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Don't MessWith

ariaDA LA MOORE FELL HARD for Richard Rainwaterthe moment he told her, "I view you like an equity investment."

"It was the ultimate compliment," says Moore, a womanwho believes that business and love are similar games.

She was then the highest-paid woman in banking. He was re-nowned as one of America's most ingenious investors. Sincethey merged matrimonially, Moore has taken charge of Rain-water's stock portfolio as well as his life. SHE'S NOT WST MRS.

In 3112 years as CEO of Rainwater Inc., RICHARD RAINWATER:she has nearly tripled her husband's net OUTRAGEOUS ANDworth, to $1.5 billion.

UNSTOPPABLE, SHE'SWhat's more, she has eagerly adopted WON LOVE, MONEY-

a crucial role that Richard has always ADD THE UPPER HANDloathed-that of the tough-guy, dissident AT COI.EIMBIAHCA.shareholder. When the couple bought BY PATRICIA SELLERSinto Mesa last year, it was Darla whobooted the oil and gas company's founder, the once notoriouscorporate raider T. Boone Pickens. And, in this year's biggestbusiness drama, it was she who forced out Columbia/HCACEO Richard Scott after the health-care giant got slammed

PHOTOGRAPH BY DAVID STRIC :

September 8, 1997 FORTUNE-

POWER LOVEBIRDS

Moore the opportunist popped a shot at a Knicks game.

sl

w

ai

with a massive criminal investigation."I've harassed guys all my life," Moore

says, surveying the view from the backpatio of the Rainwaters' hillside villa inMontecito, Cal., a few miles south ofSanta Barbara. It was here, overlookingtheir vast gardens, that Darladished it toold Boone, and where she strategized withColumbia board members to run offScott. Darla isn't currently on the board,but she and Rainwater together ownabout $260 million of Columbia stock-an investment that certainly isn't out ofthe woods yet just because of Scott's de-parture. They agreed to talk exclusivelywith FORTUNE about the mess at theworld's largest health-care company,which Scott and Rainwater started a dec -ade ago by each pitching in $125. 000 tobuy two Texas hospitals.

Among their revelations, Moore andRainwater say they clashed over whetherScott should stay or go as CEO. She won.As federal agents canvassed Columbia,Scott defiantly refused to acknowledge thetrouble, and Moore campaigned for his de-parture. "Darla was a responsible share-holder who did what had to be done,"

says Columbia's new CEO,Dr. Thomas Frist Jr., whowas Moore's anxious ally.

To get a picture of DarlaMoore, imagine, say, a crossbetween the Terminatorand Kim Basinger, with awicked South Carolinadrawl. Upon first meeting,she can come across as aprima donna, tough andaloof. As she warms up shecan turn fun and flirty, evengirlish, though the shift isdeceptive. "She's a cut -throat killer underneath,"says her friend MarthaStewart, with admiration.

Like most women whoreach the heights of corpo-

rate America-a rare breed-Moore is paradoxical. Shecollects 18th-century Frenchfurniture and rare books(her favorites: tomes byAdam Smith and de Tocque-ville). She also hangs out athot-rod events with Rainwa-ter, who owns the world'sfastest street car. Ridingshotgun in his modified redS7 Chevy, Moore has gone

from zero to 66 in 1.2 seconds. "The thrillof my life," she says." Darla isn't usually one to sit back andlet others drive. Last year at a New YorkKnicks game, she caught an errant ball.When the ref asked for it, she took aim atthe basket instead. It was an air ball. "If I

didn't have blonde hair and blue eyes andhadn't been dressed the way I was, I wouldhave been hopped out of Madison SquareGarden in a second," she says.

Rainwater agrees, telling his wife, "Youpull off everything you try to do."

A charming and free-spinnist, Rainwater, 53, seems ,Moore, 43, just fine. He has astutely

heavy lifting to his cun-ning and stunning queen of capitalism-- -"Little Precious," he calls her-so that hecan focus on the big picture, re tion (hehas reduced his golf handicap from 30 to12), and, of course, Darla. When he meetsher friends, he introduces himself this way;"Hi, I'm Richard, the househusband." Inthis unique partnership he remains the in-vestment visionary, choosing industriesinto which the Rainwater money flows.(See "Rainwater's Investing Strategies"for his tips.) Darla and Richard together,

with the help of only two associates, selectthe companies. Then Darla, whose ambi-tion seems limitless, executes the deals."My wife wants to rule the world," saysRainwater, only half facetiously.

