EXHIBIT 10.13


                                 AMENDMENT NO. 2

                    TO THE ASSET SALE AND PURCHASE AGREEMENT

     THIS AMENDMENT ("Amendment") is entered into as of October 31, 1998, by and
between Kaiser Foundation  Health Plan of Texas, a Texas non-profit  corporation
("Seller"),  and Texas  Health  Choice,  L.C.,  f/k/a HMO Texas,  L.C.,  a Texas
limited liability company ("Buyer").

                                                      RECITAL

     The  undersigned  parties have  entered  into that  certain  Asset Sale and
Purchase Agreement,  dated June 5, 1998, as amended on August 7, 1998 ("Purchase
Agreement"),  and the parties desire to further amend the Purchase  Agreement as
set forth herein.

     NOW,  THEREFORE,  for and in  consideration  of the above  recitals and the
representations,  warranties, mutual covenants, and agreements herein expressed,
and for other good and valuable  consideration,  the receipt and  sufficiency of
which are hereby expressly acknowledged, the parties hereby agree as follows:

     1.  Identity of Buyer.  The parties  hereby  agree to amend (i) the initial
paragraph of the Purchase Agreement,  (ii) Section 15.1 regarding notices, (iii)
the  signature  blocks  of  Buyer,  and (iv)  any  other  place in the  Purchase
Agreement which  references HMO Texas,  L.C. as Buyer, to change the identity of
the Buyer from HMO Texas,  L.C., a Texas  limited  liability  company,  to Texas
Health Choice, L.C., a Texas limited liability company.

     2.  Confidentiality  Agreements.  The parties hereby  acknowledge  that the
references to the Confidentiality  Agreements dated March 28, 1998 and March 30,
1998 in paragraph E of the Recitals in the Purchase Agreement are erroneous, and
hereby  agree  to  amend  such  paragraph  to  change  such  references  to  the
Confidentiality  Agreements  dated March 24, 1998 and March 27, 1998.  Copies of
the  Confidentiality  Agreements  dated  March 24,  1998 and March 27,  1998 are
attached as Exhibits A and B to this Amendment.

     3. Texas Group 3000 Issues.  The parties  hereby  acknowledge  that Section
1.4.4 of the  Purchase  Agreement  shall be  interpreted  to mean that the Texas
Group  3000  Members  shall not be  counted  in the  Membership  Base  under the
Earn-Out  Accounts for the purpose of calculating any additional  purchase price
paid by Buyer to Seller thereunder.  In addition,  other members employed by the
Group 3000 Members' employers (such employers to be determined as of the Closing
Date) shall not be counted unless (i) such member is listed on Schedule 1.4.4 as
a  National  Account or (ii)  Seller  brings  new  members  to areas  other than
Dallas/Fort  Worth in accordance  with the  provisions of Section  1.4.4.  As an
example  of  subsection  (i),  if XYZ Co.  is listed as a  National  Account  in
Schedule  1.4.4 and an  employee of XYZ Co. is listed as a Group 3000 Member but
is not included in the membership count in Schedule 1.4.4, the


     employee  shall  never  count  in  the  Membership  Base  for  purposes  of
calculating the Earn-Out Accounts;  however,  increases in the number of members
employed  by XYZ Co.  and who are not a Group 3000  Member at  Closing  shall be
counted  in the  Membership  Base  for  purposes  of  calculating  the  Earn-out
Accounts.

     4. Old National Accounts. In addition to updating Schedule 1.4.4 to make it
accurate  as of the  Closing,  the  parties  agree (i) to  delete  intentionally
Columbia  Healthcare  members from the  Membership  Base for purposes of Section
1.4.4,  notwithstanding that Columbia Healthcare is an Old National Account, and
(ii) to not count  Columbia  Healthcare  members in the New Accounts or Earn-Out
Accounts. This shall affect Section 1.4.4 of the Purchase Agreement only.

