EXECUTION COPY


                       SETTLEMENT AGREEMENT

     Settlement  Agreement  (the  "Agreement"),  dated as of
March  24,  1999,  by  and  among  the  former  shareholders  of Champion
Healthcare   Corporation   ("Champion")  listed  on  Exhibit
"A" hereto (the "Champion Shareholders"), Park-
Hospital GmbH ("Park"),  Dr.  Manfred Georg Krukemeyer ("Dr.
Krukemeyer"),   and   Paracelsus   Healthcare    Corporation
("PHC") (collectively, the "Parties").

     As  used in this Agreement, "old-Paracelsus" means  PHC
prior to its  merger  with Champion; "Class Action" means IN
RE PARACELSUS HEALTHCARE  CORP.  SEC.  LITIG.,  Master File No. H-96-3464
(S.D.  Tex.)  (EW);  "Derivative  Actions"  means  CAVEN  V.
MILLER, ET AL., C.A. No. H-96-3464  (S.D.  Texas)  (EW),  and  OROVITZ V.
MILLER,   ET  AL.,  C.A.  No.  H-97-2752  (S.D.  Texas)  (EW);  "District
Court"  means  the  United  States  District  Court  for the
Southern District of Texas; "State Court Actions" means  all
of  the  actions filed in various state courts arising from the merger of
Champion and  old-Paracelsus and the related public offerings, including,
without  limitation,  GAONKAR  V.  PARACELSUS,  ET  AL.,  No.  BC  158899
(Cal.Super.Ct., Los Angeles Cty.), PRESCOTT V. PARACELSUS, ET AL., No. BC
158979 (Cal.Super.Ct., Los Angeles Cty.), HUTCHENS V. PARACELSUS, ET AL.,
No. SC38166,  ESSEX  IMPORTS  V. PARACELSUS, ET AL., No. 96-51864 (Harris
Cty.  Dist.  Ct.),  and  MOLINARI V.  MILLER,  ET  AL.,  C.A.  No.  14945
(Del.Ch.Ct.     New     Castle     Cty.);     and     "PHC     Securities
Litigation" means the Class  Action, Derivative Actions, and
State Court Actions combined.

I.   CONTRIBUTION OF SHARES.

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          A. Subject to the terms set forth herein, Park shall contribute
          nine  million  eight  hundred sixty-five  thousand  (9,865,000)
          shares     of     PHC     common     stock     (the     "Shares
          Available")  towards a global  settlement  of  the
          claims  which could have been  asserted  and  which  are  being
          asserted  in  the  PHC Securities Litigation.  On the Effective
          Date, as defined below  in paragraph XIII., Park shall transfer
          up to the maximum amount  of  Shares  Available to the Champion
          Shareholders;  PROVIDED,  HOWEVER, that each  of  the  Champion
          Shareholders receiving shares  from Park continuously held his,
          her, or its shares of PHC common  stock  from  August  16, 1996
          through October 10, 1996; and PROVIDED, FURTHER, that no shares
          will  be  transferred  on  account  of  any  PHC  warrants, PHC
          options,   PHC   convertible   securities,   subscription   and
          preemptive  right to any PHC stock, or any other PHC securities
          (other  than  shares   of   common   stock)  held  by  Champion
          Shareholders.  In the event that the aggregate number of shares
          of  PHC common stock held by the Champion  Shareholders  totals
          less  than  sixteen  million five hundred thousand (16,500,000)
          (the "Share Threshold"),  the  number of shares of
          PHC common stock to be transferred from Park  to  the  Champion
          Shareholders shall be an amount equal to the product of (i) the
          amount  of  shares  of  PHC  common  stock held by the Champion
          Shareholders     times    (ii)    9.865/16.5    (the     "Share
          Product").   No  PHC  warrants,  PHC  options, PHC
          convertible  securities, subscription and preemptive  right  to
          any PHC stock,  and any other PHC securities (other than shares
          of common stock),   or  shares  of  PHC  common  stock  held by
          individuals  that were members of the pre-merger management  of
          Champion shall   be  counted  in  determining whether the Share
          Threshold has been met or exceeded.

     B.   In  the event that the number of shares  of  PHC  common  stock
          transferred  by  Park  to the Champion Shareholders pursuant to
          paragraph  I.A.  hereof is  less  than  the  Shares  Available,
          contemporaneously  with  the transfer of the appropriate amount
          of  shares  to  the  Champion  Shareholders,  Park  shall  make
          available for the settlement  of  the Class Action an amount of
          shares of PHC common stock equal to  the difference between the
          Shares Available and the Share Product.   In no event, however,
          shall Park transfer more than nine million eight hundred sixty-
          five thousand (9,865,000) shares of PHC common stock to resolve
          the PHC Securities Litigation and all claims  that  could  have
          been  asserted  by the Champion Shareholders arising from or in
          any way related to  the  facts  and  circumstances  forming the
          subject matter of the PHC Securities Litigation.

