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                                                                   EXHIBIT 10.20

                             EMPLOYMENT AGREEMENT
                             --------------------

     Employment Agreement (the "Agreement"), dated May 4,1998 by and between
Physicians Resource Group, Inc., a Delaware corporation (the "Company"), and Ann
Chaney ("Employee").

                              W I T N E S S E T H:
                              -------------------

     Section 1.  Employment. The Company hereby agrees to employ Employee, and
Employee hereby accepts employment by the Company, upon the terms and subject to
the conditions hereinafter set forth.

     Section 2.  Duties. Employee shall serve as the Chief Accounting Officer of
the Company. Employee agrees to devote her full time and best efforts to the
performance of her duties to the Company. Employee and the Company acknowledge
that the corporate finance office of the Company will be located in Houston,
Texas. In the event the Company moves the corporate finance office away from
Houston, Texas, Employee shall be entitled to terminate this Employment
Agreement in accordance with the provisions of Section 6(d) hereof. Employee
acknowledges that the corporate finance office is currently located in Dallas,
Texas and agrees to commute to Dallas for a reasonable period of time to
coordinate the transition of such office to Houston, Texas. The Company
acknowledges that the process of relocating the corporate finance function to
Houston will begin immediately.

     Section 3.  Term. Except as otherwise provided in Section 6 hereof, the
term of this Agreement shall be for two years ("Initial Term"), commencing on
the date of this Agreement. This Agreement shall be automatically renewed
thereafter for successive one year terms ("Renewal Term") unless either party
gives to the other written notice of termination no fewer than thirty (30) days
prior to the expiration of any such term that it does not wish to extend this
Agreement.

     Section 4.  Compensation and Benefits. In consideration for the services of
the Employee hereunder, the Company will compensate Employee as follows:

          (a)    Base Salary. Commencing on the date hereof, Employee shall be
     entitled to receive a base salary of $100,000 per annum or as increased
     from time to time by executive management.

          (b)    Bonus. During the Term of employment, Employee shall be
     eligible to receive an annual cash bonus in an amount determined in
     accordance with the employee incentive plan adopted by the Board of
     Directors of the Company on January 24, 1998 (the "Employee Incentive
     Plan"). The Employee Incentive Plan shall provide Employee with a target
     bonus opportunity of thirty-five percent (35%) of Employee's salary range
     midpoint for each calendar year in the Term of employment if the Company
     attains specified budgeted financial performance objectives for such year,
     and an over achievement bonus opportunity of five percent (5%) of target
     bonus for each one percent (1%) the Company exceeds such

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     specified budgeted financial performance objectives. The financial
     performance objectives shall be determined by the Board of Directors on an
     annual basis each year during the Term of employment. With respect to
     calendar year 1998, the financial performance objectives of the Employee
     Incentive Plan are set forth on Exhibit A, attached hereto and incorporated
     herein by reference. All bonuses payable to Employee under the Employee
     Incentive Plan shall be determined and paid within the first quarter of the
     year following the year for which such bonus is payable.

          (c)    Benefits. During the term of this Agreement, Employee shall be
     entitled to participate in and receive benefits under any and all employee
     benefit plans and programs which are from time to time generally made
     available to the executive employees of the Company, subject to approval
     and grant by the appropriate committee of the Board of Directors of the
     Company with respect to programs calling for such approvals or grants.

          (d)    Options. To induce Employee to enter into employment with the
     Company and as a condition of Employee's acceptance of such employment,
     effective upon the date of acceptance of employment, the Company shall
     grant to Employee an option to purchase Twenty-Five Thousand (25,000)
     shares of the Common Stock, par value $0.01 per share, of the Company (the
     "Common Stock,") at an exercise price of Four and One Six-Teenth Dollars
     ($4.0625) per share (the "Option"). To evidence the Option, promptly after
     the execution of this Agreement, the Company shall execute and deliver to
     the Employee an option agreement, which shall contain terms and conditions
     consistent with this Agreement and shall provide, among other things, for
     the following:

                 (i)    The Option shall be vested one-third immediately, one-
     third on the first anniversary and one-third on the second anniversary,
     with an ultimate expiration date of ten years from the date of grant.

                 (ii)   The grant of the Option shall not be subject to any
     approval by stockholders of the Company.

