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                                                                    EXHIBIT 10.1

                                                                    CONFIDENTIAL

                                                                January 10, 2001


To The Board of Managers
of International Radiology Group, L.L.C.
40 Skokie Boulevard
Northbrook, IL  60062-1618

         Re:      LETTER OF UNDERSTANDING

Gentlemen:

         This letter of understanding ("LETTER") sets forth the basic terms and
conditions pursuant to which US Diagnostic, Inc., a Delaware corporation ("USD")
proposes a transaction ("TRANSACTION") resulting in the combination of
International Radiology Group, L.L.C., a Delaware limited liability company
("IRG") (including American Imaging Management, Inc. ("AIM") with USD.

1.       TERM SHEET. USD intends to proceed with the Transaction in accordance
         with the commercial terms set forth in this Letter and the term sheet
         attached hereto as ATTACHMENT A (the "TERM SHEET"). To the extent there
         is any conflict between the Term Sheet and this Letter, this Letter
         shall control.

2.       PUBLIC ANNOUNCEMENTS. The parties agree that any public announcement
         relating to the Transaction shall be made pursuant to a joint press
         release subject to the prior review and consent of each party, except
         to the extent a party may deem it necessary to comply with laws,
         including securities law.

3.       EXPENSES. USD and IRG shall be responsible for their own expenses,
         including fees and expenses of counsel, advisors and consultants;
         PROVIDED, HOWEVER, the filing fees pursuant to the Hart-Scott-Rodino
         Antitrust Improvements Act of 1976 ("HSR ACT") shall be split equally
         by the parties.

4.       EXCLUSIVITY. During the Exclusivity Period (as hereinafter defined),
         IRG shall work with USD to negotiate and execute definitive agreements
         and to close and complete the Transaction, and IRG will not directly or
         indirectly or in any manner whatsoever (including, without limitation,
         through an affiliate or subsidiary or through any agency, trust or
         nominee arrangement):

         (a)      enter into or agree to enter into, any agreement with respect
                  to the sale of IRG or AIM or any of their respective
                  businesses' assets or properties (hereinafter collectively
                  referred to as "IRG Group"), participate in any discussions or
                  otherwise make or solicit any proposal or offer with respect
                  to the sale of the IRG Group which competes with, or may
                  compete with or otherwise prevent or delay
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                  the completion of the Transaction (including, without
                  limitation, by way of equity, debt, participation, agency,
                  management or operatorship); or

         (b)      sell or agree to sell, solicit or make any proposal or
                  participate in any discussions to or offer to sell any
                  interest in the IRG Group or otherwise transfer any interest
                  in the IRG Group; however IRG may enter into an action to
                  raise additional capital (the "Capital Raise") to meet the
                  essential operating requirements of IRG's business provided,
                  (i) IRG will not solicit a transaction, whether by merger or
                  otherwise, pursuant to which a person or entity not currently
                  a member of IRG acquires more than 20% of the outstanding
                  limited liability company interest of IRG; (ii) the merger
                  consideration as set forth in the Term Sheet shall not change;
                  and (iii) USD is not otherwise adversely effected by such
                  Capital Raise.

                  For breach by IRG of this paragraph 4, in addition to any
         other remedies available to USD, USD shall be entitled, without proof
         of damage, to any and all equitable and injunctive relief. The
         provisions of this paragraph 4 shall be binding until March 31, 2001
         (the "EXCLUSIVITY PERIOD").

                  Except as required by law in the fulfillment of the fiduciary
         duties of the USD's Board of Directors, USD agrees that during the
         Exclusivity Period it will not solicit a transaction, whether by merger
         or otherwise, pursuant to which a person or entity not currently a
         stockholder of USD acquires more than 50% of the issued and outstanding
         common stock of USD. Notwithstanding the foregoing, IRG acknowledges
         and agrees that USD intends to continue to pursue transactions to sell
         its imaging centers during this Exclusivity Period.

                  This Letter shall be deemed terminated automatically upon the
         expiration of the Exclusivity Period, unless extended by written
         consent of USD and IRG. In such case, neither USD nor IRG shall have
         any further obligation or liability (in tort, contract or otherwise) to
         the other, except as provided in paragraphs 2 and 3, which obligations
         shall survive the termination of this Letter.

5.       NEGOTIATION OF DEFINITIVE AGREEMENTS. Subject to the terms and
         conditions of this Letter, the parties agree to enter into good faith
         negotiations toward the preparation, execution and delivery of
         definitive agreements that shall set forth the terms and conditions of
         the Transaction as described in this Letter and the Term Sheet (the
         "DEFINITIVE AGREEMENTS"). The terms and provisions of the Definitive
         Agreements shall be mutually acceptable to the parties. The Definitive
         Agreements shall be prepared by USD's counsel and approved by the
         parties.