     C.   The transfer of shares in accordance with paragraphs  I.A.  and
          I.B. hereof shall only occur if the District Court certifies  a
          class  in the Class Action that is substantially similar to the
          class as  defined  with  the  consent  of Park and the Champion
          Shareholders  in  Section  B  of  that  certain   Class  Action
          Memorandum of Understanding.

     D.   PHC  shall  ensure that all shares transferred to the  Champion
          Shareholders,  the class certified in the Class Action, and Dr.
          Krukemeyer in accordance  with this Agreement are registered or
          exempt from registration under  the federal securities laws for
          purposes  of  that transfer.  Park  and  Dr.  Krukemeyer  shall
          cooperate with  PHC  in  this  regard,  but PHC shall be solely
          responsible for all reasonable expenses,  including  reasonable
          attorneys'  fees.  In the event that not all shares transferred
          to the Champion  Shareholders, the class certified in the Class
          Action, and Dr. Krukemeyer  in  accordance  with this Agreement
          are  registered,  outside counsel to PHC shall,  prior  to  the
          transfer  of  shares   to   the   Champion   Shareholders,  Dr.
          Krukemeyer, and plaintiffs in the Class Action,  provide  Park,
          Dr.  Krukemeyer  and  the  Champion  Shareholders  with a legal
          opinion,   substantially   in  the  form  attached  as  Exhibit
          AB" hereto, that  the  unregistered  shares  being
          transferred  are  exempt  from  registration  under the federal
          securities laws for purposes of that transfer and shall provide
          standard assurances concerning the transfer of  the  securities
          under state Blue Sky law.

<PAGE>
          E.  The transfer of shares of PHC common stock by Park  to  the
          Champion  Shareholders  pursuant to paragraph I.A. hereof shall
          resolve  all  claims  that could  have  been  asserted  by  the
          Champion Shareholders arising from or in any way related to the
          facts and circumstances  forming  the subject matter of the PHC
          Securities   Litigation.    To   the  extent   possible,   such
          resolutions shall be effected in such  a  way  as to not affect
          claims  and  causes  of  action,  to  the  extent not otherwise
          released  in  the  course  of a global settlement  of  the  PHC
          Securities Litigation, against PHC's current or former officers
          and   directors,  PHC's  independent   accountants,   and   the
          underwriters  associated  with  the merger of Champion and old-
          Paracelsus.   Other  than the consideration  provided  in  this
          Agreement, no other consideration  from  Park,  Dr. Krukemeyer,
          PHC, or any other person, including cash or the issuance of PHC
          shares  by PHC, shall be provided to the Champion  Shareholders
          to compromise  the claims they could have asserted arising from
          or in any way related  to  the  facts and circumstances forming
          the   subject   matter   of  the  PHC  Securities   Litigation.
          Additionally, except as provided  in  this  Agreement, Park and
          Dr.  Krukemeyer  will  provide no consideration  to  compromise
          claims  being asserted in  the  PHC  Securities  Litigation  by
          plaintiffs other than the Champion Shareholders.

     F.   Except for  members  of  the  management  of  old-Paracelsus or
          Champion  who  are included within the class certified  by  the
          District Court, no shares of PHC common stock to be transferred
          by Park shall be  for  the benefit of the pre-merger management
          of old-Paracelsus or Champion.   Additionally, no shares of PHC
          common stock to be transferred by  Park  shall be on account of
          any  PHC  warrants,  PHC  options, PHC convertible  securities,
          subscription and preemptive  right  to  any  PHC  stock, or any
          other  PHC securities (other than shares of common stock)  held
          by the Champion Shareholders.

II.  SHAREHOLDER LOAN.

     A.   The $7.2  million  subordinated  note (the "Note")
          issued by PHC to Park, dated August  30, 1996, shall, beginning
          with  the annual payment originally scheduled  to  be  made  in
          August  2000,  be  discharged  in  accordance with its original
          terms.   PHC shall pay to Park the interest  due under the Note
          as  scheduled on August 30, 1999.  Subject to the  approval  of
          PHC's senior and subordinated lenders, if PHC in its discretion
          determines  that  such  approval is required, in which case PHC
          shall use its reasonable  best  efforts  to seek such approval,
          all amounts of the Note in arrears shall be paid in full on the
          date of the annual payment due in August 30,  2000  or  as soon
          thereafter  as  is  possible.   Subject  to  the  provisions of
          subparagraphs II.B and II.C hereof, the Note shall  be  prepaid
          upon the earliest to occur of (i) the express consent of  PHC's
          senior  and subordinated lenders, (ii) a refinancing by payment
          of PHC's  senior and subordinated indebtedness, and (iii) where
          such payment  would  not  violate  the  terms of PHC's existing
          senior and subordinated indebtedness; PROVIDED,  HOWEVER,  that
          the  Note shall not be prepaid in any event prior to August 30,
          2000.