Her test of true grit came with Colum-bia/HCA, a business Rainwater started withRick Scott in 1987, a few years before Darla(or "B.D.," as Rainwater says). At the time,Rainwater was a Fort Worth investor, hav-ing just struck out on his own after 16 yearswith Texas' Uber-rich Bass family. He hadmade the Basses billions by acquiring bigstakes in distressed companies like Disneyand Texaco when their stocks were reallycheap. Having helped recruit Michael Eis-ner to Disney in 1984, Rainwater had madesome $100 million for himself and was onthe hunt for new ways to invest it. He metScott, a scrappy 34-year-old lawyer who spe-cialized in hospital mergers and acquisi-tions, and found they shared a vision-tobuild a national multiservice health-carechain. To attract the best practitioners, theycame up with the idea of selling doctors eq-uity in the business.

Moore got involved in early 1994, whenshe became CEO of Rainwater Inc. and re-placed her husband on Columbia's board ofdirectors. This was Rick Scott's heyday. Intwo years he nearly tripled Columbia's rev-enues by merging with four other compa-nies, including Hospital Corp. of America(HCA), a big Nashville chain that Rainwa-ter was a major investor in. Darla and Rich-ard, in fact, convinced Tommy Frist, thecourtly surgeon who was then HCA's chiefexecutive, to let Boy Wonder, Scott, beCEO of the combined companies.

From Darla's perspective, shespotted trouble early on at Co-lumbia. When she resignedfrom the board in early 1996-because the Rainwaters' in-

stment in Magellan Health Servicessed a conflict of interest she fell

easy about Rick Scott's management style.The Columbia l

leave little time for debate. Darla kept upwith the industry scuttlebutt, which wasthat Columbia was horribly difficult to dealwith. 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 toldher not to worry, that "everything's great."

Moore did worry, though. Late last year

ca

present a litany of issu

64 * F O R T U N E September 8, 1997

POWER LOVEBIRDS

s, selectambi-deals.

'," says

:olum -:d withDarlatime,

r, hav-i yearsle hadIg big)isneyreallyI Eis-madeas on

metspe-

luisi--tocaretheyseq-

ThenI re-d ofi. Inrev-

pa-

..icaava-ch-

theliefbe

he

o-

,d

s

she started voicing her concerns to Rain-water and Frist, Columbia's vice chairmanand largest individual shareholder. Neitherof them was losing faith in Scott yet, how-

r all, profits were going up someyear. The stock was rising steadily.

And Columbia, with $20 billion in reve-nues, was America's most admired health-care company, according to FORTUNE'sannual survey.

But Moore trusted her instincts, whichproved to be right. She says, "My singlegreatest strength is seeing through thesmoke into chaos, and operating where

everything is exploding." In March federalagents, suspecting that Columbia was over-charging Medicaid and Medicare, raidedcompany offices in El Paso. The day thenews hit the papers, Moore talked to Scotton the phone. He assured her the companyhad done nothing wrong. "Rick was dis-dainful" of the investigation, Moore says,even though the federal government sup-plies about a third of Columbia's revenues.She adds, "You don't spit on Uncle Sam."

Her wisest strategy, she decided, was tostrengthen her ties with Frist, who by thistime was feeling completely shut out byScott. A few weeks after El Paso, Frist gaveScott a nine-page letter outlining Columbia'sproblems and possible solutions. Scott neveracknowledged the letter. "Ididn't know what to do," Fristrecalls. "It was the most perplex-ing thing in my career." Hethought about quitting. Darlaurged him to hang on.

Rick Scott didn't know it,but the noose around his necktightened just before the July 4weekend. In Montecito, Moore

got a surprise visit from Frist,who said he was too angst-ridden to enjoy his holiday inAspen. They spent all after-noon on the patio devising aplan. Rainwater sat in for a

Wall Street would takecare of the Rick Scottproblem by forcing ashakeup.

