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                                  EXHIBIT 10.3
                              EMPLOYMENT AGREEMENT

Dear Mike:

          I am glad that we have resolved your change of position in a manner
that permits you to continue working for U.S. Physical Therapy, Inc. (the
"Company"). The terms of your continued employment by the Company are outlined
below:

     1.   Your position beginning effective September 2, 2003, is Vice President
          -- Special Projects. You will report to me as CEO. You will continue
          in this position, with the role, duties and responsibilities as Vice
          President -- Special Projects listed in the attached position
          description.

     2.   Your salary will continue to be $170,000 per annum, payable in
          accordance with normal Company payment schedules. Reports of work
          performed will be conducted at the end of each month. You will not be
          eligible for any cash or other bonuses during your employment.
          Moreover, you shall not be entitled to, nor should you expect to be
          awarded, any stock options or other equity incentives.

     3.   The Company shall provide and pay for your participation in all
          existing Company health, dental, long term disability and life
          insurance or benefits plans in accordance with past practices while
          you are employed by the Company. After your employment ceases you
          shall have whatever rights are granted you under the Consolidated
          Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), to
          continue to participate in such health plans. Except as provided
          above, the Company shall not be obligated to continue or provide, or
          to pay for, your participation in any other health and welfare benefit
          plans (as such term is defined under Section 3 of the Employee
          Retirement Income Security Act of 1974, as amended ("ERISA") after
          your employment is terminated.

     4.   Your employment with the Company shall continue until September 30,
          2004 (the "Termination Date"), at which time, absent further written
          agreement between you and the Company, your employment shall
          automatically terminate and there will be no severance payment due or
          payable.

     5.   Your current options, listed in Exhibit A hereto, shall continue to be
          in full force and effect and the issued options will continue to vest
          pursuant to your option awards and the 1992 Stock Option Plan. Any
          unvested options owned by you on the Termination Date shall expire and
          terminate. Any vested options you hold on the Termination Date shall
          expire on October 30, 2004. A copy of the 1992 Stock Option Plan has
          been delivered to you for your records.

     6.   To insure that your duties are limited to special projects and you are
          not asked, nor do you seek, to involve yourself in matters involving
          your former responsibilities and duties as Chief Financial Officer, we
          have agreed that while you will maintain an office at Company
          headquarters and will be present as directed by me as CEO, you will be
          permitted to establish an executive office near your residence at
          which you may work on projects assigned to you. The Company will
          reimburse you $350 per month for expenses you incur in establishing
          and maintaining such office.

     7.   If during your employment by the Company (a) you are terminated by the
          Company without "Cause" (as defined below) or (b) you resign within 30
          days after being required to accept a material diminution in title or
          duties and responsibilities, then the Company will continue to pay you
          your full salary for the stipulated period of your employment, i.e.
          until September 30, 2004. During such period, the Company shall
          continue to provide you health insurance, but all other benefits shall
          cease. "Cause" shall mean (i) your material failure to perform or
          observe (other than by reason of disability) any of the terms or
          provisions of this letter agreement, including your failure to follow
          my reasonable written directions as the Company's CEO, for more than
          five business days after written notice thereof from me as the CEO;
          (ii) dishonesty or misconduct on your part that is damaging or
          detrimental to the business of the Company, (iii) conviction of a
          felony involving moral turpitude, (iv) habitual insobriety or failure
          to perform your duties due to abuse of alcohol or drugs, or (v)
          misappropriation of any of the Company's material assets.

     8.   We regret the time and difficulty involved in resolving our
          relationship over the past month. To put this matter to rest we have
          agreed to pay any legal costs billed to you at normal rates, up to
          $5000.

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     9.   By signing below, we have mutually agreed to and do hereby release
          each other from any claims or causes of action that either of us has
          by virtue of any actions related to your employment, your
          reassignment, and any related events or statements connected
          therewith.

          We hope that you accept this offer and look forward to continuing to
work with you.

                                       Cordially,

                                       /s/ Roy Spradlin
                                       --------------------------

                                       Roy Spradlin, Chairman, President and CEO

AGREED TO AND ACCEPTED

/s/ J Michael Mullin
-------------------------------
J Michael Mullin

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