<PAGE>
          B. In the event that at any time within two (2) years following
          the Effective  Date  (i)  a voluntary petition in bankruptcy is
          filed by PHC or (ii) an involuntary  petition under Title 11 of
          the United States Code is filed against  PHC  and  (1) an order
          for  relief  is  entered  or (2) such petition is not dismissed
          within sixty (60) days of its filing, the outstanding principal
          balance of the Note, together  with  accrued interest, shall be
          converted into shares of PHC common stock  and then immediately
          issued  by  PHC to Park.  The number of shares  of  PHC  common
          stock that Park  shall  receive  in  such a conversion shall be
          calculated based on a share value of Four  Dollars  ($4.00) per
          share.   On  Park's  receipt  of  the  shares,  the  Note shall
          terminate and be canceled as fully discharged and performed.

     C.   If an agreement is reached to sell all or substantially  all of
          the  outstanding voting securities or assets of PHC to a third-
          party  within  two (2) years following the Effective Date for a
          price of less than Four Dollars ($4.00) per share of PHC common
          stock, the outstanding  principal balance of the Note, together
          with accrued interest, shall  be  converted  into shares of PHC
          common stock and then immediately  issued by PHC  to Park.  The
          number of shares of PHC common stock that Park shall receive in
          such a conversion shall be calculated based on a share value of
          Four  Dollars  ($4.00)  per  share.  On Park's receipt  of  the
          shares,  the Note shall terminate  and  be  canceled  as  fully
          discharged and performed.

III. SERVICE AGREEMENT.  -  The  senior  and  subordinated lenders of PHC
     currently  permit  PHC  to  pay Two Hundred Fifty  Thousand  Dollars
     ($250,000) annually on the Service  Agreement  dated  July  17, 1996
     between PHC and Dr. Krukemeyer.

     A.   PHC  shall  buy  out the obligation currently permitted by  the
          lenders to pay Two  Hundred  Fifty  Thousand Dollars ($250,000)
          annually  to  Dr. Krukemeyer for the remaining  period  of  the
          Service  Agreement   by  making  a  lump  sum  payment  to  Dr.
          Krukemeyer of One Million Dollars ($1,000,000) on the Effective
          Date.

     B.   PHC shall buy out its  remaining  obligations under the Service
          Agreement  by  issuing one million (1,000,000)  shares  of  PHC
          common stock to Dr. Krukemeyer on the Effective Date.

     C.   The Service Agreement  shall  terminate  and  have  no  further
          effect on the Effective Date.  Prior to the Effective Date, PHC
          shall  continue  to  make  quarterly  payments  on  the Service
          Agreement  at  the  current  rate of Two Hundred Fifty Thousand
          Dollars ($250,000) annually.

IV.  CORPORATE GOVERNANCE.

<PAGE>
          A. On the Effective Date, the current Shareholder Agreement and
          the   Shareholder   Protection  Rights   Agreement   shall   be
          terminated.  Between  the   date  of  this  Agreement  and  the
          Effective Date, PHC agrees not  to assert or pursue any rights,
          claims,  or  actions  under the Shareholder  Protection  Rights
          Agreement and Shareholder  Agreement  relating  to the terms of
          Professor  Krukemeyer's  will providing for the appointment  of
          executors,  the  actual  appointment   or  replacement  of  co-
          executors under Professor Krukemeyer's will, and the disclosure
          of such terms and circumstances, and the other transactions and
          events disclosed in the 13-D filings made  by  Park and the co-
          executors in December 1997, or as the result of any transaction
          contemplated  in  this Agreement.  In the event that  PHC  does
          assert or pursue any  such rights, claims, or actions under the
          Shareholder  Protection   Rights   Agreement   and  Shareholder
          Agreement  prior  to  the Effective Date or the termination  of
          this Agreement, Park may  terminate this Agreement, which shall
          render this entire Agreement null and void.

     B.   Simultaneous with the execution of this Agreement, PHC and Park
          shall execute a new Shareholder Agreement, in the form attached
          as  Exhibit  "C"   hereto  (the  "New  Shareholder
          Agreement"), which shall  become  effective on the
          Effective  Date.  The parties agree that, for a period  of  two
          (2) years after  the  Effective  Date,  PHC  and Park shall not
          amend  the Shareholder Agreement to grant Park  any  additional
          material rights or to delete any material rights of PHC without
          the approval of a majority of the Board taking into account only
          the votes of the directors not nominated or designated by Park.