Moore wasn't willing towait. She wanted to mergeColumbia with the indus-try's No. 2, Tenet Health-care, and install Tenet'sCEO, Jeffrey Barbakow,as chief executive of thecombined company. Notonly did the deal makesense financially, but itwould also allow Scott todepart Columbia with rel-ative dignity-Rainwater'sbiggest concern. Fast des-ignated Moore as the in-termediary for a Columbia-Tenet merger.Her role was unusual and remarkable, saysColumbia board member Michael Long,a partner at Brown Brothers Harriman:"Even though she wasn't a company officeror a director or a big fund manager, shewas so insistent. She got us to listen to her."

It seemed only a matter of time beforeScott would be gone. But the moment camesooner than anyone expected. On July 16,the feds seized documents from Columbialocations in seven states. Early the next

morning (Darla and Rich-ard were still in bed), Scottcalled her in Montecito."How ya doin'7" 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 Co-

lumbia and Tenet nevercame together. Pending thegovernment findings, thetwo companies couldn't-agree on the value of Co-lumbia's stock. So Scott re -signed, and the boardelected Frist as Columbia'snew CEO.

ick Scott wasn't the first guyDarla messed with_,'BeforeScott, there was Bt h Pick-ens. The cantankerous oil-man who terrified CEOs

during the Eighties was by last year facingwhat some might call divine retribution. Thestock of Mesa, the company he had foundedat age 28, had sunk from $48 to less than $3,and Pickens was threatened by proxy fightsand possible takeover. Smelling opportunity,Moore and Rainwater offered to help by

buying some stock, selling new

for a while.Before the deal was done,

Pickens and his attorney flewo Montecito. On the Rain-

waters' Power Patio, Darla toldPickens that he had to stepdown, that his reputation was aproblem. "I tried to be as tact -ful as I could, but tact doesn'tcome easily to me," she says.

Pickens says he holds nogrudge. Mesa is back on firmground, and following a mer-

with another oil companyto create Pioneer Natural Re-sources, Pickens' total holdingshave doubled in value. TheRainwaters, meanwhile, havegained a $161 million profit ontheir $66 million investment.

Rainwater treasures hiswife's sang-froid: "The differ-ence between Darla and me isthat I'll take a lot of time andeffort to solve a problem with-

11

2

si

n

"MY STRENGTH ISSEEING THROUGH THESMOKE INTO CHAOS,

AND OPERATINGWHERE EVERYTHING

IS EXPLODING."

Columbia's Scott (left) was Boy Wonder; Frist tried to be mentor. equity, and refinancing Mesa'sout-of-control debt. To Pickens,this was a friendly partnership.He figured he'd stay at the helm

POWER LOVEBIRDS

After Moore axed Mesa's Boone Pickens, the value of his holdings doubled.

out hurting people's feelings and reputa-tion. By the time I'm ready to act, Darlawill already have the job done."

Either he's naive or he's coy,but Rainwater says thesource of his wife's rabid am-bition is "a mystery" (Henceher allure.) Really, it isn't so

difficult to fathom if you study Moore'spast. Darla Dee, as she was known backthen, grew up in the tiny tobacco hamlet ofLake City, S.C. (pop. 8,398). The first oftwo daughters born to Eugene Moore, aschoolteacher and coach, and his wife,Lorraine, who worked at the MethodistChurch, Darla Dee spent weekends andsummers at her grandparents' 125-acrefarm just a few miles away; five black fam -ilies were tenants there and worked thefields. "The environment embodied big-otry and control," Darla says, "but at thesame time, it was warm and loving."

Eugene Moore, an all-star athlete in col-lege, wanted his eldest daughter to excel atevery sport. He had no sons nor sisters, andso, he says, "I treated Darla like a boy." Heset up a track in front of the house andclocked her 50- and 100-yard sprints. He

timed her laps in the swimming pool andcoached her on the basketball court. He tookher fishing and hunting; Darla shot rabbitsand birds. Eugene Moore even made surethat, by age 8, his daughter knew how tomap a football team's fieldformations.