     5.  Closing.  The parties  hereby  agree that  Section 1.5 of the  Purchase
Agreement shall be amended to change the reference regarding the time of Closing
from 12:01:01 a.m. to 11:59:59 p.m. on the Closing Date.

     6. Columbia Hospital  Contract.  In order to simplify the process described
in Section 1.6.3(b) of the Purchase  Agreement relating to the Columbia Hospital
Contract,  the  parties  agree to delete  the text of  Section  1.6.3(b)  of the
Purchase Agreement in its entirety, and replace such text with the following:

     Buyer has arranged to amend and assume that certain contract between Seller
and Columbia  North Texas  Division,  Inc.  ("Columbia"),  dated January 1, 1995
("Columbia  Hospital  Contract")  pursuant to a letter dated September 17, 1998,
from Larry S. Howard to Thomas O. Corley, which sets forth the agreement between
Buyer and Columbia and the consent of Columbia to the  assignment and assumption
of the Columbia Hospital Contract.  The following chart sets forth the change in
Equivalent Per Diem rates resulting from the assignment of the Columbia Hospital
Contract to Buyer:
<TABLE>


-----------------------------------------------------------------------------------------------
<CAPTION>
                                                              
Time Period                      11/1/98 to              1/1/99 to             3/1/99 to
                               12/31/98                    2/28/99             12/31/99
-----------------------------------------------------------------------------------------------
<S>                                  <C>                   <C>                  <C>   
Existing Columbia                    $1,059                $1,109               $1,109
Contract Equivalent
Per Diem
-----------------------------------------------------------------------------------------------
Amended Columbia                     $1,143                $1,143               $1,170
Contract Assigned
to Buyer Equivalent
Per Diem
-----------------------------------------------------------------------------------------------
Difference in                          $84                  $34                   $61
Equivalent Per Diem
-----------------------------------------------------------------------------------------------
</TABLE>


                                                       - 2 -

     For each Time Period set forth above,  Seller shall  reimburse Buyer 70% of
the  applicable  Difference in Equivalent  Per Diem  multiplied by the number of
Inpatient  Hospital Days incurred under the Columbia  Hospital  Contract  during
that Time Period. In addition,  Seller shall reimburse Buyer the amount by which
30% of the applicable Difference in Equivalent Per Diem multiplied by the number
of Inpatient Hospital Days incurred under the Columbia Hospital Contract for all
Time Periods cumulatively exceeds $350,000.

     Seller shall pay amounts due under this Section 1.6.3(b) on a monthly basis
promptly  upon  receipt of an  invoice  from Buyer and shall be subject to later
verification  by Seller  through a quarterly  audit of Buyer's books and records
necessary  or  reasonable  to verify the number of  Inpatient  Hospital  Days at
Columbia facilities utilized under the Columbia Hospital Contract.  This payment
shall be the sole and exclusive  payment by Seller to Buyer relating to the cost
increases  imposed by Columbia's  condition to consent to the  assignment of the
Columbia Hospital Contract from Seller to Buyer.

     The  parties  agree  that the  language  set  forth  above  supersedes  all
discussions and agreements  regarding the Columbia  Hospital  Contract among the
parties since June 5, 1998, through the date hereof,  including, but not limited
to, that certain  amendment among the parties dated August 7, 1998, and that the
language as set forth above  constitutes the sole,  full and complete  agreement
among the parties relating to the Columbia Hospital Contract.