     C.   On  or as  soon  as  practical  after  the  execution  of  this
          Agreement,  and  for  a  period  of two (2) years following the
          Effective  Date, the PHC Board of Directors  shall  include  at
          least:  (i)  three  (3)  designees  of  Park;  (ii)  three  (3)
          designees of the  Champion  Shareholders;  (iii)  one member of
          management;  and  (iv)  two  (2)  independent  directors  ("New
          Board").   For  purposes  of  the  New  Board,   a
          director is independent if (i) he or she does not have, and has
          not  had  during  the  two  (2)  years  preceding election as a
          director,  any  business, employment, financial,  familial,  or
          other relationship  with  PHC (other than being a director), an
          affiliate of PHC, Park, a Champion Shareholder, a person owning
          three percent (3%) or more  of  the  voting  securities of PHC,
          director or officer of PHC, or significant supplier or payor of
          PHC  and  (ii) so long as PHC is listed on the New  York  Stock
          Exchange, he or she satisfies the requirements of such Exchange
          for independent  directors.   Upon  expiration  of such two (2)
          year period, the PHC Board of Directors shall be  nominated and
          elected  in  accordance  with  the  then-existing  Articles  of
          Incorporation,  By-laws,  and the New Shareholder Agreement  of
          PHC.   During  the  period from  the  date  hereof  up  to  and
          including  the  date  that   the  PHC  Board  of  Directors  is
          reconstituted  pursuant  to  this   paragraph,   the   Champion
          Shareholders'   and  Park's  designees  to  the  PHC  Board  of
          Directors shall use their independent business judgment and act
          to further the consummation  of  the  transactions contemplated
          herein.

<PAGE>
          Park,  the  Champion  Shareholders  and  PHC  shall  use  their
          reasonable  best  efforts  to  ensure  that the  PHC  Board  of
          Directors is constituted in this manner.  In furtherance of the
          foregoing, PHC shall nominate and shall use its reasonable best
          efforts  to  take  and  cause to be taken all necessary  action
          (corporate and other) to  elect  to  its  Board the individuals
          required   to  be  nominated  for  election  as  directors   in
          accordance with  the terms hereof. In addition, for a period of
          two (2) years after  the Effective Date, PHC shall nominate for
          shareholder vote only  slates  of classes of directors, and not
          any director on an individual basis,  and the slates comprising
          each of Class I (with a term expiring in  2000)  and  Class  II
          (with  a term expiring in 2001) shall include at least one Park
          designee and one Champion designee.

     D.   During the  period  prior to the Effective Date, Park agrees to
          cooperate,  to the best  of  its  ability,  with  PHC  and  the
          Champion Shareholders  to  ensure that Park's representation on
          the PHC Board of Directors shall  not exceed one-third (1/3) of
          the Board of Directors.

     E.   Simultaneous  with,  or  prior  to,  the   execution   of  this
          Agreement,  the  Board  of  Directors  of  PHC  shall  adopt  a
          Resolution,  in  substantially  the  form  attached  as Exhibit
          "D" hereto, (i) adopting new Amended and  Restated
          Bylaws   for   PHC,   in   the   form   attached   as   Exhibit
          "E" hereto (the "New Bylaws"),  which
          shall  become effective on the Effective Date and (ii) electing
          new directors  to  the  Board of Directors, with such directors
          taking office upon the complete execution of this Agreement.

V.   GLOBAL SETTLEMENT OF CLAIMS AND COURT APPROVAL.

     A.   PHC  shall  use its best efforts  to  obtain  an  agreement  to
          compromise the  remaining claims and causes of action currently
          being asserted against PHC and Dr. Krukemeyer, among others, in
          the Class Action,  against PHC, Park, and Dr. Krukemeyer, among
          others, in the Derivative Actions and against PHC, Park, and/or
          Dr. Krukemeyer in the  State  Court  Actions  and  in any other
          pending  litigation  relating,  in  any  way, to the merger  of
          Champion and old-Paracelsus.  Although PHC  may issue shares of
          PHC common stock to compromise these remaining  claims,  in  no
          event  shall PHC issue more than one million five hundred fifty
          thousand   (1,550,000)  shares  of  new  PHC  common  stock  to
          compromise  these   remaining   claims  in  the  Class  Action,
          Derivative  Actions,  and  State  Court  Actions,  without  the
          express written consent of Park and the Champion Shareholders.

     B.   Upon PHC's obtaining an agreement to  compromise  the remaining
          claims,  PHC,  Park,  the Champion Shareholders, the Derivative
          Action  plaintiffs,  and  the  Class  Action  plaintiffs  shall
          jointly seek final approval  of  the  proposed settlements from
          the District Court having jurisdiction  over the PHC Securities
          Litigation.  If, after proper notice and  hearing, the District
          Court  approves  the  proposed  settlements,  PHC,   Park,  the
          Champion  Shareholders,  the Derivative Action plaintiffs,  and
          the Class Action plaintiffs  shall  seek  entry  of  orders and
          final judgments that provide, among other things:

<PAGE>
               (1) as to the Derivative Actions, entry of a court  order,
               after   notice   and   hearing,   approving  the  proposed
               settlements and their terms pursuant  to  Federal  Rule of
               Civil  Procedure  23.1,  approving  the  transfer  of  any
               unregistered  shares  to  the Champion Shareholders or Dr.
               Krukemeyer  pursuant  to this  Agreement  as  exempt  from
               registration under Section  3(a)(10) of the Securities Act
               of 1933, and directing the consummation of the settlements
               pursuant to their terms;

          (2)  as to the Class Action, entry  of  a  court  order,  after
               notice and hearing, approving the proposed settlements and
               their   terms  as  being  fair,  reasonable  and  adequate
               settlements  as  to plaintiffs pursuant to Federal Rule of
               Civil  Procedure  23   approving   the   transfer  of  any
               unregistered shares to the members of the  class  pursuant
               to  this  Agreement  as  exempt  from  registration  under
               Section  3(a)(10)  of  the  Securities  Act  of  1933, and
               directing the consummation of the settlements pursuant  to
               their terms;

          (3)  directing  that the Class Action and Derivative Actions be
               dismissed with  prejudice  as  to the settling defendants,
               including Park; and

          (4)  a bar order that prohibits, except  as otherwise expressly
               provided in this Agreement or in the  settlements  of  the
               Class  Action  and  Derivative Actions, any further claims
               against the settling  defendants,  including Park, arising
               from the events that form the basis  of the PHC Securities
               Litigation.

     C.   PHC shall use its reasonable best efforts to  obtain  a release
          of all claims being asserted in the State Court Actions against
          the settling defendants, including Park.

     D.   Each of the Champion Shareholders covenants that he, she  or it
          is  a  current  shareholder  of PHC and that he, she or it will
          remain a shareholder of PHC through  the  Effective Date.  Each
          of the Champion Shareholders further covenants  that he, she or
          it will not commence any litigation or bring any claims against
          Park, Dr. Krukemeyer, PHC, or any other person, arising from or
          in any way related to the facts and circumstances  forming  the
          subject matter of the PHC Securities Litigation.

     E.   If  the  approvals, orders, judgments, and dismissals described
          above are  not obtained from the District Court, this Agreement
          shall be null and void.

<PAGE>
     VI.  INDEMNIFICATION.   -   As  of  the  Effective  Date,  and  upon
     consummation of the transactions contemplated in paragraph I hereof,
     PHC shall indemnify and hold  harmless  Park,  Dr.  Krukemeyer,  the
     Champion  Shareholders,  and  each of their respective employees and
     agents, from any and all claims  and  causes  of action relating, in
     any way, to the merger of Champion and old-Paracelsus  that  may  be
     asserted  by  any  present  or  former holder of PHC common stock or
     other PHC securities who is neither  a party to this Agreement nor a
     member of the class certified by the District  Court  in  the  Class
     Action.  PHC shall not, however, indemnify and hold harmless Park or
     the  Champion  Shareholders  for  any  claims which may be asserted,
     assessed or otherwise imposed against any  such  persons or entities
     by   any   governmental  agency  or  tribunal,  including,   without
     limitation,   the  Securities  and  Exchange  Commission;  PROVIDED,
     HOWEVER, that PHC  shall indemnify Park and its agents and employees
     for reasonable legal  fees,  not  to  exceed  Two  Hundred and Fifty
     Thousand  Dollars  ($250,000),  incurred  in  connection   with  any
     investigation  or  claims  relating,  in  any way, to the merger  of
     Champion and the old-Paracelsus brought by  any  governmental agency
     or  tribunal,  including,  without  limitation,  the Securities  and
     Exchange Commission.  Nothing in this Agreement in any way limits or
     reduces the indemnity rights, if any, that Dr. Krukemeyer  may  have
     either  contractually  or as a former director of old-Paracelsus and
     PHC.

VII. MUTUAL RELEASE.

     A.   On the Effective Date,  for  good  and  valuable  consideration
          received,  each  of  the  Champion  Shareholders, on behalf  of
          themselves  and  each of his, her or its  current,  former,  or
          future partners, directors,  officers, employees, shareholders,
          predecessors,  successors,  affiliates,  subsidiaries,  agents,
          lawyers,  representatives,  and   assigns   (collectively,  the
          "Champion  Shareholder Releasing Parties")  hereby
          fully and finally release and forever discharge Dr. Krukemeyer,
          Park, and PHC and each of his or its current, former, or future
          trustees,   directors,   officers,   employees,   shareholders,
          predecessors,   successors,  affiliates,  subsidiaries,  family
          members,   agents,   lawyers,   representatives   and   assigns
          (collectively,      the      "Krukemeyer/Park/PHC      Released
          Parties"),  from  any  and  all  claims,  demands,
          obligations,  debts,  actions, suits, causes of action, whether
          class, derivative, individual,  or otherwise in nature, damages
          whenever  incurred,  liabilities  of   any  nature  whatsoever,
          including costs, expenses, penalties and attorneys' fees, known
          or unknown, suspected or unsuspected, in law, under statute, or
          in  equity,  that the Champion Shareholder  Releasing  Parties,
          whether directly,  representatively,  derivatively  or  in  any
          other  capacity,  ever had, now have or hereafter can, shall or
          may  have  against  the  Krukemeyer/Park/PHC  Released  Parties
          arising  from  or  in  any   way   related  to  the  facts  and
          circumstances forming the subject matter  of the PHC Securities
          Litigation.