6.       CLOSING CONDITIONS. The closing of the Transaction shall be contingent
         upon conditions customary to transactions of this nature, including,
         but not limited to, the following:

         (a)      with respect to USD:

                  (i)      there shall not have occurred (i) any damage, loss or
                           condemnation of any material assets, properties or
                           contracts of the IRG Group or (ii) a material adverse

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                           change (A) in the financial condition or results of
                           operations of the IRG Group, (B) in the business,
                           assets, operations or prospects of the IRG Group or
                           (C) in any law or regulation applicable to the IRG
                           Group;

                  (ii)     receipt of all (A) necessary consents from
                           non-regulatory third parties (including USD's
                           lenders) and (B) applicable regulatory approvals
                           required for the completion of the Transaction and
                           the expiration of any waiting periods required under
                           the HSR Act or other applicable law or regulation;

                  (iii)    approval of the Transaction by the Board of Directors
                           and stockholders of USD;

                  (iv)     the satisfactory completion, in USD's sole
                           discretion, of USD's due diligence review of the IRG
                           Group;

                  (v)      the Form S-4 Registration Statement (or other
                           appropriate form) containing the joint proxy
                           statement of USD and IRG and the prospectus
                           ("PROXY/PROSPECTUS") for the shares of common stock
                           ("TRANSACTION SHARES") constituting part of the
                           consideration shall have been declared effective by
                           the Securities and Exchange Commission ("SEC");

                  (vi)     prior to mailing the Proxy/Prospectus the Board of
                           Directors shall have received an opinion from its
                           financial advisor that the Transaction is fair from a
                           financial point of view to the USD Stockholders;

                  (vii)    the Transaction Shares shall have been listed by
                           NASDAQ National Market System, upon notice of
                           issuance;

                  (viii)   CIGNA shall have indicated to USD that consummation
                           of the Transaction will not result in an adverse
                           change in CIGNA's current relationship with AIM;

                  (ix)     the Transaction shall not (A) require USD to obtain a
                           waiver or modification from the holders of its 9%
                           Subordinated Convertible Debentures due 2003 ("PUBLIC
                           DEBT"); or (B) constitute a "change in control" under
                           the Public Debt; and

                  (x)      prior to the execution of the Definitive Agreements
                           IRG shall have delivered to USD the following audited
                           financial statements (A) for IRG and AIM for their
                           respective 1997, 1998 and 1999 fiscal years; (B) for
                           IRG and AIM for their respective three month periods
                           ended March 31, 2000; and (C) for IRG and AIM as the
                           combined IRG Group for the six month period from
                           April 1, 2000 to September 30, 2000.

         (b)      with respect to IRG:

                  (i)      receipt of all applicable regulatory approvals
                           required for the completion of the Transaction and
                           the expiration of any waiting periods required under
                           the HSR Act or other applicable law or regulation;



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                  (ii)     the members of IRG shall have approved the
                           Transaction, including without limitation the
                           allocation of the Transaction consideration among
                           each member; and

                  (iii)    the satisfactory completion in IRG's sole discretion,
                           of IRG's due diligence review of USD.

7.       INVESTIGATION. USD, its agents, its representatives and its lenders
         shall be permitted to make a full and complete investigation of the
         assets, properties, business affairs and financial condition of the IRG
         Group, including access to the books, records, financial information,
         agreements and all other documents of the IRG Group. IRG, its agents,
         its representatives and its lenders shall be permitted to make a full
         and complete investigation of the assets, property, business offices
         and financial condition of USD, including access to the books, records,
         financial information, agreements and all other documents of USD. All
         information obtained by either party in the course of its investigation
         shall be kept confidential in accordance with the terms of the
         Confidentiality Letter (as hereinafter defined).

8.       NON-BINDING NATURE. Except as to paragraphs 2, 3, 4, 5, 6 and 7 hereof,
         the parties hereto understand and agree that this Letter and Term Sheet
         set forth the parties' current understanding of agreements, which may
         be set out in a binding fashion in the Definitive Agreements to be
         executed at a later date. Except as to paragraphs 2, 3, 4, 5, 6 and 7
         hereof, this letter does not create and is not intended to create a
         binding and enforceable contract between the parties and may not be
         relied upon by either party as the basis for a contract by estoppel or
         otherwise, but rather evidences a non-binding expression of good faith
         understanding to endeavor, without obligation, to negotiate mutually
         agreeable Definitive Agreements.

9.       NO OTHER AGREEMENTS. Subject to the foregoing, there are no other
         written or oral agreements or understandings between the parties
         hereto, other than the confidentiality agreements contained in that
         certain letter, dated July 13, 2000, between USD and IRG (the
         "CONFIDENTIALITY LETTER"), which agreement and undertaking shall remain
         in full force and effect between and among the parties despite the
         execution of this Letter.

10.      GOVERNING LAW. The rights and obligations set forth in this Letter
         shall be governed by the laws of the State of Florida, without regard
         to principles of conflicts of laws thereof.

11.      SUCCESSOR AND ASSIGNS. This Letter and the rights and obligations of
         USD and IRG shall not be assignable.

12.      AMENDMENT. This Letter may only be amended or modified by a writing
         executed by USD and IRG.

13.      IRG BOARD OF MANAGERS APPROVAL. By IRG's execution of this letter, IRG
         is representing and warranting to USD that this Letter and the
         Transaction contemplated hereby have been approved by the IRG Board of
         Managers.

