. And thanks to weight-training and aerobics, he lost 40 pounds and pared his body fat from 27% to 19%. " Darla 's body fat is in the middle range of female Olympians," Rainwater boasts.
No trophy wife, Moore kept her job at Chemical. "I didn't want to be viewed like all the rest of them," she says. "You know, here comes Megabucks, and now she's by the pool." At the end of a long day, she'd come home to Richard, who would hand her a drink, put on some music, light candles, set out a basket of crudites, and rub her weary feet. Really. Richard's friends say he simply loves being in love. Richard and Darla are not only one of capitalism's most powerful couples; they're also the most outrageously affectionate. He's like a puppy dog around his Little Precious, nuzzling his face into her neck. "She's a babe," he says, "and everybody else says so too." She calls him "Sweet Pea," but more often he's "Buckwheat," a reference to one of the boys in Our Gang. The little girl on the show, you may recall, was Darla .
The lovebirds' business partnership began in earnest three years ago when Rainwater envisioned a boom in Southwestern real estate and started Crescent. He asked Moore to take charge at Rainwater Inc., which had net assets of about $600 million. She quit Chemical and plunged in, streamlining the business. "It was embarrassing," she says. "The way we used to calculate net worth was to sit down every month or so, estimate our holdings, and look up the stock prices in the paper. We'd get close, plus or minus $10 million." She sold a bunch of small investments and partnership interests and redirected the money into publicly held companies where she could make a big impact—which, as we now know, she did.
Darla Moore is eight pounds thinner today; those frenzied final days at Columbia took their toll. She's also famous now as the woman who detonated one of the most meteoric entrepreneurial careers of the decade. Some people are saying, "Richard Rainwater began Rick Scott's career. Darla Moore ended it."
"It's a good headline," she says, "but Rick's career probably isn't over. I'd think he'd go build another company, and he'd have tremendous support in the investment community. Remember, Rick has been accused of nothing illegal." She adds, "He's a great performer under the right circumstances. Unfortunately, Rick's greatest assets—his drive and his optimism—turned into his greatest liabilities when he was faced with the government onslaught."
She hasn't spoken to Scott since he left Columbia in July. Rainwater has called him three times. Scott hasn't called back. (He also declined to return Fortune's calls.)
At Columbia, meanwhile, Frist is making radical changes and undoing Scott's vision. He's prohibited equity stakes for affiliated doctors. He's eliminated short-term cash bonuses for executives. He's put the brakes on acquisitions, he says, "until we have a strong value system in place." He's also cooperating with the government. The new strategies will curb Columbia's revenue growth, at least short term. The stock, at $32a, is down 28% from its February high—and for the Rainwaters, that's a $100 million loss on paper. Asked whether Columbia shares are a good buy today, Rainwater simply says, "It depends on what the government does."
The outlook on Darla Moore is much clearer. "She's the best investment I've ever made," Rainwater says. "She wants to do not just a little more, but a lot more." Yes, her plan is to hunt bigger prey and do tougher deals and stage more audacious power plays. Asked what she'd like etched on her tombstone, she replies: " Darla Moore never let a problem overwhelm her—not even Richard Rainwater."
Reporter Associate Rajiv Rao