Her mother pushed hertoo, but in other areas likemusic (piano) and aca-demics. If Darla Deebrought home straight .A's-and she did-LorraineMoore figured she couldbe a nurse or a teacher,both good professions thatallow a woman to followher husband wherever hemoves. "She kept telling

me, 'I'll never do that. I'lldo anything but that!' "her mother recalls. "Weargued a lot, and I alwayslost." Darla's sister, Lisa,was better at fulfillinMom's expectations: Lisahusband and two s,

In high school (all white, since LakeCity was one of the last American towns to

be integrated), Darla wasn't hugely popu-lar. "I was on the fringe. I rejected what

you do to be popular-the beauty queen!cheerleader/sorority thing," she says. "Imust have had an air of superiority aboutme, but I felt destined for bigger things."

Her first big thing was a summer in-ternship with Senator Strom Thurmondduring college at the University of SouthCarolina. "It was so heady to be aroundpower," she says. "It was my first access topeople who had control of their lives,"

After college, Thurmond got her a jobas a researcher for the Republican Na-tional Committee. It was 1976, post-Wa-tergate, and an awful year for the GOP.(Carter beat Ford.) Moore realized thatpolitics wasn't her game. "It dawned onme that this is all borrowed power. Theguy who's powerful one day is nobody thenext. I found nothing gratifying about it."

She opted for business school, at GeorgeWashington University in D.C., though shehadn't a clue what she wanted to do withher life, Soon after graduating in 1981,Moore entered the training program at

Chemical Bank in New York City with 31other MBAs. She went into a hardball areaof banking where few others wanted to go:'the bankruptcy business. "A mentor hadadvised me, `Find a niche and becomethe very best at it,' " she explains. "I saw thebankruptcy area as a career opportunitybecause it had no cachet, no protocols, andno women."

Her boss, Bob Conway, believed Chem-ical could make a lot of money by actually

soliciting business frombankrupt companies-imagine that-and offer-ing them loans at reallyhigh interest rates. Hesent his 30-year-old pro-tegee knocking on thedoors of lawyers, accoun -tants, and investmentbankers who specializedin bankruptcies. "Being awoman gave me a com-petitive edge," Mooresays. "They would muchrather have lunch with methan with other men."

It was part ingenuityand part luck, but Moore'stiming was impeccable.This was the dawn of the

LBO era, and when debt-ridden giants likeTexaco, Macy's, Federated DepartmentStores, and Eastern Air Lines went bank-rupt, they turned to Chemical, and to

is a nurse, with a

"I TOLD BOONE PICK -

ENS HIS REPUTATION

WAS A PROBLEM. I

TRIED TO BE TACTFUL.

BUT TACT DOESN'T

COME EASILY TO ME."

68 • FORTUNE September 8, 1997

POWER LOVEBIRDS

Moore, for help. Chase Manhattan vicechairman James Lee, her former colleague

at Chemical, remembers FORTUNE 500CEOs strong-arming Moore to get lowerrates on loans. "Darla would turn to theCEO and say, deadpan, `You are bank-rupt,' " Lee recalls. "She's totally fearless."

She was hell to work for too-intolerantof anyone who couldn't deal with problemsas decisively as she. When Moore was 33,some of her subordinates quit on her. "You

are a management problem," her boss toldher. She eventually learned to hang on togood employees-business was booming,after all-but she always made sure every-one knew: You don't mess with Darla. Shewalked into one meeting with the seniormanagement of a major retailer and an-nounced. "Put on your rubber underwear,boys. It's going to be a long evening."

When Richard Rainwater bounded intoDarla Moore's life, she was known in the

banking industry as the Queen of DIP

(debtor-in-possession financing), she wasgenerating huge profits for Chemical (atleast $100 million during her last years

there), and she was earning more than $1million annually. They met in Fort Worthon a deal to finance Farley Industries, anunderwear company, of all things (Farleyowns Fruit of the Loom). Their first twoencounters were platonic, but sparks flew."I thought I was going to hyperventilate

Rainwater's Investing StrategiesMr. Darla Moore on the promising industries of tomorrow

RAINWATER GROUPCOMPANY

VALUE OF HOLDINGSin millions

I

Richard Rainwater, hard at work at their M lontecito estate

R

ichard Rainwater had $2.000 to his namewhen he graduated from Stanford BusinessSchool in 1968. Thanks to an uncanny knackfor predicting industry trends, he has in-creased his wealth 750,000-fold. Yet he's so

low-key that you can't even find the Rainwater Inc. office inNew York City; its name isn't listed in the phone book, nordoes it appear on the door of the office itself. Only withDarla's prodding--oh, how she sways powerful men-didRainwater agree to share his outlook:

What's your investing strategy?I find moments in time when you can create great compa-nies in industries that are going through major change. I'minterested in large industries and in companies that offerproducts the whole world needs to develop and go forward.

