Sheldon Razin’s story is what entrepreneurs dream of: He took $2,000 of his own money and built a company that’s now worth $1.4 billion at recent check.
Razin is founder and chairman of Quality Systems Inc., an Irvine healthcare information technology company and a Wall Street favorite.
He was one of seven entrepreneurs honored at the Business Journal’s annual Excellence in Entrepreneurship award luncheon held March 18 at the Hyatt Regency Irvine.
The 70-year-old Razin was called an “ageless entrepreneur” by award presenter Steve Johnson of the Entrepreneurs’ Organiza-tion-Orange County.
Quality has its roots in a management consulting business Razin started in the early 1970s to develop commercial software.
Now Quality makes software that helps doctors and dentists manage their practices. The company had profits of $46 million for the 12 months through December, a 4.4% rise in a year in which many companies saw falling profits.
Sales were $231 million through December, an 8% increase from a year earlier.
Investors have liked what they’ve seen. Quality’s shares are up more than 2,000% since the beginning of the decade. They are up about 10% since the beginning of the year, versus a 10% decline for Standard & Poor’s 500 index.
Quality has boomed with doctors who are moving to adopt technology and create “paperless offices.” The company also is expected to benefit from up to $20 billion in healthcare information technology investments as part of President Obama’s plans for healthcare reform.
Before starting Quality, Razin, who has a bachelor’s in mathematics from the Massachusetts Institute of Technology, held various technical and managerial positions at Rockwell International Corp., which no longer exists but left behind Iowa’s Rockwell Collins Inc. and Milwaukee-based Rockwell Automation Inc.
Quality started its healthcare work about three years after it was founded. That’s when a dentist who attended church with Graeme Frehner, who helped found Quality, asked to have a computer system installed in his office.
Then one of Quality’s salesmen met the wife of the man who ran Riverside Dental Group. She mentioned that her husband wanted a computer system that would be ready for immediate use after it was installed.
Upon taking the work, Quality became the first company to build ready-to-use software for dentists. Demand for the company’s dental software systems ballooned from there, according to Razin.
“We went from trying to do dentistry on timeshare to putting the system on the client’s site,” he said. “We pioneered that. No one else had ever done that.”
Later, Razin had what he called “another epiphany”,he realized that he had to train his customers’ employees and “support them for life” to be successful.
Soon after, Quality went national, selling its products to large dental groups.
It added doctors as customers in 1978. Anesthesiology Consultants Inc., a Las Vegas medical group, was the first to use the company’s software for doctors.
Quality went public in 1982, raising $11 million and giving it what Razin described as “stability forever.”
Since becoming public, Quality has grown through contracts and deals, including a 1996 buy of Clinitec International Inc., which brought into the fold longtime executive Patrick Cline, who runs Quality’s dominant NextGen medical software division.
Razin, in true entrepreneurial fashion, has held multiple offices at Quality. He was chief executive from 1974 until early 2000; president from inception until early 2000 (although he didn’t have that title for a year in the early 1990s); and treasurer until 1982.
Razin said he is excited about Quality, saying that the company is in a “new positive era” with Chief Executive Steven Plochocki.
Razin is quick to credit Quality’s 1,205 workers: “It’s not just the visionary that does it,it’s actually the people you’re able to get around you, and so those people deserve a huge plaudit.”
Like most entrepreneurs, Razin’s had to deal with the trials and tribulations of running a business. He’s had a long-running tussle with company director Ahmed Hussein, an Egyptian businessman who owns about 16% of Quality. The two have clashed about corporate governance.
Hussein has mounted three proxy battles against the company and has succeeded in electing some directors. But Quality’s board maintains a Razin-backed majority.
Razin owns about 18% of Quality.
The company fought hard in the latest proxy battle, including putting up a pro-management Web site that included information about Hussein’s past, including a censure from the American Stock Exchange and litigation.
“We only put up a fraction of what this guy has done,” Razin said. “This time, I said, ‘Not only do I want to beat this guy in terms of the proxy fight, but I don’t want him to ever come after us again.'”
Outside the office, Razin, who “grew up in the streets of Boston,” is heavily involved with MIT. His roles include serving on an advisory board for the school’s McGovern Institute for Brain Research and donating money for permanent fellowships.
Razin’s leisure pursuits include tennis, snorkeling, scuba diving, sailing and swimming from his house in Laguna Beach to the Surf and Sand Hotel.
The entrepreneur also enjoys spending time with his wife of 45 years, Janet, two adult sons and their wives and his five grandchildren, ages 7 to 11, “who I love so dearly,” he said.