                            [signature page follows]




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         If the terms and conditions of this Letter are in accord with your
understanding, please sign and return a counterpart of this Letter no later than
5:00 p.m. (EST) January 12th, 2001, after which date, if not returned, this
Letter shall be null and void.

                                               Very truly yours,

                                               US DIAGNOSTIC, INC.



                                               By: /s/ David McIntosh
                                                   -----------------------------
                                                   David McIntosh, Director


Acknowledged and agreed to
this 12 day of January, 2001.

INTERNATIONAL RADIOLOGY GROUP, LLC


By: /s/ J.R. Holland, Jr.
    -------------------------------
Name:  J.R. Holland, Jr.
       ----------------------------
Title: Manager
       ----------------------------






                   [Signature Page to Letter of Understanding]







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                                  ATTACHMENT A

                                   TERM SHEET

TRANSACTION STRUCTURE:     While we presently intend for the transaction to be
                           a merger of IRG with and into USD, or a wholly owned
                           subsidiary of USD, the final structure will depend on
                           the mutual agreement of USD and IRG after a review of
                           the tax, accounting and legal issues. For purposes of
                           this letter the transaction is hereinafter referred
                           to as the "MERGER." The surviving party in the Merger
                           is hereinafter referred to as the "ISSUER," and the
                           common stock of the Issuer is hereinafter referred to
                           as "MERGER SHARES."

MERGER CONSIDERATION:      As of September 30, 2000 USD had 22,710,033 shares of
                           common stock issued and outstanding and 2,949,946
                           shares of common stock subject to outstanding options
                           and warrants. The members of IRG (including, without
                           limitation the holders of Class A, Class B, Class B-1
                           (if any) and Class C shares) and holders of options
                           for IRG shares the ("Members") would be entitled to
                           aggregate consideration as a result of the Merger
                           equal to Merger Shares representing 49% of the issued
                           outstanding Merger Shares on a fully-diluted post
                           merger basis. In addition, the Members would receive
                           $10 million in additional consideration consisting of
                           $5 million in cash and $5 million in a Subordinated
                           Unsecured Debenture according to the terms below.
                           Such consideration is subject to change based upon
                           the completion of due diligence by both parties.

SUBORDINATED UNSECURED
DEBENTURE:                 Amount                 $5 million
                           Term                   5 Year
                           Interest               8% per annum
                           Amortization           Year 1:           $0
                                                  Year 2:           $0
                                                  Year 3:           $1 million
                                                  Year 4:           $2 million
                                                  Year 5:           $2 million

ISSUER BOARD OF DIRECTORS: The composition of the Issuer's initial Board of
                           Directors shall be agreed upon as part of the
                           Definitive Agreements, PROVIDED, HOWEVER, the
                           nominees of IRG shall represent a majority of the
                           initial Board of Directors.

MANAGEMENT:                The officers and management team of the Issuer shall
                           be agreed upon between USD and IRG as part of the
                           Definitive Agreements.





                                      A-1

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STOCK OPTIONS:             Prior to mailing the Proxy/Prospectus USD and IRG
                           shall agree upon the available post Merger stock
                           option pool and the guidelines with respect to the
                           granting of options.

VOTING AGREEMENTS:         Prior to mailing the Proxy/Prospectus, IRG shall have
                           obtained and delivered to USD the agreement of
                           holders of its Class A voting shares representing at
                           least 51% of the entire class and all of the holders
                           of its Class C shares to vote for the Merger.

REPRESENTATIONS,
WARRANTIES,
COVENANTS AND
INDEMNIFICATION
PROVISIONS:                The representations, warranties, covenants and
                           indemnification set forth in the Definitive
                           Agreements shall be customary to transactions of this
                           nature and shall be mutually agreed upon by the
                           parties.

OTHER TERMS AND
CONDITIONS:                This Term Sheet does not purport to be all-inclusive.
                           Definitive Agreements will include other matters that
                           are not covered by or made clear herein and are
                           subject to the mutual agreement of the parities.

                           THIS SUMMARY OF TERMS AND CONDITIONS IS ATTACHMENT A
                           TO LETTER OF UNDERSTANDING DATED JANUARY 8, 2001 AND
                           IS NOT TO BE CONSIDERED SEPARATELY FROM THE LETTER OF
                           UNDERSTANDING. EXCEPT AS SET OUT IN THE LETTER OF
                           UNDERSTANDING, THE LETTER OF UNDERSTANDING AND THIS
                           ATTACHMENT A ARE NOT INTENDED TO BE COMPLETE AND
                           ALL-INCLUSIVE AS TO THE TERMS OF THE PROPOSED
                           TRANSACTION, NOR DOES THE LETTER OF UNDERSTANDING OR
                           THIS ATTACHMENT A CREATE A BINDING AND ENFORCEABLE
                           CONTRACT BETWEEN OR COMMITMENT OR OFFER TO ANY PARTY
                           OR PARTIES.





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