So what appeals to you these days?We have 30% of our money in oil and gas, 30% in real es-tate, 25% in health care, and 15% in cash and other assets.

With oil prices so low, why oil and gas?The world has adopted unfettered capitalism. We've gonefrom fewer than a billion people living under capitalism afew years ago to four billion people playing the game today.

As they raise their livingstandards, oil, gas, andminerals will becomemuch more dear. Around1999, we should see atightening in the world'sresource base.

What about real estate?Our investments are con-centrated in the South-

western U.S. If the oiland gas markets tighten,Houston could becomethe center of the world.Since financing shiftedfrom S&Ls to the public,the market cap of theREIT [real estate invest-

ment trust] industry has gone from $9 billion in 1990 to $100billion today. I think it'll be $1 trillion in ten or 15 years.

You own Columbia/HCA and Magellan Health Services, apsychiatric -care company. Why?There's a cascading of people into old age, the prime yearsfor health care. And there's a technological revolution that's

providing ways to help them live longer. So health care willcontinue to grow as a percentage of our GNP Mental healthcare is another attractive business--it's a serious problemin many countries, so we see Magellan expanding into for-eign markets.

What's your view of the overall stock market?It looks better from a long-term standpoint than ever. As liv-ing standards rise around the world. America will continueto dominate. How can you make a case that you don't wantto be an investor? More and more people around the

I buy soft drinks and software and cellular phones.Cola and Microsoft and Motorola will benefit enormot

Crescent Real Estate Equities $426.6

Columbia/HCA Healthcare

Pioneer Natural Resources

$227.2(formerly Mesa Inc.)

Magellan Health Services

Mid-Ocean Ltd.

Crescent Operating Co.

All other assets(interests in Monet Group,Natural Gas Partners, Texas Rangers.Staubach Co., etc., cash)

Total $1.5 billion

$107.1

$37.2

$21.5

$210.0

70-FORTUNE September 8, 1997

TOWER LOVEBIRDS

and collapse," Moore says. "This was themost intense, complex guy I'd ever met. Ithought, `This cannot be.' " Trouble was,she was in a serious, long-term relation-ship with a man in New York. Rainwater,little did she know, had just separated from

his high school sweetheart and wife of 25years, Karen. (They have three children.)

Shortly after that second meeting, Rain-water called Moore at her Chemical of-fice. When she picked up the phone, sheblurted, "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. Sit-

ting down to dinner that first night at the

Regency Hotel, Rainwater told Moore,

"I'm not interested in having an affair. I'llgo forward with this only if you're inter-ested in marriage."

She shot back, "You're too big. Youhave too much money. And you're going toruin everything I've worked for."

Moore knew exactly what she was doing.As she says, "When I was 15, 1 announcedto my peer group of girls that when I mar-ried, it would be royalty What I did wasmarry the capitalist equivalent of royalty."

Like any smart executive, she wasn'tabout to be acquired easily. She told Rich-ard and her close friends that she dreadedbecoming "Mrs. Rainwater" and losingher identity "It was the only time in my lifeI was certifiably unstable," Moore says.But Richard did "his wooing thing." Hetold her, "When I see a unique and re-markable opportunity, I commit quicklyand 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? Youthink just like I do.' "

They canceled a big wedding plannedfor January and married on the spur ofthe moment on a rainy Friday the 13th inDecember 1991 at Manhattan's Brick Pres-byterian Church. From that day on, Rich -ard Raines; ter got everything he bargainedfor and mere

las Mavericks) and gym shorts. "We're justregular folks," Moore says. As if.

It sounds too California, but Darla andRichard share a particular passion: They're

72-FORTUNE September 8, 1997

bunch of small investments and partner-ship interests and redirected the moneyinto publicly held companies where shecould make a big impact-which, as wenow know, she did.