                 (iii)  The shares of Common Stock of the Company issuable under
     the Option shall be fully registered and freely tradeable and shall be of
     the same class of voting common stock of the Company, with the same rights,
     powers and privileges, as is currently publicly traded on the New York
     Stock Exchange and registered with the United States Securities and
     Exchange Commission. Without limiting the foregoing, such shares shall not
     be subject to any restriction, on transfer, on exercise of any right, power
     or privilege or otherwise, not applicable to all of such class of voting
     common stock generally.

                 (iv)   In the event of a change in control or threatened change
     in control of Employer, Employee's options granted pursuant to Section 4(d)
     shall become immediately vested and exercisable. A "change in control" will
     be deemed to have occurred for purposes hereof (i) upon the occurrence of a
     change of stock ownership of the Company of a nature

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     that would be required to be reported in response to Item 6(e) of Schedule
     14A promulgated under the Exchange Act, and any successor Item of a similar
     nature; or (ii) upon the acquisition of beneficial ownership, directly or
     indirectly, by any person (as such term is used in Sections 13(d) and
     14(d)(2) of the Exchange Act) of securities of the Company representing 33%
     or more of the combined voting power of the Company's then outstanding
     securities; or (iii) a change during any period of two consecutive years of
     a majority of the members of the Board for any reason, unless the election,
     or the nomination for election by the Company's stockholders, of each
     director was approved by a vote of a majority of the directors then still
     in office who were directors at the beginning of the period; provided that
     a change in control will not be deemed to have occurred for purposes hereof
     with respect to any person meeting the requirements of clauses (i) and (ii)
     of Rule 13d-1(b)(1) promulgated under the Exchange Act.

     Section 5.  Expenses. It is acknowledged by the parties that Employee, in
connection with the services to be performed by her pursuant to the terms of
this Agreement, will be required to make payments for travel (including travel
and housing in Dallas during the transition period), entertainment of business
associates and similar expenses. The Company will reimburse Employee for all
reasonable expenses of types authorized by the Company and incurred by Employee
in the performance of her duties hereunder. Employee will comply with such
budget limitations and approval and reporting requirements with respect to
expenses as the Company may establish from time to time.

     Section 6.  Termination. Employee's employment hereunder will commence on
the date of this Agreement and continue until the end of the Initial Term and
any renewals of such term, except that the employment of Employee hereunder will
terminate earlier upon the occurrence of the following events:

          (a)    Death or Disability. Employee's employment will terminate
     immediately upon the death of Employee during the term of her employment
     hereunder or, at the option of the Company, in the event of Employee's
     disability, upon 30 days notice to Employee. Employee will be deemed
     disabled if, as a result of Employee's incapacity due to physical or mental
     illness, Employee shall have been absent from her duties with the Company
     on a full-time basis for 120 consecutive business days. In the event of the
     termination of this Agreement pursuant to this subsection, Employee will
     not be entitled to any severance pay or other compensation except for any
     portion of her base salary accrued but unpaid from the last monthly payment
     date to the date of termination, accrued bonus, and expense reimbursements
     under Section 5 hereof for expenses incurred in the performance of her
     duties hereunder prior to termination.

          (b)    For Cause. The Company may terminate the Employee's employment
     for "Cause" upon five (5) days written notice by the Company to Employee.
     For purposes of this Agreement, a termination will be for Cause if: (i)
     Employee willfully and continuously fails to perform her duties with the
     Company (other than any such failure resulting from

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     incapacity due to physical or mental illness), (ii) Employee willfully
     engages in gross misconduct materially and demonstrably injurious to the
     Company or (iii) Employee has been convicted of a felony. In the event of
     the termination of this Agreement pursuant to this subsection, Employee
     will not be entitled to any severance pay or other compensation except for
     any portion of her base salary accrued but unpaid from the last monthly
     payment date to the date of termination and expense reimbursements under
     Section 5 hereof for expenses incurred in the performance of her duties
     hereunder prior to termination.

          (c)    By Company Without Cause. The Company may terminate this
     Agreement at any time for any reason without cause. Upon termination of
     this Agreement pursuant to this subsection, the Company will pay Employee,
     as Employee's sole remedy in connection with such termination, severance
     pay in the amount determined by multiplying Employee's monthly base salary
     at the rate in effect immediately preceding the termination of Employee's
     employment by twelve (12) months. The Company will also pay Employee the
     portion of her base salary accrued but unpaid from the last monthly payment
     date to the date of termination, accrued bonus, and expense reimbursements
     under Section 5 hereof for expenses incurred in the performance of her
     duties hereunder prior to termination.