     7. Adjustment to Purchase Price. Section 1.4.1 of the Purchase Agreement is
amended to state as follows:

     The  consideration  for the transfer of the Assets from Seller and Seller's
Affiliates  to Buyer shall be One Hundred  Twenty-Two  Million,  Nine  Thousand,
Three  Hundred and Nine  Dollars  ($122,009,309.00),  as adjusted as provided in
this Section 1.4 (the  "Purchase  Price").  Ninety-Two  Million,  Nine Thousand,
Three Hundred and Nine Dollars  ($92,009,309.00)  of the Purchase Price shall be
paid by Buyer to Seller by Federal  Reserve Bank wire  transfer of good funds at
Closing,  as adjusted as provided in this  Section  1.4.  The  remaining  Thirty
Million  Dollars  ($30,000,000.00)  of the  Purchase  Price  shall  be  paid  in
accordance with the earn-outs set forth in Sections 1.4.4 and 1.4.5. The parties
acknowledge  that the amount of Two Hundred Seventy Five Six Hundred  Ninety-One
($ 275,691.00) is the purchase price  associated  with the Insurance  Assumption
Reinsurance  Agreement and that such amount is not included in the term Purchase
Price for purposes of this Agreement.

     In addition,  Section 1.4.6 of the Purchase  Agreement  shall be deleted in
its entirety, it being the intent of the parties that the sole adjustment to the
Purchase Price as a result of any decrease in

                                                       - 3 -

     Member  Accounts as required by Section  1.4.6 is reflected in the Purchase
Price set forth in the amended Section 1.4.1 set forth above.

     8.  Amendment to Section  10.8.  Both  Sections  10.8(a) and 10.8(b) of the
Purchase Agreement shall each be amended to add the following:

     The parties  shall meet  within 30 days of the  Closing  Date to come to an
agreement on the actuarially  sufficient commercial rate to be charged for 1999.
If the parties are unable to come to an agreement prior to January 1, 1999, each
shall charge the other an amount equal to 4 % (2 % for Medicare)  above the rate
being charged for 1998 (the 1998  commercial and Medicare rates being  described
in the  consolidated and amended Exhibits 10.8(a) & (b)) until they have reached
an agreement as to the  actuarially  sufficient  commercial  rates for 1999,  at
which  time,  the  amount  previously   provided  for  1999  shall  be  adjusted
accordingly with the final actuarially sufficient commercial rates.

9.       Section Deleted.  Section 10.9 is deleted in its entirety.

10.      Amendments Relating to Personal Property.

     a.  Section  11.3.1  of the  Purchase  Agreement  is  amended  to  add  the
following:

     This Section  11.3.1 shall not apply to the extent that the  aggregate  net
book value of the personal  property  delivered to Buyer  hereunder is less than
$22,478,636.

     b.  Section  11.3.2  of the  Purchase  Agreement  is  amended  to  add  the
following:

     This Section  11.3.2 shall not apply to the extent that the  aggregate  net
book value of the personal  property  delivered to Buyer  hereunder is less than
$22,478,636.

     11. Exhibits/Documents Amended. The parties agree to amend certain exhibits
which were  attached to the Purchase  Agreement on June 5, 1998,  and to replace
such exhibits in their entirety with new versions of such exhibits,  which shall
be approved by the parties  and signed at Closing,  the  signatures  of the duly
authorized  officer(s) of each party to such exhibits to  conclusively  evidence
the parties'  approval thereof,  including,  without  limitation,  the following
exhibits:

         Bill of Sale                                         Exhibit 1.6.1(b)
         Transition Agreement                                 Exhibit 1.6.1(m)
         Medical Services Agreement                           Exhibit 1.6.1(n)
         Opinion Letter of Seller's Counsel                   Exhibit 5.1
         Opinion Letter of Buyer's Counsel                    Exhibit 6.1

     12. Schedules  Amended.  The parties agree to amend certain schedules which
were  attached to the Purchase  Agreement  on June 5, 1998,  and to replace such
schedules  in their  entirety  with  restated  versions  of such  schedules,  as
follows:

                                                       - 4 -


         Schedule 1. l(b)        Provider Agreements
         Schedule 1.1(c)         Contracts
         Schedule 1.l(d)         Tangible Personal Property
         Schedule 1.1(i)         Assets of Seller's Affiliates
         Schedule 1.1(j)         Software, Hardware and Related Data of Seller 
                                    or Seller's Affiliates
         Schedule 1.2(m)         Other Assets to be Excluded
         Schedule 1.4.4          Membership Base
         Schedule 2.1.6          Litigation
         Schedules 10.8(a)&(b)   Seller's Group 3000 Rates & Seller's
                                     Affiliates Standard Group 3000 Rates 
                                     (amended and combined)