<PAGE>
          B.  On the Effective Date, for good and valuable  consideration
          received,  Dr. Krukemeyer, Park, and PHC and each of his or its
          current,  former,  or  future  trustees,  directors,  officers,
          employees,  shareholders, predecessors, successors, affiliates,
          subsidiaries, family members, agents, lawyers, representatives,
          and assigns (collectively,  the  "Krukemeyer/Park/PHC Releasing
          Parties") hereby fully  and  finally  release  and
          forever  discharge  each of the Champion Shareholders, and each
          of  his,  her  or  its current,  former,  or  future  trustees,
          partners,   directors,   officers,   employees,   shareholders,
          predecessors,   successors,  affiliates,  subsidiaries,  family
          members,  agents,   lawyers,   representatives,   and   assigns
          (collectively,     the     "Champion    Shareholder    Released
          Parties")  from   any  and  all  claims,  demands,
          obligations, debts, actions, suits,  causes  of action, whether
          class, derivative, individual, or otherwise in  nature, damages
          whenever   incurred,  liabilities  of  any  nature  whatsoever,
          including costs, expenses, penalties and attorneys' fees, known
          or unknown, suspected or unsuspected, in law, under statute, or
          in  equity, that  the  Krukemeyer/Park/PHC  Releasing  Parties,
          whether  directly,  representatively,  derivatively  or  in any
          other  capacity, ever had, now have or hereafter can, shall  or
          may have  against  the  Champion  Shareholder  Released Parties
          arising   from  or  in  any  way  related  to  the  facts   and
          circumstances  forming the subject matter of the PHC Securities
          Litigation.
VIII. ASSIGNMENT AND PURSUIT OF CERTAIN CLAIMS.

     A.   Prior to the Effective  Date, PHC shall not settle, compromise,
          or assign any claim or cause  of  action  it  has or might have
          arising from or related to the facts and circumstances  forming
          the subject matter of the PHC Securities Litigation, including,
          without  limitation,  a  claim  or  cause  of  action against a
          current  or  former  officer  or director holding $.01  options
          (for,   among   other   things,  affirmative   recoveries   and
          cancellation  of  the  $.01   options)   and   its  independent
          accountants  except  as provided in this Agreement,  the  Class
          Action Memorandum of Understanding,  and  the Derivative Action
          Settlement  Agreement  or except in a document  signed  by  the
          Champion  Shareholders  and   Park.    This   obligation  shall
          terminate on the Effective Date.

<PAGE>
          B.  Effective  upon  the  transfer of shares from Park  to  the
          Champion Shareholders pursuant  to  paragraph I.A., PHC and the
          Champion Shareholders hereby assign to  Park any and all claims
          or causes of action that PHC and the Champion  Shareholders may
          have  against  PHC's independent accountants arising  from  the
          work that the independent  accountants  performed in connection
          with  the  merger  of  Champion  and  old-Paracelsus   and   in
          connection  with  any  and  all  services  that the independent
          accountants   provided   to   old-Paracelsus.   Notwithstanding
          anything  to  the  contrary in paragraph  VI.,  PHC  shall  not
          indemnify  Park against  any  counterclaims  or  other  actions
          asserted against  Park  by  the  independent accountants.  Park
          shall hold PHC and all other parties  who  receive  releases in
          connection  with  this  Agreement, the settlement of the  Class
          Action, and the Derivative Actions harmless from any liability,
          costs, and expenses, including  reasonable legal fees, they may
          incur as a result of Park's pursuit of such assigned claims and
          causes  of  action against PHC's independent  accountants.   In
          addition, to  the  extent  PHC or any of the other parties held
          harmless by Park are required to pay amounts to the independent
          accountants in connection with  such assigned claims and causes
          of  action,  PHC and such other parties  may  at  their  option
          require  that  any  recovery  due  Park  from  the  independent
          accountants be reduced  by  such  amounts.  Park also covenants
          not  to  commence  any  litigation  against   the   independent
          accountants  until such time as a written commitment  has  been
          obtained   from   another   "Big  Five"  or  other
          nationally recognized accounting  firm,  acceptable  to PHC and
          its  Board  of  Directors  in its sole and absolute discretion,
          agreeing  to  serve  as  PHC's  independent  accountants.    In
          connection with this assignment,  upon prior written request to
          PHC, and provided that such requests  are reasonable, PHC shall
          make available to Park all documents that  are relevant to such
          claims;  PROVIDED, HOWEVER, that Park shall reimburse  PHC  for
          the costs associated with producing such documents.  If for any
          reason this  assignment  is not valid or enforceable, the other
          agreements and obligations  contained  in this Agreement remain
          valid and enforceable.

