EXHIBIT 10.4


                                 THIRD AMENDMENT
                                       TO
                              EMPLOYMENT AGREEMENT


         THIS THIRD AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment") is made
and entered into effective as of January 1, 2001 by and between PHYAMERICA
PHYSICIAN SERVICES OF FLORIDA, INC., f/k/a COASTAL PHYSICIAN SERVICES OF SOUTH
FLORIDA, INC., a Florida corporation ("Employer" or the "Company") and SHERMAN
PODOLSKY, M.D. ("Employee").

                               W I T N E S S E T H:

         WHEREAS, Employer and Employee have previously entered into an
employment agreement dated January 1, 1998, as amended by that certain First
Amendment to Employment Agreement dated September 1, 1999, as further amended by
that certain Second Amendment to Employment Agreement dated January 1, 2000,
(collectively the "Agreement") under which Employee is currently employed by
Employer;

         WHEREAS, compensation under the Agreement is set for each calendar year
during the term of the Agreement by agreement of Employer and Employee, and the
Employer and Employee have agreed upon the compensation arrangements for
calendar year 2001 and now desire to substitute the attached Exhibit A as
Exhibit A to the Agreement effective as of January 1, 2001;

         NOW, THEREFORE, in consideration of the terms and conditions set forth
in this Amendment, the parties hereby agree that the Agreement is hereby
modified as follows:

1.   Replacement of Exhibit A. Exhibit A, Compensation, attached to the
     Agreement is hereby replaced by the Exhibit A dated January 1, 2001 and
     attached to this Amendment.

2.   This Amendment shall be an amendment and modification to the Agreement and
     shall become part of the Agreement and employment arrangement between
     Employee and Employer from and after the date of this Amendment. All
     capitalized terms not defined herein shall have the same meaning as set
     forth in the Agreement. Any conflict between terms of this Amendment and
     the Agreement will be resolved in favor of this Amendment. Except as
     amended herein, all terms of the Agreement shall remain in full force and
     effect.

         IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.


EMPLOYEE:                                      PHYAMERICA PHYSICIAN SERVICES
                                               OF FLORIDA, INC.



                                   (SEAL)   By:
-----------------------------------            ---------------------------------
       Sherman Podolsky, M.D.                  Its:
                                                   -----------------------------
<PAGE>
                                    EXHIBIT A
                                    ---------

                                  Compensation
                                  ------------

                                 January 1, 2001

1.   Base Salary. For services provided as an employee of Employer, Employee
     shall receive a base salary of $300,000 per annum (the "Base Salary")
     payable in accordance with Employer's current payroll practices. The Base
     Salary shall be subject to annual review and adjustment as of each January
     1, with the next review and adjustment to be effective January 1, 2002.

2.   Incentive Bonus. For calendar year 2001, Employee shall be entitled to an
     incentive or performance bonus (the "Incentive Bonus") of up to 40% of
     annual Base Salary, based on the following:

     (a)  Employee must be employed by Employer on the last day of the measuring
          period for the incentive performance bonus (the last day of the
          calendar quarter for quarterly incentives, and the last day of the
          calendar year for annual incentives) unless Employee's employment has
          been terminated (i) by Employer without cause under Section 12(a),
          (ii) by death or disability of Employee under Section 12(d) where such
          death or disability occurs within the last 4 months of 2001 or (iii)
          by Employee because of a material breach by Employer as provided in
          Section 12(e).

     (b)  Employee's Incentive Bonus shall be based on the following criteria,
          subject to a cap of 40% of annual Base Salary as previously indicated:

          (i)   up to 40% of Base Salary (10% per quarter) based on the
                Rvp/Contract Manager Program with 80% of the amount earned based
                on the performance of contracts of Florida. RVPs treated as a
                group and 20% of the amount earned based on the performance of
                contracts of California RVPs treated as a group, provided any
                quarterly bonus awarded shall not exceed 10% of Base Salary.

          (ii)  2.5% of Base Salary for each calendar quarter (but limited to a
                maximum of 5% of Base Salary per year) in which the Company, on
                a consolidated basis, achieves or exceeds budgeted net operating
                results, after debt expense, including the program fees and
                related costs of the NCFE financing.

          (iii) up to 10% of Base Salary as determined solely in the discretion
                of the Compensation Committee of the Board of Directors of
                PhyAmerica Physician Group, Inc.