Durham company is making a killing on saving lives.

• Position: Coastal Healthcare Group - Company Profile

The adage that doctors make terrible investors doesn't apply to Steve Scott.

On June 20, he became a multimillionaire when his Durham-based Coastal Healthcare Group (CGRP-NASDAQ) sold $39.6 million of stock at $11.50 a share in an initial public offering. Scott shed a million of his 9.2 million shares, pocketing $10.7 million after paying an investment-banking fee. With Coastal trading at about $15 in late July, his remaining stock -- about two-thirds of the shares outstanding -- was worth $120 million. His salary and bonus totaled $1.3 million last year.

Not bad for a 43-year-old gynecologist, even one who was trained at Duke University Medical Center. The Indiana native wouldn't talk, but the company's prospectus and Chief Operating Officer Rob Cadwallader shed some light on how Scott got so rich.

In short, Coastal is a jumbo-sized medical practice capitalizing upon the problems many hospitals face in staffing emergency rooms. It's a practice of 1,900 physicins who work in 338 hospitals in 43 states.

Scott founded Coastal after completing his Duke residency in 1977. "It wasn't that uncommon for some $(student doctors$) to earn extra money moonlighting covering emergency rooms," Cadwallader says." He realized that there was a tremendous business opportunity." Emergency-room doctors rank low on medicine's totem pole. Usually they're residents or doctors looking for a plce to start. Coastal physicians are independent contractors who typically make from $80 to $100 an hour. They don't have to worry about administrative details, and if itchy to move, they can transfer around the system. Moreover, they can buy their liability insurance from Century American Insurance Co., which is wholly owned by Steve Scott.

Emergency care tends to be a financial headache for hospitals. "The emergency-room is a primary source of medical care for a large segment of the American public," Cadwallader says. Since many hospitals can't turn away patients who can't pay, he says, they need to find efficient ways to treat them.

Hospitals find retaining emergency-room doctors a chore. Convenience and Coatal's ability to deliver consistent, quality care is why Rowan Memorial Hospital in Salisbury has used the company for more than five years. "I can't say that there is a savings by using them," says Jim Freeman, chief executive officer.

Taking these problems off hospitals' hands has proved most lucrative for Coastal. It recruits physicians, schedules their workweek and...