     C.   From and after the Effective Date, claims  and causes of action
          of  PHC  may  be  pursued  or  compromised and settled  at  the
          discretion and as determined by  the reconstituted PHC Board of
          Directors or as provided in  settlements  reached  with respect
          to the PHC Securities Litigation.

IX.  TERMINATION  OF CERTAIN STOCK OPTIONS. - Except as provided  in  the
     Derivative  Action   Settlement   Agreement   and  Senior  Executive
     Memorandum of Understanding, PHC shall investigate  the  feasibility
     of  canceling  certain  $.01  PHC stock options that were issued  in
     connection with the merger of   Champion  and  old-Paracelsus.   PHC
     shall  also  investigate  the feasibility of reacquiring, at a price
     not to exceed the strike price, any PHC shares that have been issued
     pursuant to such options or,  if  the  person  who  obtained  shares
     pursuant  to such options has sold the shares, the proceeds realized
     on the sale of those shares.

X.   CLASS ACTION  MEMORANDUM  OF  UNDERSTANDING  AND  DERIVATIVE ACTIONS
     SETTLEMENT AGREEMENT. - The obligations set forth in  this Agreement
     shall  be  conditioned  on  the  final  execution  by  all  parties,
     including Park, of a Class Action Memorandum of Understanding  and a
     Derivative  Actions  Settlement  Agreement.  This  Agreement and the
     Class  Action Memorandum of Understanding shall be executed  at  the
     same time.

<PAGE>
     XI. COSTS.  -  Upon  execution  of  this Agreement, the Class Action
     Memorandum of Understanding, and the  Derivative  Actions Settlement
     Agreement by the Champion Shareholders, PHC shall pay all reasonable
     fees  and  out-of-pocket  expenses  of  the  Champion  Shareholders,
     including, without limitation, reasonable attorneys' fees,  incurred
     as  of the date thereof;  PROVIDED, HOWEVER, that in no event  shall
     such  payment  exceed  Five  Hundred  Thousand  Dollars  ($500,000).
     Additionally,  during  the  period  from  the date hereof up to  and
     including  the Effective Date, PHC shall pay,  on  a  monthly basis,
     such  additional reasonable fees and out-of-pocket expenses  of  the
     Champion  Shareholders,  including,  without  limitation, reasonable
     attorneys'  fees,  incurred  subsequent  to  the execution  of  this
     Agreement;  PROVIDED, HOWEVER, that in no event  shall PHC's payment
     of  legal  fees  incurred  by  the  Champion  Shareholders,  in  the
     aggregate, exceed Eight Hundred Thousand Dollars ($800,000).  If the
     reasonable legal fees incurred by the Champion  Shareholders  exceed
     Eight Hundred Thousand Dollars ($800,000), the Champion Shareholders
     may  request  that  such additional fees and expenses be paid by PHC
     and PHC's decision on  payment of those additional fees and expenses
     shall be at the discretion of the New Board of Directors of PHC.  In
     the event that the PHC Securities Litigation is not globally settled
     as contemplated in this  Agreement, any amounts paid to the Champion
     Shareholders pursuant to this paragraph shall be subtracted from and
     offset against any eventual  judgment  or  recovery  by the Champion
     Shareholders in connection with a claim or demand related in any way
     to  the  merger  of  old-Paracelsus  and  Champion or to the  events
     forming the basis of the PHC Securities Litigation  and the judgment
     is  against  or  the  recovery  is from any person with a  right  of
     indemnification or contribution against PHC.

XII. PRESS RELEASE. - Upon the final execution  of this Agreement and the
     Class Action Memorandum of Understanding,  the Parties shall jointly
     prepare  and  the  Board  of Directors of PHC shall  issue  a  press
     release announcing generally the terms of the agreements.  Except as
     required by applicable law, under no circumstance shall any party to
     this Agreement issue a press  release,  without  the  consent of all
     other Parties to this Agreement, or disclose the salient  provisions
     contained in this Agreement.

XIII. EFFECTIVE DATE. - The "Effective Date" means the first
     business day ten (10) days after the order(s) and judgment(s) of the
     District  Court  approving  the settlements of the Class Action  and
     Derivative Actions and dismissing  the  Class  Action and Derivative
     Actions with prejudice become final and no longer subject to appeal.

XIV. TERMINATION OF TOLLING AGREEMENT. - Upon the transfer of shares from
     Park to the Champion Shareholders pursuant to paragraph  I.A. hereof
     and the payment by PHC to the Champion Shareholders of all  fees and
     out-of-pocket  expenses due and owing on the Effective Date pursuant
     to paragraph XI.  hereof,  the  August  1997 Tolling Agreement among
     PHC, Park, Dr. Krukemeyer, certain of the Champion Shareholders, and
     others shall terminate as to PHC, Park, and Dr. Krukemeyer.