Darla Moore is eight pounds thinner to-day; those frenzied final days at Columbia

took their toll. She's alsofamous now as the womanwho detonated one of themost meteoric entrepre-neurial careers of the dec-ade. Some people are say-ing, "Richard Rainwaterbegan Rick Scott's career.Darla Moore ended it."

"It's a good headline,"she says, "but Rick's careerprobably isn't over. I'dthink he'd go build anothercompany, and he'd havetremendous support in theinvestment community.Remember, Rick has beenaccused of nothing illegal."She adds, "He's a greatperformer under the rightfemale Olympians," Rainwater boasts. circumstances. Unfortunately, Rick' s great-No trophy wife, Moore kept her job at est assets-his drive and his optimism-Chemical. "I didn't want to be viewed like turned into his greatest liabilities when heall the rest of them," she says. "You know, was faced with the government onslaught."here comes Megabucks, and now she's by

She hasn't spoken to Scott since he leftthe pool." At the end of a long day, she'd Columbia in July. Rainwater has called himcome home to Richard, who would hand three times. Scott hasn't called back. (Heher a drink, put on some music, light can- also declined to return FORTUNE's calls.)dies, set out a basket of crudites, and rub At Columbia, meanwhile, Frist is mak-her weary feet. Really. Richard's friends say ing radical changes and undoing Scott'she simply loves being in love. Richard and vision. He's prohibited equity stakes for af-Darla are not only one of capitalism's most filiated doctors. He's eliminated short-powerful couples; they're also the most out- term cash bonuses for executives. He's putrageously affectionate. He's like a puppy the brakes on acquisitions, he says, "untildog around his Little Precious, nuzzling his we have a strong value system in place."face into her neck. "She's a babe,"' he says, He's also cooperating with the govern-"and everybody else says so too." She calls ment. The new strategies will curb Colum-him "Sweet Pea," but more often he's bia's revenue growth, at least short term."Buckwheat," a reference to one of the The stock, at $321/x, is down 28% from itsboys in Our Gang. The little girl on the February high-and for the Rainwaters,show, you may recall, was Darla.

that's a $100 million loss on paper. AskedThe lovebirds' business partnership be- whether Columbia shares are a good buyrnest three years ago when Rain- today, Rainwater simply says, "It dependsisioned a boom in Southwestern on what the government does.""rescent. He asked The outlook on Darla Moore is muchat Rainwater Inc., clearer, "She's the best investment I've

ever made," Rainwater says. "She wantsto do not just a little more, but a lot more."Yes, her plan is to hunt bigger prey and dotougher deals and stage more audaciouspower plays. Asked what she'd like etchedon her tombstone, she replies: "DarlaMoore never let a problem overwhelmher-not even Richard Rainwater." 13

ack in Montecito, it's a gor-geous Sunday afternoon.

are is in black spandex andtikes. Rainwater: always Mr.

Casual, is wearing an Indianax T-shirt (though he co-owns the Dal-

looking for the meaning of success and hap-piness. Around the time he married Darla,Richard had what you might call a midlifecrisis, or maybe an epiphany He quit work-ing for a year. "Quit working? He quit func-tioning!" Moore says. He wrote reams ofpoetry to Darla. (A sample: "All we've ima-gined, shared. All we'vehidden, bared. Out of our-selves at last, and into eachother.") He became quiteintrospective-he andDarla are fans of The RoadLess Travelled, the spiri-tual-growth book by M.Scott Peck. Through Cres-cent Real Estate Equities,a company that he started,he bought Canyon Ranch,America's No. 1 camp-ground for the health-crazed rich. And thanks toweight-training and aero-bics, he lost 40 pounds andpared his body fat from27% to 19%. "Darla's bodyfat is in the middle range of

E

WHEN I WAS 15,I TOLD MY FRIENDSI'D MARRY ROYALTY.

WHAT I DID WAS

MARRY THE CAPITAL-

IST EQUIVALENT."

rMoorewhich had net assets of about $600 million.She quit Chemical and plunged in, stream-lining the business. "It was embarrassing,"

I used to calculate networth was to sit down every month or so,estimate our holdings, and look up thestock prices in the paper. We'd get close,plus or minus $10 million." She sold a