          (d)    By Employee for Good Reason. Employee may terminate this
     Agreement for good reason in the event of either (i) termination of the
     employment of Peter G. Dorflinger as President and Pam Westbrook as Chief
     Financial Officer of the Company for any reason (including or (ii) the
     relocation of the corporate accounting office to a location other than
     Houston, Texas. Upon termination of this Agreement pursuant to this
     subsection, the Company will pay Employee severance pay in the amount
     determined by multiplying Employee's monthly base salary at the rate in
     effect immediately preceding the termination of Employee's employment, by
     twelve (12) months. The Company will also pay Employee the portion of her
     base salary accrued but unpaid from the last monthly payment date to the
     date of termination, accrued bonus, and expense reimbursements under
     Section 5 hereof for expenses incurred in the performance of her duties
     hereunder prior to termination.

     Section 7.  Effect of Termination on Options. The Employee has been granted
options to purchase shares of the Company's Common Stock and may continue to be
granted such options from time to time. The effect of the termination of the
Employee's employment on such options shall be determined by this Section.

          (a)    If the Employee voluntarily leaves the employment of the
     Company in breach of this Agreement, her options will automatically expire.

          (b)    If Employee dies or becomes disabled, as defined in Section
     6(a), while employed by the Company, her options shall become fully vested
     and exercisable on the date of her death or disability and shall expire
     twelve (12) months thereafter unless by its terms any of such options
     expire sooner.

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          (c)    If the Employee's employment with the Company is terminated for
     Cause, as defined in Section 6(b), her options will automatically expire.

          (d)    If the Employee's employment with the Company is terminated
     without cause during the Initial Term, pursuant to Section 6(c) or by
     Employee for Good Reason pursuant to Section 6(d), her options will remain
     exercisable and will vest and expire in accordance with the terms of the
     applicable option agreements.

          (e)    If the Employee's employment with the Company is terminated
     without cause subsequent to the Initial Term, pursuant to Section 6(c), her
     options shall be exercisable (to the extent exercisable on the date of
     termination of employment) at any time within three months following the
     date of termination of employment unless by its terms the option expires
     earlier.

     Section 8.  Confidential Information. Employee recognizes and acknowledges
that certain assets of the Company and its affiliates, including without
limitation information regarding customers, pricing policies, methods of
operation, proprietary computer programs, sales, products, profits, costs,
markets, key personnel, formulae, product applications, technical processes, and
trade secrets (hereinafter called "Confidential Information") are valuable,
special and unique assets of the Company and its affiliates. Employee will not,
during or after her term of employment, disclose any of the Confidential
Information to any person, firm corporation, association, or any other entity
for any reason or purpose, whatsoever, directly or indirectly, except as may be
required pursuant to her employment hereunder, unless and until such
Confidential Information becomes publicly available other than as a consequence
of the breach by Employee of her confidentiality obligations hereunder. In the
event of the termination of her employment, whether voluntary or involuntary and
whether by the Company or Employee, Employee will deliver to the Company all
documents and data pertaining to the Confidential Information and will not take
with her any documents or data of any kind or any reproductions (in whole or in
part) of any items relating to the Confidential Information.

     Section 9.  Noncompetition. Until one (1) year after termination of
Employee's employment hereunder, Employee will not (i) engage directly or
indirectly, alone or as a shareholder, partner, officer, director, employee or
consultant of any other business organization, in any business activities which
relate to the acquisition and consolidation of medical practices which were
either conducted by the Company at the time of Employee's termination or
"Proposed to be Conducted" (as defined herein) by the Company at the time of
such termination (the "Designated Industry"), (ii) divert to any competitor of
the Company in the Designated Industry any customer of Employee, or (iii)
solicit or encourage any officer, employee, or consultant of the Company to
leave its employ for employment by or with any competitor of the Company in the
Designated Industry. The parties hereto acknowledge that Employee's
noncompetition obligations hereunder will not preclude Employee from (i) owning
less than 5% of the common stock of any publicly traded corporation conducting
business activities in the Designated Industry or (ii) serving as an officer,
director, stockholder or employee of an entity engaged in the healthcare
industry whose business operations are not competitive with those of the
Company. "Proposed to be Conducted," as used herein, shall

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include those business activities which are the subject of a formal, written
business plan approved by the Board of Directors prior to termination of
Employee's employment and which the Company takes material action to implement
within 12 months of the termination of Employee's employment. Employee will
continue to be bound by the provisions of this Section 9 until their expiration
and will not be entitled to any compensation from the Company with respect
thereto. If at any time the provisions of this Section 9 are determined to be
invalid or unenforceable, by reason of being vague or unreasonable as to area,
duration or scope of activity, this Section 9 will be considered divisible and
will become and be immediately amended to only such area, duration and scope of
activity as will be determined to be reasonable and enforceable by the court or
other body having jurisdiction over the matter; and Employee agrees that this
Section 9 as so amended will be valid and binding as though any invalid or
unenforceable provision had not been included herein.

     Section 10.  General.

          (a)     Notices. Except as otherwise provided herein, all notices and
     other communications hereunder will be in writing or by written
     telecommunication, and will be deemed to have been duly given if delivered
     personally or if mailed by certified mail, return receipt requested or by
     written telecommunication, to the relevant address set forth below, or to
     such other address as the recipient of such notice or communication will
     have specified to the other party hereto in accordance with this Section
     10(a):

     If to the Company, to:                  with a copy to:

     Physicians Resource Group, Inc.         Physicians Resource Group, Inc.
     Three Lincoln Centre, Suite 1540        Three Lincoln Centre, Suite 1540
     5430 LBJ Freeway                        5430 LBJ Freeway
     Dallas, TX 75240                        Dallas, Texas 75240
     Attn: President                         Attn: General Counsel
     Fax No.: (972) 982-8297                 Fax No.: (972) 982-8299

     If to Employee, to:

     Ms. Ann Chaney
     10 Troy Lane
     West Columbia, TX 77468


          (b)     Withholding; No Offset. All payments required to be made by
     the Company under this Agreement to Employee will be subject to the
     withholding of such amounts, if any, relating to federal, state and local
     taxes as may be required by law. No payment under this Agreement will be
     subject to offset or reduction attributable to any amount Employee may owe
     to the Company or any other person.

          (c)     Equitable Remedies. Each of the parties hereto acknowledges
     and agrees that

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     upon any breach by Employee of her obligations under Section 9 hereof, the
     Company will have no adequate remedy at law, and accordingly will be
     entitled to specific performance and other appropriate injunctive and
     equitable relief.

          (d)    Severability. If any provision of this Agreement is held to be
     illegal, invalid or unenforceable, such provision will be fully severable
     and this Agreement will be construed and enforced as if such illegal,
     invalid or unenforceable provision never comprised a part hereof, and the
     remaining provisions hereof will remain in full force and effect and will
     not be affected by the illegal, invalid or unenforceable provision or by
     its severance herefrom. Furthermore, in lieu of such illegal, invalid or
     unenforceable provision, there will be added automatically as part of this
     Agreement a provision as similar in its terms to such illegal, invalid or
     unenforceable provision as may be possible and be legal, valid and
     enforceable.

          (e)    Waivers. No delay or omission by either party hereto in
     exercising any right, power or privilege hereunder will impair such right,
     power or privilege, nor will any single or partial exercise of any such
     right, power or privilege preclude any further exercise thereof or the
     exercise of any other right, power or privilege.

          (f)    Counterparts. This Agreement may be executed in multiple
     counterparts, each of which will be deemed an original, and all of which
     together will constitute one and the same instrument.

          (g)    Captions. The captions in this Agreement are for convenience of
     reference only and will not limit or otherwise affect any of the terms or
     provisions hereof.

          (h)    Reference to Agreement. Use of the words "herein," "hereof,"
     "hereto" and the like in this Agreement refer to this Agreement only as a
     whole and not to any particular subsection or provision of this Agreement,
     unless otherwise noted.

          (i)    Binding Agreement. This Agreement will be binding upon and
     inure to the benefit of the parties and will be enforceable by the personal
     representatives and heirs of Employee and the successors of the Company. If
     Employee dies while any amounts would still be payable to him hereunder,
     such amounts will be paid to Employee's estate. This Agreemcnt is not
     otherwise assignable by Employee.

          (j)    Entire Agreement. This Agreement contains the entire
     understanding of the parties, supersedes all prior agreements and
     understandings relating to the subject matter hereof and may not be amended
     except by a written instrument hereafter signed by each of the parties
     hereto.

          (k)    Governing Law. This Agreement and the performance hereof will
     be construed and governed in accordance with the laws of the State of
     Texas, without regard to

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     its choice of law principles.

     EXECUTED as of the date and, year first written above.

                                             PHYSICIANS RESOURCE GROUP, INC.


                                             /s/ Peter G. Dorflinger
                                             -----------------------------------
                                             Peter G. Dorflinger
                                             President


                                             EMPLOYEE


                                             /s/ Ann Chaney
                                             -----------------------------------
                                             Ann Chaney

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