XV.  DOCUMENTATION AND APPROVAL.  - The Parties  shall  act in good faith
     and  use  their  best  efforts  to further document the transactions
     contemplated herein and obtain approval  of  the respective judicial
     and governmental authorities and third parties.

XVI. GENERAL PROVISIONS.

     A.   The agreements contained herein are in no  way  intended  as an
          admission  of  liability by PHC, Park or Dr. Krukemeyer or that
          any reallocation  of PHC shares to the Champion Shareholders is
          proper, fair, or warranted under the circumstances.

     B.   This  Agreement  shall   be   governed  by,  and  construed  in
          accordance with, the laws of the  State of Texas without regard
          to Texas conflict of law rules.

     C.   Any modifications or amendments to  this  Agreement  must be in
          writing and signed by the Parties.

     D.   This  Agreement  may  be  executed  in counterparts, and as  so
          executed shall constitute one agreement.
<PAGE>
Date: ___________        PARK-HOSPITAL GmbH


                         _________________________________
                         By: Dr. Heiner Meyer zu L<o">sebeck
                                Managing Director
<PAGE>

Date: ___________        PARACELSUS HEALTHCARE CORPORATION


                         _________________________________
                         By:
                         Title:
<PAGE>
                         Date: ___________ DR. MANFRED GEORG KRUKEMEYER


                         _________________________________



<PAGE>
Date: ___________        _________________________________
Number of Shares of PHC  Name of Champion Shareholder
Common Stock Continuously
Held from August 16, 1996
through October 10, 1996:
________________         ________________________________
                         By:
                         Title:



Date: ___________        _________________________________
Number of Shares of PHC  Name of Champion Shareholder
Common Stock Continuously
Held from August 16, 1996
through October 10, 1996:
________________         ________________________________
                         By:
                         Title:



Date: ___________        _________________________________
Number of Shares of PHC  Name of Champion Shareholder
Common Stock Continuously
Held from August 16, 1996
through October 10, 1996:
________________         ________________________________
                         By:
                         Title:



Date: ___________        _________________________________
Number of Shares of PHC  Name of Champion Shareholder
Common Stock Continuously
Held from August 16, 1996
through October 10, 1996:
________________         ________________________________
                         By:
                         Title:


<PAGE>
Date: ___________        _________________________________
Number of Shares of PHC  Name of Champion Shareholder
Common Stock Continuously
Held from August 16, 1996
through October 10, 1996:
________________         ________________________________
                         By:
                         Title:



Date: ___________        _________________________________
Number of Shares of PHC  Name of Champion Shareholder
Common Stock Continuously
Held from August 16, 1996
through October 10, 1996:
________________         ________________________________
                         By:
                         Title:



Date: ___________        _________________________________
Number of Shares of PHC  Name of Champion Shareholder
Common Stock Continuously
Held from August 16, 1996
through October 10, 1996:
________________         ________________________________
                         By:
                         Title:



Date: ___________        _________________________________
Number of Shares of PHC  Name of Champion Shareholder
Common Stock Continuously
Held from August 16, 1996
through October 10, 1996:
________________         ________________________________
                         By:
                         Title:


<PAGE>
Date: ___________        _________________________________
Number of Shares of PHC  Name of Champion Shareholder
Common Stock Continuously
Held from August 16, 1996
through October 10, 1996:
________________         ________________________________
                         By:
                         Title:



Date: ___________        _________________________________
Number of Shares of PHC  Name of Champion Shareholder
Common Stock Continuously
Held from August 16, 1996
through October 10, 1996:
________________         ________________________________
                         By:
                         Title:



Date: ___________        _________________________________
Number of Shares of PHC  Name of Champion Shareholder
Common Stock Continuously
Held from August 16, 1996
through October 10, 1996:
________________         ________________________________
                         By:
                         Title:



Date: ___________        _________________________________
Number of Shares of PHC  Name of Champion Shareholder
Common Stock Continuously
Held from August 16, 1996
through October 10, 1996:
________________         ________________________________
                         By:
                         Title:


<PAGE>
Date: ___________        _________________________________
Number of Shares of PHC  Name of Champion Shareholder
Common Stock Continuously
Held from August 16, 1996
through October 10, 1996:
________________         ________________________________
                         By:
                         Title:



Date: ___________        _________________________________
Number of Shares of PHC  Name of Champion Shareholder
Common Stock Continuously
Held from August 16, 1996
through October 10, 1996:
________________         ________________________________
                         By:
                         Title:



Date: ___________        _________________________________
Number of Shares of PHC  Name of Champion Shareholder
Common Stock Continuously
Held from August 16, 1996
through October 10, 1996:
________________         ________________________________
                         By:
                         Title: