<PAGE> 1                                                   Exhibit 10.11		

                             THIRD AMENDMENT
                                   TO
                            CREDIT AGREEMENT

     THIS  THIRD  AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT"), dated
effective  as  of  August   14,  1997,  is  among  PARACELSUS  HEALTHCARE
CORPORATION, a California corporation (the "BORROWER"), each of the banks
or other lending institutions  which  is  a party to the Credit Agreement
(as hereinafter defined) (individually, a "LENDER" and, collectively, the
"LENDERS") and is a signatory to this Amendment, BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, a national banking  association,  as  lead
agent for the Lenders (the "AGENT"), BANQUE PARIBAS, a bank organized and
existing under the laws of the Republic of France, as documentation agent
for  the Lenders (the "DOCUMENTATION AGENT"), NATIONSBANK OF TEXAS, N.A.,
a national  banking  association,  as managing agent for the Lenders (the
"MANAGING  AGENT")  and CREDIT LYONNAIS  NEW  YORK  BRANCH  and  TORONTO-
DOMINION (TEXAS), INCORPORATED,  as  co-agents  for the Lenders (the "CO-
AGENTS").

                                RECITALS:

     A.   The Borrower, the Lenders, the Agent, the  Documentation Agent,
the  Managing  Agent and the Co-Agents previously executed  or  otherwise
became parties to  that  certain  Credit Agreement dated as of August 16,
1996,  as amended by that certain First  Amendment  to  Credit  Agreement
dated (except  as  otherwise  provided  therein) as of April 14, 1997 and
that  certain  Second  Amendment  to Credit Agreement  dated  (except  as
otherwise provided therein) as of August  14,  1997  (as  so amended, the
"CREDIT AGREEMENT").

     B.   The parties hereto desire to amend the definition  of  the term
"Required Lenders" in the Credit Agreement.

     NOW,  THEREFORE,  in  consideration  of  the premises and the mutual
covenants herein contained, the parties hereto  (which  shall include the
all Lenders) hereby agree as follows:

                                ARTICLE 1

                               DEFINITIONS

     Section 1.1 DEFINITIONS.  All defined terms used in  this  Amendment
but not defined herein shall have the meanings therefor set forth  in the
Credit Agreement as amended by this Amendment.

                                ARTICLE 2

                               AMENDMENTS

     Section   2.1   AMENDED  AND  RESTATED  DEFINITION.   The  following
definition set forth in  SECTION  1.1  of  the Credit Agreement is hereby
amended and restated to read in its entirety as follows:

          "  'REQUIRED  LENDERS'  means, at any  date  of  determination,
     Lenders having in the aggregate  at  least 66 % (in dollar amount as
     to any one or more of the following) of  the  sum  of  the aggregate
     outstanding   Revolving   Credit  Loans  Commitments  (or,  if  such
<PAGE> 2     

     Commitments have terminated  or  expired,  the aggregate outstanding
     principal  amount of the Revolving Credit Loans  and  the  aggregate
     Letter of Credit Liabilities)."

                                ARTICLE 3

                              MISCELLANEOUS

     Section 3.1  RATIFICATION  AND  CONFIRMATION OF LIENS.  The Borrower
hereby  ratifies and confirms all of its  indebtedness,  liabilities  and
obligations  under, and all of its Liens granted pursuant to or evidenced
by, each of the  Security  Documents and other Loan Documents to which it
is a party.

     Section 3.2 COSTS.  The  Borrower  shall  pay  all  reasonable fees,
costs and expenses incurred by the Agent and the Documentation  Agent  in
connection  with the negotiation, preparation, execution and consummation
of this Amendment  and  the  transactions  contemplated hereby, including
without limitation the reasonable fees and expenses  of  counsel  to  the
Agent and the Documentation Agent.

     Section  3.3 HEADINGS.  The headings, captions and arrangements used
in this Amendment  are  for  convenience  only  and  shall not affect the
interpretation of this Amendment.

     Section  3.4  EFFECT  OF THIS AMENDMENT.  The Credit  Agreement,  as
amended by this Amendment, shall  remain  in full force and effect except
that any reference therein, or in any other  Loan Document, to the Credit
Agreement shall be deemed to mean and refer to  the  Credit  Agreement as
amended by this Amendment.

     Section 3.5 COUNTERPARTS.  This Amendment may be executed  in one or
more  counterparts,  by  means  of  facsimile or otherwise, each of which
shall be deemed an original, but all  of  which together shall constitute
one and the same Amendment.

     SECTION 3.6 GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE  STATE  OF  TEXAS  (WITHOUT
REGARD TO CONFLICTS OF LAW PRINCIPLES) AND APPLICABLE LAWS OF THE  UNITED
STATES.

     Section 3.7 NO ORAL AGREEMENTS.  THE CREDIT AGREEMENT, AS AMENDED BY
THIS  AMENDMENT,  TOGETHER  WITH  THE OTHER LOAN DOCUMENTS, REPRESENT THE
ENTIRE  AGREEMENT  BETWEEN  AND  AMONG   THE  PARTIES,  AND  MAY  NOT  BE
CONTRADICTED  BY EVIDENCE OF PRIOR, CONTEMPORANEOUS  OR  SUBSEQUENT  ORAL
AGREEMENTS OF THE  PARTIES.   THERE  ARE  NO  UNWRITTEN  ORAL  AGREEMENTS
BETWEEN OR AMONG THE PARTIES.










<PAGE> 3


     IN  WITNESS  WHEREOF,  the  undersigned  parties  hereto  have  duly
executed  this  Amendment  effective  as  of the day and year first above
written.

                              THE BORROWER:

                              PARACELSUS HEALTHCARE CORPORATION


                              By: /s/ Deborah H. Frankovich
                              Name:  Deborah H. Frankovich
                              Title: Senior Vice President & Treasurer


                              THE AGENTS AND THE LENDERS:

                              BANK OF AMERICA NATIONAL TRUST AND SAVINGS
                              ASSOCIATION, as Agent


                              By: /s/ David Price
                              Name: David Price
                              Title: Vice President


                              BANK OF AMERICA NATIONAL TRUST AND SAVINGS
                              ASSOCIATION, as a Lender and as Issuing Bank


                              By: /s/ Edward S. Han
                              Name: Edward S. Han
                              Title: Vice President


                              By: /s/ Edward S. Han
                              Name: Edward S. Han
                              Title: Vice President



                              BANQUE PARIBAS, as Documentation Agent
                                  and as a Lender

                              By: /s/ Glenn E. Mealey
                              Name: Glenn E. Mealey
                              Title: Vice President


                              By: /s/ Timothy A. Donnon
                              Name: Timothy A. Donnon
                              Title: Regional General Manager





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                            NATIONSBANK OF TEXAS, N.A., as Managing
                                  Agent and as a Lender


                              By: /s/ Brad W. DeSpain
                              Name: Brad W. DeSpain
                              Title: Senior Vice President


                              AMSOUTH OF ALABAMA


                              By: /s/ David Z. Blackstone
                              Name: David Z. Blackstone
                              Title: Senior Vice President


                              BANK OF NEW YORK



                              By: /s/ Lisa Y. Brown
                              Name: Lisa Y. Brown
                              Title: Vice President


                              THE BANK OF NOVA SCOTIA



                              By: /s/ A.T.D. Clarke
                              Name: A.T.D. Clarke
                              Title: Senior Manager


                              CREDIT LYONNAIS NEW YORK BRANCH,
                                  as Co-Agent and as a Lender



                              By: /s/ Farboud Tavangar
                              Name: Farboud Tavangar
                              Title: First Vice President

                              CORESTATES BANK, N.A.


                              By: /s/ Anne D. Brehony
                              Name: Anne D. Brehony
                              Title: Vice President

                              FUJI BANK LIMITED


                              By: /s/ Philip C. Lauinger III
                              Name: Philip C. Lauinger III
                              Title: Vice President & Manager

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                              FLEET NATIONAL BANK



                              By: /s/Ginger Stolzenthaler
                              Name: Ginger Stolzenthaler
                              Title: Senior Vice President

                              KEY BANK OF UTAH



                              By:/s/ Craig L. Haverlock
                              Name: Craig L Haverlock
                              Title: Vice President

                              THE LONG-TERM CREDIT
                                  BANK OF JAPAN, LTD.



                              By: /s/ Koh Takemoto
                              Name: General Manager
                              Title:

                              MELLON BANK, N.A.



                              By: /s/ Ryan Busch
                              Name: Ryan Busch
                              Title: Assistant Vice President

                              PNC BANK, N.A.



                              By: /s/ Thomas J. McCool
                              Name: Thomas J. McCool
                              Title: Senior Vice President

                              TORONTO-DOMINION (TEXAS), INCORPORATED,
                              as Co-Agent and as a Lender
 

                              By: /s/ Neva Nesbitt
                              Name: Neva Nesbitt
                              Title: Vice President


                              UNION BANK OF CALIFORNIA, N.A.


                              By: /s/ Lynn E. Vine
                              Name: Lynn E. Vine
                              Title: Vice President