     13. HCFA and OPM.  Notwithstanding  the terms of the HCFA and OPM  Novation
Agreements, as such terms may come to be, Buyer and Seller agree that as between
themselves,  the  relationship  between  Seller and Buyer  shall be  governed by
Sections 10.2 and 10.3 of the Purchase  Agreement and the following  addition to
Sections 11.1 and 11.2 of the Purchase Agreement:

     There  shall  be a  new  Section  11.1(f)  that  shall  state:  Any  claim,
obligation,  or other  liability  arising from the current OPM or HCFA contracts
(including,  but not limited to, any legal obligations regarding the accuracy of
the  encounter  data) with respect to any period prior to the Closing Date other
than as described in Sections 10.2 or 10.3.

     There  shall  be a  new  Section  11.2(f)  that  shall  state:  Any  claim,
obligation,  or other  liability  arising from the current OPM or HCFA contracts
(including,  but not limited to, any legal obligations regarding the accuracy of
the  encounter  data) with  respect to any period on or after the  Closing  Date
other than as described in Sections 10.2 or 10.3.

     14.  Directors.  The last  sentence of Section  10.4.4 shall be deleted and
replaced  with the  following:  Buyer  shall  pay for the  premiums  of all such
directors for the calendar year 1999.

     15. National Accounts. Buyer and Seller agree that the fixtures,  furniture
and  equipment  used by Seller's  Affiliates  in  connection  with its  National
Accounts Program and which are located in Northpoint I, 9229 LBJ Freeway,  Suite
202, Dallas, Texas 75243 are not Assets.

     16. Other  Provisions.  All other provisions of the Purchase  Agreement not
explicitly amended by this Amendment shall remain in full force and effect.


                                                   *************
                                            [signature pages to follow]

                                                       - 5 -

     IN WITNESS  WHEREOF,  the parties hereto have executed this Amendment as of
October 31, 1998.

                          BUYER:

                          TEXAS HEALTH CHOICE, L.C. (F/K/A HMO TEXAS, L.C.)

                          By:                                            

                          Name:                                          

                          Title:                          



                          SELLER:

                          KAISER FOUNDATION HEALTH PLAN OF TEXAS

                          By:                                                

                          Name:                                              

                          Title:                                             


     Sierra Health Services,  Inc. and Kaiser Foundation Hospitals have executed
this Amendment solely with respect to their respective guarantee obligations set
forth in Section 14 of the Purchase Agreement.

                          SIERRA HEALTH SERVICES, INC.

                          By:                                                

                          Name:                                              

                          Title:                                             

[signature page 1 of 2 - Amendment No. 2 to Asset Sale and Purchase Agreement]

                                                       - 6 -

                          KAISER FOUNDATION HOSPITALS

                          By:                                                  

                          Name:                                                

                          Title:                                               

Attachments:
Exhibit A                        Confidentiality Agreement dated March 24, 1998
Exhibit B                        Confidentiality Agreement dated March 27, 1998
Restated Schedule 1.1(b)         Provider Agreements
Restated Schedule 1.1(c)         Contracts
Restated Schedule 1.1(d)         Tangible Personal Property
Restated Schedule 1.1(i)         Assets of Seller's Affiliates
Restated Schedule 1.1(j)         Software, Hardware and Related Data of 
                                   Seller or Seller's Affiliates
Restated Schedule 1.2(m)         Other Assets to be Excluded
Restated Schedule 1.4.4          Membership Base
Restated Schedule 2.1.6          Litigation
Restated Schedules 10.8 (a)&(b)  Seller's Group 3000 Rates and Seller's 
                                   Affiliates Standard Group 3000 Rates



















[signature page 2 of 2 - Amendment No. 2 to Asset Sale and Purchase Agreement]


                                                       - 7 -