EXHIBIT 4.7


                                   SURVIVING
                             SHAREHOLDERS AGREEMENT

                            Dated as of June 1, 1998

                                     among

                         VANGUARD HEALTH SYSTEMS, INC.

                   MORGAN STANLEY CAPITAL PARTNERS III, L.P.

                            MSCP 892 INVESTORS, L.P.

                     MORGAN STANLEY CAPITAL INVESTORS, L.P.

                                      and

                            THE OTHER PERSONS LISTED
                         ON THE SIGNATURES PAGES HEREOF



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                               TABLE OF CONTENTS

                                   ---------
                                                                           Page
                                                                           ----

                                   ARTICLE 1
                                  DEFINITIONS

Section 1.01.  Definitions ...............................................   2

                                   ARTICLE 2
                RIGHTS AND OBLIGATIONS WITH RESPECT TO TRANSFER

Section 2.01.  General Restrictions.......................................   9
Section 2.02.  Agreement to Be Bound......................................   9
Section 2.03.  Legends....................................................  10
Section 2.04.  Additional Restrictions on Certain Shares..................  11
Section 2.05.  Repurchase of Common Shares Held by Management
               Investors .................................................  11

                                   ARTICLE 3
                              REGISTRATION RIGHTS

Section 3.01.  Definitions................................................  13
Section 3.02.  Demand Registration Rights.................................  14
Section 3.03.  Piggy-Back Registration Rights.............................  18
Section 3.04.  Registration Procedures....................................  20
Section 3.05.  Participation in Underwritten Registrations................  23
Section 3.06.  Holdback Agreements........................................  23
Section 3.07.  Indemnification ...........................................  24

                                   ARTICLE 4
                                 MISCELLANEOUS

Section 4.01.  Headings...................................................  28
Section 4.02.  No Inconsistent Agreements; Conflicting Charter or Bylaw
               Provision .................................................  28
Section 4.03.  Entire Agreement...........................................  28
Section 4.04.  Notices....................................................  29
Section 4.05.  Applicable Law; Submission to Jurisdiction.................  29
Section 4.06.  Severability...............................................  30
Section 4.07.  Successors, Assigns, Transferees...........................  30
Section 4.08.  Amendments; Waivers........................................  30
Section 4.09.  Counterparts...............................................  31


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                                                                           Page
                                                                           ----
Section 4.10.  Recapitalization, etc......................................  31
Section 4.11.  Remedies...................................................  31
Section 4.12.  Fees and Expenses..........................................  31
Section 4.13.  Reasonable Best Efforts....................................  31
Section 4.14.  Effectiveness of This Agreement............................  31
Section 4.15.  Termination of Article 2...................................  32

Exhibit A  -  Form of Agreement to Be Bound

Annex I    -  Allocation of Founders Shares, Initial Shares and Initial Options


                                      ii

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                                   SURVIVING
                             SHAREHOLDERS AGREEMENT

     SURVIVING SHAREHOLDERS AGREEMENT dated as of June 1, 1998 among Vanguard
Health Systems, Inc., a Delaware corporation (the "Issuer"), Morgan Stanley
Capital Partners III, L.P., a Delaware limited partnership ("MSCP III"), MSCP
III 892 Investors, L.P., a Delaware limited partnership ("892 Investors"),
Morgan Stanley Capital Investors, L.P., a Delaware limited partnership
("MSCI"), and each of the other Persons listed on the signature pages hereof.
Each of the parties to this Agreement (other than the Issuer) and any other
Person who, pursuant to the terms hereof, shall become a party to or agree to
be bound by the terms of this Agreement after the date hereof is sometimes
hereinafter referred to as a "Holder".

     WHEREAS, the parties hereto have entered into a Subscription Agreement
dated as of June 1, 1998 (as amended from time to time, the "Subscription
Agreement") pursuant to which the Holders purchased Common Shares (as defined
below) from the Issuer;

     WHEREAS, the parties hereto have entered into a Shareholders Agreement on
and as of the date hereof (as amended from time to time, the "Shareholders
Agreement") pursuant to which the parties desire to restrict the sale,
assignment, transfer, encumbrance or other disposition of the Common Shares and
to provide for certain rights and obligations relating to the capital stock of
the Issuer and certain matters relating to the conduct of the business and the
affairs of the Issuer following the date hereof;

     WHEREAS, upon the consummation of a Liquidity Event, (i) the Shareholders
Agreement shall terminate pursuant to Section 5.15 thereof and (ii) this
Agreement will become effective against the parties hereto pursuant to Section
4.14 hereof; and

     WHEREAS, pursuant to this Agreement, the parties hereto desire to restrict
the sale, assignment, transfer, encumbrance or other disposition of the Common
Shares and to provide for certain rights and obligations relating to the
capital stock of the Issuer and certain matters relating to the conduct of the
business and the affairs of the Issuer following the date of the termination of
the Shareholders Agreement.

     NOW, THEREFORE, the parties hereto agree as follows:


<PAGE>


                                   ARTICLE 1
                                  DEFINITIONS

     Section 1.01. Definitions. (a) The following terms, as used herein, have
the following meanings:

     "Affiliate" means, with respect to any Person, any other Person, directly
or indirectly, controlling, controlled by, or under common control with, such
Person; provided that, for purposes of this Agreement, (i) the Issuer shall not
be treated as an Affiliate of any Holder or such Holder's Affiliates and (ii) a
Holder and its Affiliates shall not be treated as Affiliates of the Issuer or
its Affiliates or as Affiliates of any other Holder or such Holder's Affiliates
solely by reason of its ownership interest in the Issuer. For purposes of this
definition, the term "control" (including the correlative terms "controlling",
"controlled by" and "under common control with") means the possession, direct
or indirect, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities,
by contract, or otherwise.

     "Board of Directors" means the Board of Directors of the Issuer.

     "Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in the City of New York are authorized by law to close.

     "Cause" means, with respect to any Management Investor who has an
employment agreement with the Issuer, "Cause" as defined in such Management
Investor's employment agreement with the Issuer or, if such Management Investor
does not have an employment agreement with the Issuer, "Cause" shall mean (i)
the conviction of such Management Investor by a court of competent jurisdiction
of a criminal act classified as a felony or involving moral turpitude following
the exhaustion of all possible appeals, (ii) the willful and continued failure
by such Management Investor to substantially perform his or her duties with the
Issuer (other than any such failure resulting from his or her incapacity due to
physical or mental illness or any such actual or anticipated failure after the
issuance of a notice of termination for Good Reason by such Management Investor
pursuant to Section 7.1 of his or her Severance Protection Agreement with the
Issuer) after a written demand for substantial performance is delivered to such
Management Investor by the Issuer, which demand specifically identifies the
manner in which the Issuer believes that such Management Investor has not
substantially performed his or her duties, or (iii) the willful engaging by
such Management Investor in conduct which is demonstrably and materially
injurious to the Issuer or its subsidiaries, monetarily or otherwise. For
purposes of clauses (ii) and (iii) of this definition, no act, or failure to
act, on such Management Investor's part shall be deemed "willful" unless done,
or omitted to be done, by such Management


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Investor not in good faith and without reasonable belief that his or her act,
or failure to act, was in the best interest of the Issuer.

     "Commission" means the Securities and Exchange Commission or any successor
commission or agency having similar powers.

     "Common Shares" means shares of the common stock of the Issuer, par value
$0.01 per share.

     "Cost" means, with respect to any share of capital stock or other equity
security of the Issuer, the price paid for such share or other security, it
being understood that (i) with respect to the Initial Shares, "Cost" shall be
equal to $100 per share, (ii) with respect to a number of Common Shares
purchased prior to the date hereof set forth opposite the name of each
Management Investor under the heading "Founders Shares" on Annex I hereto,
"Cost" shall be equal to the per share Purchase Price (as defined in the
Subscription Agreement") and (iii) with respect to (A) the Initial Options,
"Cost" shall be equal to the "Cost" thereof as specified on such Annex and (B)
all other stock options of the Issuer, "Cost" shall be zero.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

     "Executive Managers" means collectively Charles N. Martin, Jr., W.
Lawrence Hough, Joseph D. Moore and Ronald P. Soltman.

     "Good Reason" means, with respect to any Management Investor who has an
employment agreement with the Issuer, "Good Reason" as defined in such
Management Investor's employment agreement with the Issuer or, if such
Management Investor does not have an employment agreement with the Issuer,
"Good Reason" shall mean the occurrence (without such Management Investor's
express written consent), following a Change in Control (as defined in the
Severance Protection Agreements between each Management Investor (other than
the Executive Managers) and the Issuer dated as of the date hereof) during the
term of this Agreement (including any events prior to a Change of Control that
are deemed to have occurred following a Change of Control pursuant to Section
6.1 of such Severance Protection Agreements), of any one of the following acts
by the Issuer, or failures by the Issuer to act, unless, in the case of any act
or failure to act described below, such act or failure to act is corrected
prior to the date of termination of employment of such Management Investor
specified a notice of termination given by such Management Investor in respect
thereof (which notice shall be delivered at least 15 and not more than 60 days
prior to the termination by the Management Investor of his employment): (A) any
change in such


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Management Investor's title, authorities, responsibilities (including reporting
responsibilities) which represents, in such Management Investor's reasonable
judgment, an adverse change from his status, title, position or
responsibilities (including reporting responsibilities) which were in effect
immediately prior to the Change in Control or from his status, title, position
or responsibilities (including reporting responsibilities) which were in effect
following a Change in Control pursuant to such Management Investor's consent to
accept any such change; (B) the assignment to him of any duties or work
responsibilities which in his reasonable judgment are inconsistent with his
status, title, position or work responsibilities; or any removal of him from,
or failure to reappoint or reelect him to, any of such positions, except if any
such changes are because of disability, retirement, death or Cause; (C) a
reduction by the Issuer in such Management Investor's annual base salary as in
effect on the date hereof or as the same may be increased from time to time
except for across-the-board salary reductions similarly affecting all senior
executives of the Issuer and all senior executives of any Person in control of
the Issuer; (D) the relocation of such Management Investor's office at which he
is to perform his duties, to a location more than thirty (30) miles from the
location at which such Management Investor performed his duties prior to the
Change in Control, except for required travel on the Issuer's business to an
extent substantially consistent with his business travel obligations prior to
the Change in Control; (E) if such Management Investor had been based at the
Issuer's principal executive offices immediately prior to the Change in
Control, the relocation of the Issuer's principal executive offices to a
location more than 30 miles from the location of such offices immediately prior
to the Change in Control; (F) the failure by the Issuer, without such
Management Investor's consent, to pay to such Management Investor any portion
of his current compensation, or to pay to such Management Investor any portion
of an installment of deferred compensation under any deferred compensation
program of the Issuer, within seven (7) days of the date that such compensation
is due; (G) the failure by the Issuer to continue in effect any stock-based
and/or cash annual- or long-term incentive compensation plan in which such
Management Investor participates immediately prior to the Change in Control,
unless such Management Investor participates after the Change in Control in
other plans generally available to senior executives of the Issuer and senior
executives of any Person in control of the Issuer that are comparable in the
aggregate; (H) the failure by the Issuer to continue to provide such Management
Investor with benefits substantially similar in aggregate value to such
Management Investor in the aggregate to those enjoyed by such Management
Investor under any of the Issuer's pension, life insurance, medical, health and
accident, or disability plans in which such Management Investor was
participating immediately prior to the Change in Control, unless such
Management Investor participates after the Change in Control in other benefit
plans generally available to senior executives of the Issuer and senior
executives of any Person in control of the Issuer that are comparable in the
aggregate; (I) the


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<PAGE>


adverse and substantial alteration of the nature and quality of the office
space within which such Management Investor performed his duties prior to a
Change in Control as well as in the secretarial and administrative support
provided to such Management Investor, provided, however, that a reasonable
alteration of the secretarial or administrative support provided to such
Management Investor as a result of reasonable measures implemented by the
Issuer to effectuate a cost-reduction or consolidation program shall not
constitute Good Reason hereunder; (J) any material breach by the Issuer of any
provision of such Management Investor's Severance Protection Agreement; or (K)
any termination of such Management Investor's employment which is not effected
pursuant to a notice of termination setting forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of such
Management Investor's employment; provided that in respect of each of clauses
(A) through (K), a Management Investor's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder.

     "Initial Options" means the stock options of the Issuer set forth opposite
the name of each Management Investor under the heading "Initial Options" on
Annex I hereto.

     "Initial Shares" means, with respect to any Management Investor, the
number of Common Shares purchased prior to the date hereof set forth under the
heading "Initial Shares" and opposite the name of such Management Investor on
Annex I hereto.

     "IPO" means the initial Public Offering.

     "Liquidity Event" means the first to occur of (i) the consummation of the
IPO, (ii) the sale (by way of merger or otherwise) by the MSCP Entities for
cash of all or substantially all of their aggregate equity interests in the
Issuer in one transaction or a series of related transactions, (iii) the sale
(by way of merger or otherwise) by the MSCP Entities, for capital stock of
another Person, of all or substantially all of their equity interests in the
Issuer in one transaction or a series of related transactions, but only if all
of such capital stock received by the MSCP Entities (x) has been registered
under the Securities Act and (y) is capable of being immediately sold by the
MSCP Entities upon consummation of such transaction(s) on a national securities
exchange or quotation system in accordance with applicable law (the capital
stock described in clauses (x) and (y) is hereinafter referred to as
"Marketable Securities"), (iv) the sale (by way of merger or otherwise) for
cash and/or Marketable Securities of all or substantially all of the assets
(including stock) of the Issuer and its Subsidiaries in one


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transaction or a series of related transactions or (v) the liquidation or
dissolution of the Issuer and its Subsidiaries.

     "Management Investors" means each Person listed on Annex I hereto,
regardless of whether any such Person is an employee of the Issuer at any
applicable time.

     "Martin Percentage" means, as of any date, (i) the aggregate number of
Common Shares Transferred prior to such date by Charles N. Martin, Jr., any
Holder that is an Affiliate of Charles N. Martin, Jr. and their respective
Permitted Transferees (other than Common Shares Transferred to other Permitted
Transferees of Charles N. Martin, Jr.), divided by (ii) the aggregate number of
Common Shares acquired by Charles N. Martin, Jr. and any such Affiliate on or
prior to such date (by way of purchase, upon exercise of Options or otherwise).

     "MSCP DIK" means any Transfer by any MSCP Fund of any of its Common Shares
to partners of such MSCP Fund pursuant to a distribution in respect of the
partnership interests of such MSCP Fund in accordance with such MSCP Fund's
partnership agreement as then in effect.

     "MSCP Entities" means the MSCP Funds and their Permitted Transferees.

     "MSCP Funds" means MSCP III, 892 Investors, MSCI and any successors
thereof.

     "MSCP Percentage" means, as of any date, (i) the aggregate number of
Common Shares Transferred prior to such date by the MSCP Entities, including,
without limitation, any Common Shares Transferred pursuant to a MSCP DIK (other
than (x) Common Shares Transferred between MSCP Entities and (y) any Common
Shares forfeited by the MSCP Entities on or prior to such date pursuant to
Section 2.08 of the Shareholders Agreement) divided by (ii) the aggregate
number of Common Shares acquired (by way of purchase or otherwise) by the MSCP
Entities on or prior to such date (other than any Common Shares forfeited by
the MSCP Entities on or prior to such date pursuant to Section 2.08 of the
Shareholders Agreement).

     "Option Carry Plan" means the Vanguard Health Systems, Inc. Option Carry
Plan dated as of the date hereof.

     "Option Plans" means (i) the Option Carry Plan, (ii) the Vanguard Health
Systems, Inc. 1998 Stock Option Plan, (iii) the Vanguard Health Systems, Inc.
Nonqualified Initial Option Plan, in each case dated as of the date hereof and
as


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the same may be amended from time to time and (iv) any other option or
equity-based compensation plan adopted by the Issuer after the date hereof.

     "Options" means stock options granted pursuant to the Option Plans.

     "Permitted Transferee" means:

          (i) with respect to any MSCP Fund, (v) any Affiliate of such MSCP
     Fund, (w) any general or limited partner of such MSCP Fund (a "MSCP
     Partner"), (x) any officer, general partner, director or limited partner
     of such MSCP Fund or a MSCP Partner (collectively, "MSCP Associates"), (y)
     the heirs, executors, administrators, testamentary trustees, legatees or
     beneficiaries of any MSCP Associate and (z) a trust, corporation,
     partnership or other entity substantially all the economic interests of
     which are held by or for the benefit of the MSCP Funds, their Affiliates,
     MSCP Partners, MSCP Associates, their spouses or their children (whether
     by birth or adoption);

          (ii) with respect to any Holder that is an individual, (w) the
     spouse, issue, grandparents, grandchildren, aunts, uncles, nieces and
     nephews (in each case, whether natural or adopted) of such Holder, (x) a
     Person to whom Common Shares are Transferred by such Holder by will or the
     laws of descent and distribution, (y) a trust established for the
     exclusive benefit of such Holder or his or her Permitted Transferees and
     (z) if such Holder is a Management Investor, a fund in any community
     foundation established by such Management Investor or a foundation
     established by such Management Investor for the sole purpose of making
     charitable donations; and

          (iii) with respect to any other Holder, any Affiliate of such Holder.

     "Person" means an individual, partnership, corporation, limited liability
company, trust, joint stock company, association, joint venture, or any other
entity or organization.

     "Public Offering" means any underwritten public offering of equity
securities of the Issuer pursuant to an effective registration statement under
the Securities Act other than pursuant to a registration statement on Form S-4
or Form S-8 or any successor or similar form.

     "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.


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<PAGE>


     "Subsidiary" means any entity of which ownership interests having ordinary
voting power to elect a majority of the board of directors or other Persons
performing similar functions are at the time directly or indirectly owned by
the Issuer.

     "Transaction Agreements" means this Agreement, the Subscription Agreement,
the Shareholders Agreement and the other Ancillary Agreements (as defined in
the Subscription Agreement).

     "Transfer" means, with respect to any security, (i) when used as a verb,
to sell, assign, dispose of, exchange or otherwise transfer such security or
any interest therein, whether directly or indirectly, or agree or commit to do
any of the foregoing and (ii) when used as a noun, a direct or indirect sale,
assignment, disposition, exchange or other transfer or any agreement or
commitment to do any of the foregoing.

     (b) Each of the following terms is defined in the Section set forth
opposite such term:

                      Term                           Section
                      ----                           -------
         Annual Revenues                             2.05
         Competitive Activity                        2.05(a)
         Disadvantageous Condition                   3.02
         892 Investors                               Preamble
         Holder                                      Preamble
         Indemnified Party                           3.07(c)
         Indemnifying Party                          3.07(c)
         Inspectors                                  3.04(h)
         Issuer                                      Preamble
         Management Seller                           2.05(b)
         Marketable Securities                       1.01
         Maximum Offering Size                       3.02(b)
         MSCI                                        Preamble
         MSCP III                                    Preamble
         Priority Securities                         3.03(a)
         Records                                     3.04(h)
         Registering Holders                         3.01
         Registrable Common Shares                   3.01
         Registration Expenses                       3.01
         Requesting Holder                           3.02(a)
         Rule 144                                    2.02
         Shareholders Agreement                      Recitals
         Subscription Agreement                      Recitals


                                       8

<PAGE>


                                   ARTICLE 2
                RIGHTS AND OBLIGATIONS WITH RESPECT TO TRANSFER

     Section 2.01. General Restrictions. (a) No Holder may Transfer any Common
Shares or any interest therein in a private Transfer, unless such private
Transfer is permitted by, and subject to the provisions of, this Article 2.

     (b) Notwithstanding anything herein to the contrary and except for
Transfers by a Management Investor to his or her Permitted Transferees, prior
to the first anniversary of the IPO, each Management Investor and each
Permitted Transferee of any Management Investor agrees not to Transfer,
mortgage, pledge, grant a security interest or participation interest in or
otherwise encumber, any of his or her Common Shares issued upon exercise of
Options granted under the Option Carry Plan.

     (c) Notwithstanding anything herein to the contrary, each Transfer of
Common Shares must be made in compliance with the Securities Act, any
applicable state and foreign securities law and this Article 2. Each Holder
understands and agrees that the Common Shares have not been registered under
the Securities Act and that they are restricted securities. Any attempt to
Transfer, pledge, grant a security interest or participation in, or otherwise
encumber any Common Shares not in compliance with this Agreement shall be null
and void and neither the Issuer nor any transfer agent shall give any effect in
the Issuer's transfer records to such Transfer, pledge, grant or encumbrance.

     (d) No Holder shall (i) enter into any agreement or arrangement of any
kind with any Person with respect to its Common Shares inconsistent with the
provisions of this Agreement or for the purpose or with the effect of denying
or reducing the rights of any other Holder under this Agreement including, but
not limited to, agreements or arrangements with respect to the Transfer or
voting of its Common Shares or (ii) act, for any reason, as a member of a group
or in concert with any other Person in connection with the Transfer or voting
of its Common Shares in any manner which is inconsistent with the provisions of
this Agreement.

     Section 2.02. Agreement to Be Bound. No Transfer of Common Shares
otherwise permitted pursuant to Article 2 (other than Transfers pursuant to a
Public Offering or Rule 144 under the Securities Act (or any successor
provision) (as the same may be amended from time to time, "Rule 144") or
Transfers to the Issuer) shall be effective unless (i) the certificates
representing such Common Shares delivered to such transferee shall bear the
legend set forth in Section 2.03, if required by such Section and (ii) prior to
such Transfer, such transferee (if not


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already a party to this Agreement) shall have executed and delivered to the
Issuer an instrument or instruments substantially in the form of Exhibit A
hereto confirming that such transferee has agreed to be bound as a "Holder" by
the terms of this Agreement, a copy of which instrument shall be maintained on
file with the Secretary of the Issuer and shall include the address of such
transferee to which notices hereunder shall be sent; provided that the
provisions of clause (ii) above shall not be applied to any MSCP DIK in
connection with which any MSCP Fund determines not to require its partners to
have agreed in writing to be bound by the terms of this Agreement or to be
entitled to the benefit hereof. The Issuer agrees that prior to issuing Common
Shares to (x) the owner of any hospital or hospital system in partial
consideration for the acquisition of assets from the owner of such hospital or
hospital system or (y) any holder of any Options who is not otherwise a party
to this Agreement, the Issuer will require such owner or such holder, as the
case may be, to agree to be bound by this Agreement in the manner described
above.

     Section 2.03. Legends. (a) Each certificate evidencing outstanding Common
Shares acquired by any Holder shall bear a legend in substantially the
following form:

          THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
          REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
          SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, OR TRANSFERRED EXCEPT
          IN COMPLIANCE THEREWITH. THE SECURITIES REPRESENTED BY THIS
          CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER
          AS SET FORTH IN THE SURVIVING SHAREHOLDERS AGREEMENT DATED AS OF JUNE
          1, 1998, COPIES OF WHICH WILL BE FURNISHED BY VANGUARD HEALTH
          SYSTEMS, INC. UPON REQUEST AND WITHOUT CHARGE.

     (b) If any Common Shares (i) shall cease to be Registrable Common Shares
or (ii) may be sold pursuant to Rule 144 or otherwise in the public market
without being registered under the Securities Act, upon the written request of
the Holder thereof (who shall provide with such request evidence reasonably
satisfactory to the Issuer (which may include an opinion of counsel) that such
Common Shares may be sold in the case of any sale under (ii) above), the Issuer
shall issue to such Holder a new certificate evidencing such Common Shares
without the first sentence of the legend required by Section 2.03(a) hereof
endorsed thereon. If any Common Shares shall cease to be subject to the
restrictions on Transfer set forth in this Agreement, the Issuer shall, upon
the


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<PAGE>


written request of the Holder thereof, issue to such Holder a new certificate
evidencing such Common Shares without the second sentence of the legend
required by Section 2.03(a) hereof endorsed thereon.

     Section 2.04. Additional Restrictions on Certain Shares. (a)
Notwithstanding anything in this Agreement to the contrary and except as
provided below in Section 2.04(b), none of Charles N. Martin, Jr., any Holder
that is an Affiliate of Charles N. Martin, Jr. or any of their respective
Permitted Transferees may Transfer (other than to a Permitted Transferee of
Charles N. Martin, Jr.) any Common Shares if the number of Common Shares
proposed to be Transferred, when added to the aggregate number of Common Shares
previously Transferred by Charles N. Martin, Jr., any such Affiliate and their
respective Permitted Transferees to Persons other than Permitted Transferees of
Charles N. Martin, Jr., would cause the Martin Percentage to equal or exceed
the MSCP Percentage on the date of such Transfer.

     (b) Notwithstanding the provisions of Section 2.04(a), during each period
of 12 consecutive months beginning on the date of the consummation of the IPO,
Charles N. Martin, Jr. may Transfer up to 5% of his Common Shares (which 5%, if
not Transferred during any such period, may be carried forward to subsequent
periods), in no event to exceed an aggregate of 35% of his Common Shares to the
extent, but only to the extent, necessary to pay the exercise price and
withholding taxes payable in connection with the exercise of Options to the
extent permitted by the terms of the Option Plans or to fund the payment by Mr.
Martin of taxes (excluding the amount of any taxes attributable to an increase
in income tax rates) relating to the Common Shares which the parties did not
expect to be imposed.

     Section 2.05. Repurchase of Common Shares Held by Management Investors.
(a) If any Management Investor voluntarily terminates his or her employment
with the Issuer other than for Good Reason or is terminated by the Issuer for
Cause and, prior to June 1, 2003, such Management Investor engages in any
Competitive Activity, then the Issuer shall have the right, exercisable as set
forth in Section 2.05(b), to purchase from such Management Investor (and his or
her Permitted Transferees) (i) any Common Shares issued upon exercise of
Options granted pursuant to the Option Carry Plan and (ii) any and all other
shares of capital stock or other equity securities of the Issuer then owned by
such Management Investor (and his or her Permitted Transferees) for a purchase
price in cash for such share or other security equal to the Cost thereof. The
Issuer may, at its discretion and with the consent of the compensation
committee of the Board of Directors (or, if at such time no such committee
exists, the Board of Directors) assign its repurchase right under this Section
2.05(a) to the other Management Investor(s). A Management Investor shall be
deemed to engaged in "Competitive


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Activity" for purposes of this Agreement if such Management Investor shall,
directly or indirectly, personally or through its Affiliates, own any interest
or invest in, operate, join, control, or participate as a partner, director,
principal, officer, or agent of, enter into the employment of, act as a
consultant to, or perform any services for, any Person (other than the Issuer
and/or one or more of its Subsidiaries) that is engaged in the acquisition,
ownership, operation, and/or management of any hospital, hospital system or
hospital management company, other than (i) ownership of not more than 5% of
the outstanding voting securities of any public corporation or (ii) working as
a certified public accountant or an attorney for an accounting or law firm.

     (b) If the Issuer elects (or, pursuant to this Section 2.05(b), is
directed to elect) to exercise any of its rights set forth in Section 2.05(a),
the Issuer shall deliver written notice to such effect to the relevant
Management Investor(s) and his or her Permitted Transferee(s) (each, a
"Management Seller") promptly, but in no event later than 90 days, following
the occurrence of the event giving rise to such repurchase right. Such notice
shall set forth the number of Common Shares, Options and/or other equity
securities of the Issuer that the Issuer has elected to purchase from such
Management Seller and the total consideration to be paid pursuant to the sale
of such Common Shares, Options, and/or other equity securities of the Issuer,
as the case may be. Each Management Seller shall deliver to the Issuer, within
10 days of the applicable notice, the certificate or certificates representing
the number of Common Shares required to be sold by such Management Seller(s)
duly endorsed in blank or accompanied by a duly executed stock power, together
with all other documents required to be executed by such Management Seller(s)
in connection with such transaction, including without limitation copies of
executed option agreements relating to the Options, if applicable. If any such
Management Seller(s) fails to deliver such certificates or documents to the
Issuer, the Issuer shall cause the books and records of the Issuer to show that
such securities are bound by the provisions of this Section 2.05 and that such
securities shall be transferred only to the Issuer upon surrender for Transfer
by such Management Seller(s). Notwithstanding anything herein to the contrary,
MSCP III may, by delivery of written notice to the Issuer, require the Issuer
to exercise any of its repurchase rights set forth in this Section 2.05 in
respect of securities owned by any Executive Manager.


                                      12
<PAGE>


                                   ARTICLE 3
                              REGISTRATION RIGHTS

     Section 3.01. Definitions. The following terms, as used in this Article 3,
have the following meanings:

     "Registering Holders" means Holders whose Registrable Common Shares are
covered by or offered pursuant to a registration statement filed pursuant to
this Article 3.

     "Registrable Common Shares" means all Common Shares of the Issuer owned by
the Holders. Registrable Common Shares shall cease to be Registrable Common
Shares when (i) a registration statement with respect to the sale of such
Common Shares shall have become effective under the Securities Act and such
Common Shares shall have been disposed of pursuant to such registration
statement, or (ii) such Common Shares shall have ceased to be outstanding.

     "Registration Expenses" means all (i) registration, qualification and
filing fees, (ii) fees and expenses of compliance with securities or blue sky
laws (including reasonable fees and disbursements of a qualified independent
underwriter, if any, counsel in connection therewith and the reasonable fees
and disbursements of counsel in connection with blue sky qualifications of the
Registrable Common Shares), (iii) printing expenses, (iv) internal expenses of
the Issuer (including, without limitation, all salaries and expenses of
officers and employees performing legal or accounting duties), (v) fees and
disbursements of counsel for the Issuer, (vi) customary fees and expenses for
independent certified public accountants retained by the Issuer (including the
expenses of any comfort letters or costs associated with the delivery by
independent certified public accountants of a comfort letter or comfort
letters), (vii) fees and expenses of any special experts retained by the Issuer
in connection with such registration, (viii) reasonable fees and expenses of
one separate firm of attorneys for the Registering Holders (which counsel shall
be selected by the Holders selling securities constituting a majority of all
securities to be included in such registration in the case of any registration
pursuant to the exercise of its right under Section 3.02) and (ix) fees and
expenses of listing the Registrable Common Shares on a securities exchange; but
shall not include any out-of-pocket expenses of the Registering Holders,
transfer taxes, fees and expenses of underwriter's counsel, underwriting fees
or discounts or commissions attributable to the sale of Registrable Common
Shares.

     "Requesting Holder" means either (i) the MSCP Funds collectively or (ii)
other Holders owning more than 15% of the Registrable Common Shares outstanding
at such time.


                                      13
<PAGE>


     Section 3.02. Demand Registration Rights. (a) Registration on Request. If
a Requesting Holder desires to effect the registration under the Securities Act
of outstanding Registrable Common Shares, such Requesting Holder may make a
written request that the Issuer effect such registration; provided that (A)
such registration is expected to result in an aggregate price to the public of
not less than $50 million, (B) if such Requesting Holder is the MSCP Funds,
such request is made after the earlier of (x) the third anniversary of the date
hereof and (y) the first day after the expiration of any "lock-up" period
required by the underwriters in connection with the IPO and (C) if such
Requesting Holder consists of Holders other than the MSCP Funds, such request
is made after the first day after the expiration of any "lock-up" period
required by the underwriters in connection with the IPO. Each such request will
specify the number of shares of Registrable Common Shares proposed to be sold
and will also specify the intended method of disposition thereof; provided that
the Issuer shall not be obligated to effect any shelf registration of
Registrable Common Shares pursuant to Rule 415 under the Securities Act. The
Issuer will promptly give written notice of such requested registration to all
other Holders of Registrable Common Shares, and thereupon will use its best
efforts to effect, as promptly as practicable, the registration under the
Securities Act of:

          (ii) the Registrable Common Shares which the Issuer has been so
     requested to register by such Requesting Holder pursuant to this
     Section 3.02; and

          (iii) the Registrable Common Shares which the Issuer has been
     requested to register by all Holders (other than such Requesting Holder)
     pursuant to Section 3.03 by written request given to the Issuer within 20
     days after the giving of such written notice by the Issuer (which request
     shall specify the intended method of disposition of such Registrable
     Common Shares);

all to the extent necessary to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Common Shares so to
be registered; provided that:

          (x) the Issuer shall not be obligated to file a registration
     statement relating to a registration request pursuant to this Section 3.02
     at any time during the six-month period immediately following the
     effective date of another registration statement filed pursuant to this
     Section 3.02;

          (y) the Issuer shall not be obligated to file more than (i) four
     registration statements on Form S-1 or S-2 pursuant to this Section 3.02 on
     behalf of a Requesting Holder consisting of the MSCP Funds (it being


                                      14
<PAGE>


     understood that the Issuer shall be obligated to file an unlimited number
     of registration statements on Form S-3 (or any successor form) if
     requested by a Requesting Holder consisting of the MSCP Funds pursuant to
     the provisions of this Section 3.02) and (ii) two registration statements
     pursuant to this Section 3.02 on behalf of a Requesting Holder consisting
     of Holders other than the MSCP Funds; and

          (z) at the time of any request to register Registrable Common Shares
     pursuant to this Section 3.02, if the Board of Directors determines in its
     good faith reasonable judgment that the Issuer should not file any
     registration statement otherwise required to be filed pursuant to Section
     3.02(a) because the Issuer is engaged in or in good faith plans to engage
     in any financing, acquisition or other material transaction which would be
     adversely affected by the filing of a registration statement otherwise
     required to be filed pursuant to this Section 3.02 (a "Disadvantageous
     Condition"), the Issuer shall be entitled to postpone for the shortest
     reasonable period of time (but not exceeding 120 days from the date of the
     request), the filing of such registration statement and shall promptly
     give the Requesting Holder written notice of such determination,
     containing a general statement of the reasons for such postponement and an
     approximation of the anticipated delay. If the Issuer shall so postpone
     the filing of the registration statement, the Requesting Holder shall have
     the right to withdraw the request for registration by giving written
     notice to the Issuer within 30 days after receipt of the notice of
     postponement. Such right to delay a request for registration pursuant to
     this Section 3.02 may not be exercised more than once in any 1-year period.

     Promptly after the expiration of the 20-day period referred to in clause
(ii) above, the Issuer shall notify each holder of Registrable Common Shares to
be included in the registration of the other Holders requesting Registrable
Common Shares to be included therein and the number of Registrable Common
Shares requested to be included therein. The Requesting Holder may, at any time
prior to the effective date of the registration statement relating to such
registration, revoke such request, without liability to any other Holder
holding Registrable Common Shares requested to be registered pursuant to clause
(ii) above, by providing a written notice to the Issuer revoking such request;
provided that, if as a result thereof such registration is abandoned, all
Registration Expenses and all other fees and expenses reasonably incurred by
other Holders including Registrable Common Shares in such registration shall be
borne by the Requesting Holder revoking such registration. If the Issuer
determines to take any action pursuant to clause (z) above, the Issuer shall
deliver a notice to the Requesting Holder and to any other Holder selling
Registrable Common Shares pursuant to an effective registration statement to
such effect. Upon the receipt of any such notice, such


                                      15
<PAGE>


Holders shall forthwith discontinue use of the prospectus contained in such
registration statement and, if so directed by the Issuer, shall deliver to the
Issuer all copies of the prospectus then covering such Registrable Common
Shares current at the time of receipt of such notice (or, if no registration
statement has yet been filed, all drafts of the prospectus covering such
Registrable Common Shares). If any Disadvantageous Condition shall cease to
exist, the Issuer shall promptly notify the Requesting Holder (and any other
Holder who shall have ceased selling securities pursuant to an effective
registration statement as a result of such Disadvantageous Condition) to such
effect. If so requested by the Requesting Holder, the Issuer shall, if any
registration statement shall have been withdrawn, at such time as it is
possible or, if earlier, at the end of the 120-day period following such
withdrawal, file a new registration statement covering the Registrable Common
Shares that were covered by such withdrawn registration statement, and the
effectiveness of such registration statement shall be maintained for such time
as may be necessary so that the period of effectiveness of such new
registration statement, when aggregated with the period during which such
withdrawn registration statement was effective, if any, shall be such time as
may be otherwise required by this Agreement.

     (b) Priority Participation in Requested Registrations. If a registration
pursuant to this Section 3.02 involves a Public Offering and the managing
underwriter shall advise the Issuer that, in its view, the number or proposed
mix of securities requested to be included in such registration (including
securities which the Issuer requests to be included which are not Registrable
Common Shares) exceeds the largest number of securities which can be sold
without having a material adverse effect on such offering (the "Maximum
Offering Size"), including the price at which such securities can be sold, the
Issuer will include in such registration:

          (i) first, the Registrable Common Shares requested to be included in
     such registration pursuant to Section 3.02(a)(i) or (ii) by all Holders,
     allocated (if necessary) pro rata among such Holders on the basis of the
     relative number of Registrable Common Shares each such Holder has
     requested to be included in such registration; and

          (ii) second, Common Shares to be sold for the account of other
     Persons (including the Issuer), with such priorities among them as the
     Issuer shall determine.

     (c) Registration Statement Form. Registrations under this Section 3.02
shall be on such appropriate registration form of the Commission (i) as shall
be selected by the Issuer, subject to Section 3.02(a), and as shall be
reasonably acceptable to the Requesting Holder and (ii) as shall permit the
disposition of such


                                      16
<PAGE>


Registrable Common Shares in accordance with the method or methods of
disposition intended on the part of the Requesting Holder. Notwithstanding
anything herein to the contrary, if, pursuant to a registration request under
this Section 3.02, the Issuer proposes to effect registration by filing of a
registration statement on Form S-3 (or any successor or similar short-form
registration statement) and any managing underwriter shall advise the Issuer in
writing that, in its opinion, the use of another form of registration statement
is of material importance to the success of such proposed offering, then such
registration shall be effected on such other form.

     (d) Expenses. Except as specifically provided herein, the Issuer will pay
promptly all Registration Expenses in connection with the registration requests
made pursuant to this Section 3.02. The Requesting Holder shall pay all
out-of-pocket expenses of the Requesting Holder, transfer taxes, fees and
expenses of underwriter's counsel and underwriting discounts and commissions,
if any, relating to the sale or disposition of such Requesting Holder's
Registrable Common Shares pursuant to a registration statement requested
pursuant to this Section 3.02.

     (e) Effective Registration Statement. A registration requested pursuant to
this Section 3.02 shall not be deemed to have been effected until the
registration statement has been effective (and not subject to any stop order,
injunction or other order or requirement of the Commission or other
governmental agency or court for any reason) for a period of 120 days following
the date on which such registration statement was declared effective or such
shorter period which will terminate when all Registrable Common Shares covered
by such registration statement have been sold.

     (f) Underwriters. The managing underwriter or underwriters of any Public
Offering effected pursuant to this Section 3.02 shall be selected by the
Registering Holders whose securities constitute a majority of all securities to
be included in such registration and the price, terms and provisions of the
offering shall be subject to the approval of the Requesting Holder. Any
Affiliate of a Registering Holder may be selected to serve, on an arm's-length
basis, as underwriter for an underwritten offering effected pursuant to this
Section 3.02. The Issuer will enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of such
Registrable Common Shares.

     (g) Transferability of Rights. Notwithstanding anything herein to the
contrary, each of the MSCP Funds and the Management Investors shall have the
right to Transfer any of its rights under this Section 3.02 in respect of any


                                      17
<PAGE>


Registrable Common Shares held by it to any Permitted Transferee of any of the
Registrable Common Shares of such Holder. Following any such Transfer, such
Permitted Transferee shall possess the same rights under this Section 3.02 in
respect of the Registrable Common Shares then owned by it as the transferring
Holder had possessed in respect of such securities prior to the Transfer.

     Section 3.03. Piggy-Back Registration Rights. (a) Right to Include
Registrable Common Shares. If the Issuer at any time proposes to register any
of its equity securities ("Priority Securities") under the Securities Act
(other than (i) by a registration on Form S-4, Form S-8 or any successor or
similar form, (ii) in connection with a direct acquisition by the Issuer of
another Person, or (iii) pursuant to a shelf registration of securities
pursuant to Rule 415 under the Securities Act), in each case whether or not for
sale for its own account or as a result of a demand from a security holder, it
will at each such time give prompt written notice at least 30 days prior to the
anticipated filing date of the registration statement relating to such
registration to all Holders of Registrable Common Shares of its intention to do
so and of such Holders' rights under this Section 3.03. The parties hereto
agree that Priority Securities shall not include any convertible debt
securities or debt securities issued with attached warrants. Any such notice
shall offer all such Holders the opportunity to include in such registration
such number of Registrable Common Shares as each such Holder may request;
provided that any Holder owning less than 1% of the outstanding Common Shares
and who is entitled to sell all of the Registrable Common Shares owned by such
Holder at such time pursuant to Rule 144 or Rule 145 of the Securities Act
shall not be entitled to such notice or to include any Registrable Common
Shares in such registration unless on the date of determination the average
daily trading volume of the Common Shares during the 30 trading days prior to
such date is less than the total number of Common Shares owned by such Holder.
Upon the written request of any Holder made within 20 days after the receipt of
any such notice (which request shall specify the number of Registrable Common
Shares intended to be disposed of by such Holder), the Issuer will use its best
efforts to effect the registration with the Commission under the Securities Act
and any related qualification or other compliance of all Registrable Common
Shares which the Issuer has been so requested to register, to the extent
required to permit the disposition of the Registrable Common Shares to be so
registered; provided that if, at any time after giving written notice of its
intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Issuer
shall determine for any reason not to register or to delay registration of such
securities, the Issuer shall give written notice of such determination to each
Holder and, thereupon, (x) in the case of a determination not to register,
shall be relieved of its obligation to register any Registrable Common Shares
in connection with such registration (but not from its obligation to pay the
Registration Expenses in connection therewith), without prejudice,


                                      18
<PAGE>


however, to the rights of any Holder entitled to do so, to request that such
registration be effected as a registration under Section 3.02, and (y) in the
case of a determination to delay registering, shall be permitted to delay
registering any Registrable Common Shares, for the same period as the delay in
registering such other securities. If a registration pursuant to this Section
3.03 involves a Public Offering, each Holder holding Registrable Common Shares
requesting to be included in such registration may elect, in writing not less
than 5 Business Days prior to the effective date of the registration statement
filed in connection with such registration, not to register such securities in
connection with such registration. No registration effected under this Section
3.03 shall relieve the Issuer of its obligation to effect any registration upon
request under Section 3.02. The Issuer will pay promptly all Registration
Expenses in connection with each registration of Registrable Common Shares
requested pursuant to this Section 3.03 and each such Holder shall pay all
out-of-pocket expenses of such Holder, transfer taxes and underwriting
discounts and commissions, if any, relating to the sale or disposition of such
Holder's Registrable Common Shares pursuant to a registration statement
effected pursuant to this Section 3.03.

     (b) Priority in Incidental Registrations. If a registration pursuant to
this Section 3.03 involves a Public Offering and the managing underwriter (or,
in the case of the IPO and if an Affiliate of MSCP III is a managing
underwriter, a majority in number of the managing underwriters) shall advise
the Issuer that, in its view, the number or mix of securities (including all
Registrable Common Shares) which the Issuer, the Holders and any other Persons
intend to include in such registration exceeds the Maximum Offering Size, the
Issuer will include in such registration, in the priority listed below,
securities up to the Maximum Offering Size:

          (i) first, Priority Securities to be sold for the Issuer's own
     account; and

          (ii) second, Registrable Common Shares or Common Shares requested to
     be included in such registration pursuant to Section 3.02 or 3.03 or
     otherwise by all other Persons (including the Holders), allocated (if
     necessary) pro rata among such Persons on the basis of the relative number
     of securities each such Person has requested to be included in such
     registration.

     (c) Transferability of Rights. Notwithstanding anything herein to the
contrary, each Holder shall have the right to Transfer any of its rights under
this Section 3.03 to any Permitted Transferee of any of the Registrable Common
Shares of such Holder. Following any such Transfer, such Permitted Transferee
shall possess the same rights under this Section 3.03 in respect of the
Registrable


                                      19
<PAGE>


Common Shares then owned by it as the transferring Holder had possessed in
respect of such securities prior to the Transfer.

     Section 3.04. Registration Procedures. If the Issuer is required to use
its reasonable best efforts to effect the registration of any Registrable
Common Shares under the Securities Act as provided in Section 3.02 or 3.03, the
Issuer will, as promptly as possible:

     (a) prepare and file with the Commission a registration statement on an
appropriate form (subject to 3.02(c)), and thereafter use its best efforts to
cause such registration statement to become effective and to remain effective
for the period specified in Section 3.02(e) and prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for the period specified in Section 3.02(e)
and to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement until such
time as all of such securities have been disposed of in accordance with the
intended methods of disposition by the Registering Holders thereof set forth in
such registration statement; provided that the Issuer will, at least 5 Business
Days prior to filing a registration statement or prospectus or any amendment or
supplement thereto, furnish to each Registering Holder copies of such
registration statement or prospectus (or amendment or supplement) as proposed
to be filed (including, upon the request of such Holder, documents to be
incorporated by reference therein) which documents will be subject to the
reasonable review and comments of such Holder (and its attorneys) during such
5-Business-Day period and the Issuer will not file any registration statement,
any prospectus or any amendment or supplement thereto (or any such documents
incorporated by reference) containing any statements with respect to such
Holder to which such Holder shall reasonably object in writing;

     (b) furnish to each Registering Holder and to any underwriter such number
of conformed copies of such registration statement and of each such amendment
and supplement thereto (in each case including all exhibits), the prospectus
contained in such registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 or
Rule 430A under the Securities Act, in conformity with the requirements of the
Securities Act, documents incorporated by reference in such registration
statement, amendment, supplement or prospectus and such other documents (in
each case including all exhibits), as a Registering Holder or underwriter may
reasonably request;

     (c) after the filing of the registration statement, promptly notify each
Registering Holder of the effectiveness thereof and of any stop order issued or


                                      20
<PAGE>


threatened by the Commission and take all reasonable actions required to
prevent the entry of such stop order or to remove it if entered and promptly
notify such Registering Holder of such lifting or withdrawal of such order;

     (d) use its reasonable best efforts to register or qualify all Registrable
Common Shares and other securities covered by such registration statement under
such other securities or blue sky laws of such jurisdictions as the Registering
Holders holding a majority of the Registrable Common Shares to be included in
such registration or the underwriter shall reasonably request, to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and take any other action which may be reasonably
necessary or advisable to enable the Registering Holders to consummate the
disposition in such jurisdictions of the securities owned by such Registering
Holders, except that the Issuer shall not for any such purpose be required to
qualify generally to do business as a foreign corporation in any jurisdiction
wherein it would not but for the requirements of this Section 3.04(d) be
obligated to be so qualified, to subject itself to taxation in any such
jurisdiction or to consent to general service of process in any such
jurisdiction;

     (e) use its reasonable best efforts to cause all Registrable Common Shares
covered by such registration statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to enable
the Registering Holders to consummate the disposition of such Registrable
Common Shares;

     (f) furnish to each Registering Holder and to each underwriter, if any, a
signed counterpart of: (i) an opinion of counsel for the Issuer addressed to
such Holder and underwriter on which opinion both such Holder and such
underwriter are entitled to rely and (ii) a "comfort" letter signed by the
independent public accountants who have certified the Issuer's financial
statements included in such registration statement, each in customary form and
covering such matters of the type customarily covered by opinions or comfort
letters, as the case may be, as the Registering Holders holding a majority of
the Registrable Common Shares included in such registration or the managing
underwriter therefor reasonably request. The Issuer will use its best efforts
to have such comfort letters addressed to each Registering Holder;

     (g) immediately notify each Registering Holder at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, upon discovery that, or upon the happening of any event as a result of
which, the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in the


                                      21
<PAGE>


light of the circumstances under which they were made, and promptly prepare and
furnish to such Registering Holder a reasonable number of copies of any
supplement to or amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make statements
therein not misleading in the light of the circumstances under which they were
made;

     (h) make available for inspection by any Registering Holder, any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other professional retained by any
such Holder or underwriter (collectively, the "Inspectors"), all financial and
other records, pertinent corporate documents and properties of the Issuer
(collectively, the "Records") as shall be reasonably necessary to enable them
to exercise their due diligence responsibility, and shall cause (i) the
Issuer's officers, directors and employees to supply all information reasonably
requested by any Inspectors and (ii) the senior management of the Issuer and
its Subsidiaries to participate in any "road show" presentations to investors,
in each case in connection with such registration statement. Each such Holder
agrees that information obtained by it as a result of such inspections shall be
deemed confidential and shall not be used by it as the basis for any market
transactions in the securities of the Issuer or its Affiliates unless and until
such information is made generally available to the public. Each such Holder
further agrees that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, give notice to the Issuer and
allow the Issuer, at its expense, to undertake appropriate action to prevent
disclosure of the Records deemed confidential;

     (i) use its reasonable best efforts to list all Registrable Common Shares
covered by such registration statement on any securities exchange or quotation
system on which any of the Registrable Common Shares is then listed or traded;
and

     (j) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first full
calendar month after the effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section 12(a) of the
Securities Act and Rule 158 thereunder.

     The Issuer may require each Registering Holder to promptly furnish to the
Issuer, as a condition precedent to including such Registering Holder's
Registrable Common Shares in any registration, such information regarding such


                                      22
<PAGE>


Registering Holder and the distribution of such securities as the Issuer may
from time to time reasonably request in writing.

     Each Holder agrees that upon receipt of any notice from the Issuer of the
happening of any event of the kind described in Section 3.04(g), such Holder
will forthwith discontinue such Holder's disposition of Registrable Common
Shares pursuant to the registration statement relating to such Registrable
Common Shares until such Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3.04(g) and, if so directed by the
Issuer, will deliver to the Issuer (at the Issuer's expense) all copies, other
than permanent file copies, then in such Holder's possession, of the prospectus
and any amendments or supplements thereto relating to such Registrable Common
Shares current at the time of receipt of such notice. In the event the Issuer
shall give such notice, the Issuer shall extend the period during which the
effectiveness of such registration statement shall be maintained (including the
period referred to in Section 3.02(e) hereof) by the number of days during the
period from and including the date of the giving of notice pursuant to Section
3.04(g) to the date when the Issuer shall make available to the Holders a
prospectus supplemented or amended to conform with the requirements of Section
3.04(g).

     Section 3.05. Participation in Underwritten Registrations. No Person may
participate in any Public Offering pursuant to Section 3.02 or 3.03 unless such
Person (i) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.

     Section 3.06. Holdback Agreements. (a) If any registration or offering of
Registrable Common Shares shall be in connection with a Public Offering, each
Holder holding Registrable Common Shares agrees not to effect any public sale
or distribution of any Registrable Common Shares or any securities convertible
into or exchangeable or exercisable for Registrable Common Shares (in each case
other than as part of such Public Offering), if and to the extent requested by
the managing underwriter during the 14 days prior to, and during (x) the
180-day period if such Public Offering is the IPO or (y) the 90-day period if
such Public Offering is not the IPO, in either case beginning on, the effective
date of such registration statement without the written consent of such
managing underwriter; provided that each such Holder has received written
notice of such registration at least 5 Business Days prior to the anticipated
beginning of the 14-day period referred to above.


                                      23
<PAGE>


     (b) If any registration or offering of Registrable Common Shares shall be
in connection with a Public Offering, the Issuer agrees (i) that, if and to the
extent requested by the managing underwriter, neither it nor any of its
Affiliates will effect any public sale or distribution of any of its equity
securities or of any security convertible into or exchangeable or exercisable
for any equity security of the Issuer during the 14 days prior to, and during
(x) the 180-day period if such Public Offering is the IPO or (y) the 90-day
period if such Public Offering is not the IPO, in either case beginning on, the
effective date of such registration statement (except as part of such Public
Offering) without the written consent of such managing underwriter and (ii)
that any agreement entered into after the date of this Agreement pursuant to
which the Issuer issues or agrees to issue any privately placed securities
shall contain a provision under which holders of such securities agree not to
effect any public sale or distribution of any such securities during the
periods described in (i) above (except as part of any such registration, if
permitted).

     Section 3.07. Indemnification. (a) Indemnification by the Issuer. The
Issuer agrees to indemnify and hold harmless each Registering Holder, its
officers, directors and agents and each Person, if any, who controls such
Registering Holder within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act from and against any and all losses, claims,
damages, liabilities or expenses caused by any untrue statement or alleged
untrue statement of a material fact contained in any registration statement or
prospectus relating to the Registrable Common Shares (as amended or
supplemented if the Issuer shall have furnished any amendments or supplements
thereto) or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and the Issuer will reimburse such Registering Holders
for any legal or any other expenses reasonably incurred by them in connection
with investigating or defending such loss, claim, damage, liability or expense,
except insofar as such losses, claims, damages, liabilities or expenses are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information furnished in writing to the Issuer by such
Registering Holder or on such Registering Holder's behalf expressly for use
therein; provided that with respect to any untrue statement or omission or
alleged untrue statement or omission made in any preliminary prospectus, or in
any prospectus, as the case may be, the indemnity agreement contained in this
paragraph shall not apply to the extent that any such loss, claim, damage,
liability or expense results from the fact that a current copy of the
prospectus (or the amended or supplemented prospectus, as the case may be) was
not sent or given to the Person asserting any such loss, claim, damage,
liability or expense at or prior to the written confirmation of the sale of the
Registrable Common Shares concerned to such Person if it is determined that the
Issuer has provided such prospectus (or amended or supplemented prospectus)


                                      24
<PAGE>


and it was the responsibility of such Registering Holder to provide such Person
with a current copy of the prospectus (or such amended or supplemented
prospectus, as the case may be) and such current copy of the prospectus (or
such amended or supplemented prospectus, as the case may be) would have cured
the defect giving rise to such loss, claim, damage, liability or expense. The
Issuer also agrees to indemnify any underwriters of the Registrable Common
Shares, their officers and directors and each Person who controls such
underwriters on substantially the same basis as that of the indemnification of
the Registering Holders provided in this Section 3.07(a).

     (b) Indemnification by the Registering Holders. Each Registering Holder
agrees, severally but not jointly, to indemnify and hold harmless the Issuer,
its officers, directors and agents and each Person, if any, who controls the
Issuer within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act to the same extent as the foregoing indemnity from the
Issuer to such Registering Holder, but only (i) with respect to information
furnished in writing by such Registering Holder or on such Registering Holder's
behalf expressly for use in any registration statement or prospectus relating
to the Registrable Common Shares, or any amendment or supplement thereto, or
any preliminary prospectus or (ii) to the extent that any loss, claim, damage,
liability or expense described in Section 3.07(a) results from the fact that a
current copy of the prospectus (or the amended or supplemented prospectus, as
the case may be) was not sent or given to the Person asserting any such loss,
claim, damage, liability or expense at or prior to the written confirmation of
the sale of the Registrable Common Shares concerned to such Person if it is
determined that it was the responsibility of such Registering Holder to provide
such Person with a current copy of the prospectus (or such amended or
supplemented prospectus, as the case may be) and such current copy of the
prospectus (or such amended or supplemented prospectus, as the case may be)
would have cured the defect giving rise to such loss, claim, damage, liability
or expense. Each such Registering Holder also agrees to indemnify and hold
harmless the underwriters of the Registrable Common Shares, their officers and
directors and each Person who controls such underwriters on substantially the
same basis as that of the indemnification of the Issuer provided in this
Section 3.07(b). Each Registering Holder's obligation to indemnify pursuant
to(ii) this Section is several in the proportion that the proceeds of the
offering received by such Holder bears to the total proceeds of the offering
received by all the Holders and not joint.

     (c) Conduct of Indemnification Proceedings. In case any proceeding
(including any governmental investigation) shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to this Section
3.07, such Person (an "Indemnified Party") shall promptly notify the Person
against whom such indemnity may be sought (the "Indemnifying Party") in writing
and


                                      25
<PAGE>


the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such Indemnified Party, and
shall assume the payment of all fees and expenses; provided that the failure of
any Indemnified Party so to notify the Indemnifying Party shall not relieve the
Indemnifying Party of its obligations hereunder except to the extent that the
Indemnifying Party is materially prejudiced by such failure to notify. In any
such proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) in
the reasonable judgment of such Indemnified Party representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Indemnified Parties, such firm shall be design(ii) ated in writing by the
Indemnified Party that had the largest number of Registrable Common Shares
included in such registration. The Indemnifying Party shall not be liable for
any settlement of any proceeding effected without its written consent, but if
settled with such consent, or if there be a final judgment for the plaintiff,
the Indemnifying Party shall indemnify and hold harmless such Indemnified
Parties from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment. No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Party is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability arising out of such
proceeding.

     (d) Contribution. If the indemnification provided for in this Section 3.07
is unavailable to the Indemnified Parties in respect of any losses, claims,
damages or liabilities referred to herein, then each Indemnifying Party, in
lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such losses, claims,
damages or liabilities (i) as between the Issuer and the Registering Holders on
the one hand and the underwriters on the other, in such proportion as is
appropriate to reflect the relative benefits received by the Issuer and such
Registering Holders on the one hand and the underwriters on the other, from the
offering of the Registrable Common Shares, or if such allocation is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits but also the


                                      26
<PAGE>


relative fault of the Issuer and such Registering Holders on the one hand and
of such underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations and (ii) as between the
Issuer on the one hand and each such Registering Holder on the other, in such
proportion as is appropriate to reflect the relative fault of the Issuer and of
each such Registering Holder in connection with such statements or omissions,
as well as any other relevant equitable considerations. The relative benefits
received by the Issuer and such Registering Holders on the one hand and such
underwriters on the other shall be deemed to be in the same proportion as the
total proceeds from the offering (net of underwriting discounts and commissions
but before deducting expenses) received by the Issuer and such Registering
Holders bear to the total underwriting discounts and commissions received by
such underwriters, in each case as set forth in the table on the cover page of
the prospectus. The relative fault of the Issuer and such Registering Holders
on the one hand and of such underwriters on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Issuer and such
Registering Holders or by such underwriters. The relative fault of the Issuer
on the one hand and of each such Registering Holder on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by such party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.

     The Issuer and the Holders agree that it would not be just and equitable
if contribution pursuant to this Section 3.07 were determined by pro rata
allocation (even if the underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages or liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 3.07, no underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Registrable Common Shares underwritten by it and
distributed to the public were offered to the public exceeds the aggregate
amount of any damages which such underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission, and no Holder shall be required to contribute any amount in excess of
the amount by which the total price at which the Registrable Common


                                      27
<PAGE>


Shares of such Holder were offered to the public exceeds the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation. Each such Holder's obligation
to contribute pursuant to this Section is several in the proportion that the
proceeds of the offering received by such Holder bears to the total proceeds of
the offering received by all such Holders and not joint.

                                   ARTICLE 4
                                 MISCELLANEOUS

     Section 4.01. Headings. The headings in this Agreement are for convenience
of reference only and shall not control or affect the meaning or construction
of any provisions hereof.

     Section 4.02. No Inconsistent Agreements; Conflicting Charter or Bylaw
Provision. (a) The Issuer will not hereafter enter into any agreement with
respect to its securities which is inconsistent with or grant rights superior
to the rights granted to the Holders of Registrable Common Shares in this
Agreement. The Issuer has not previously entered into any agreement (currently
in effect) with respect to any of its debt or equity securities granting any
registration rights to any Person.

     (b) Each Holder shall vote its Common Shares or execute written consents,
as the case may be, and take all other actions necessary, to ensure that the
certificate of incorporation, bylaws and other constituent documents of the
Issuer and each Subsidiary (i) facilitate and do not at any time conflict with
any provision of this Agreement and (ii) permit each Holder to receive the
benefits to which each such Holder is entitled under this Agreement.

     Section 4.03. Entire Agreement. The Transaction Agreements constitute the
entire agreement and understanding of the parties hereto and thereto in respect
of the subject matter contained herein and therein, and there are no
restrictions, promises, representations, warranties, covenants, or undertakings
with respect to the subject matter hereof or thereof, other than those
expressly set forth or referred to herein or therein. The Transaction
Agreements supersede all prior agreements and understandings between the
parties hereto and thereto with respect to the subject matter hereof and
thereof, including without limitation the letter of intent


                                      28
<PAGE>


among the Issuer, the Executive Managers and Morgan Stanley Capital Partners
III, Inc. dated April 2, 1998.

     Section 4.04. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including telecopier) and shall be
deemed to have been duly given or made if sent by telecopy, delivered
personally or sent by registered or certified mail (postage prepaid, return
receipt requested) to such party at its address or telecopier number set forth
on the signature pages hereof, or such other address or telecopier number as
such party may hereinafter specify for the purpose to the party giving such
notice. All such notices, requests and other communications shall be deemed
received on the date of receipt by the recipient thereof if received prior to
5:00 p.m. in the place of receipt and such day is a Business Day in the place
of receipt. Otherwise, any such notice, request or communication shall be
deemed not to have been received until the next succeeding Business Day in the
place of receipt.

     Section 4.05. Applicable Law; Submission to Jurisdiction. This Agreement
shall be construed in accordance with and governed by the laws of the State of
Delaware, without regard to the conflicts of law rules of such state. Each of
the parties hereto hereby consents to the exclusive jurisdiction of the United
States District Court for the District of Delaware and the Chancery Court of
the State of Delaware (and of the appropriate appellate courts therefrom) over
any suit, action or proceeding arising out of or relating to this Agreement.
Each party hereto irrevocably waives, to the fullest extent permitted by law,
any objection which it may now or hereafter have to the laying of venue in any
such court or that any such proceeding which is brought in accordance with this
Section has been brought in an inconvenient forum. Subject to applicable law,
process in any such proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such court. Without
limiting the foregoing and subject to applicable law, each party agrees that
service of process on such party as provided in Section shall be deemed
effective service of process on such party. Nothing herein shall affect the
right of any party to serve legal process in any other manner permitted by law
or at equity or to enforce in any lawful manner a judgment obtained in one
jurisdiction in any other jurisdiction. WITH RESPECT TO A PROCEEDING IN ANY
SUCH COURT, EACH OF THE PARTIES IRREVOCABLY WAIVES AND RELEASES TO THE OTHER
ITS RIGHT TO A TRIAL BY JURY, AND AGREES THAT IT WILL NOT SEEK A TRIAL BY JURY
IN ANY SUCH PROCEEDING.

     Section 4.06. Severability. The invalidity or unenforceability of any
provisions of this Agreement in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Agreement in such
jurisdiction or the validity, legality or enforceability of this Agreement,
including any such


                                      29
<PAGE>


provision, in any other jurisdiction, it being intended that all rights and
obligations of the parties hereunder shall be enforceable to the fullest extent
permitted by law.

     Section 4.07. Successors, Assigns, Transferees. The provisions of this
Agreement shall be binding upon and accrue to the benefit of the parties hereto
and their respective heirs, executors, administrators, successors and permitted
assigns. Notwithstanding the foregoing, neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by the Issuer or any Holder, except (i) as specifically provided
pursuant to the terms hereof, (ii) in connection with a Transfer of securities
of the Issuer pursuant to the terms hereof, in which case any Person acquiring
Common Shares who is required by the terms of this Agreement to become a party
hereto shall thenceforth be a "Holder" and (iii) that the MSCP Funds may assign
any of their rights, remedies, obligations or liabilities hereunder to (or
exercise any of the foregoing jointly with) an Affiliate of the MSCP Funds
without the consent of the other parties hereto. Nothing in this Agreement,
expressed or implied, is intended to confer on any Person other than the
parties hereto, and their respective successors and permitted assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.

     Section 4.08. Amendments; Waivers. (a) No failure or delay on the part of
any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.

     (b) Any provision of this Agreement may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by the Holders of a majority (or, prior to the issuance of all
Common Shares set forth on Schedule 2.01(a) and Schedule 2.01(b) to the
Subscription Agreement, at least 75%) of the number of outstanding Common
Shares owned by all Holders at such time, or in the case of a waiver, by the
party against whom the waiver is to be effective; provided that no amendment
that would, in any material respect, adversely or uniquely affect such Holder
shall be effective without the prior written consent of such Holder.

     Section 4.09. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original with the same effect as if
the signatures thereto and hereto were upon the same instrument.

     Section 4.10. Recapitalization, etc. In the event that any capital stock or
other securities are issued in respect of, in exchange for, or in substitution
of, any


                                      30
<PAGE>


Common Shares by reason of any reorganization, recapitalization,
reclassification, merger, consolidation, spin-off, partial or complete
liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the Common Shares or any other change in capital
structure of the Issuer, appropriate adjustments shall be made with respect to
the relevant provisions of this Agreement so as to fairly and equitably
preserve, as far as practicable, the original rights and obligations of the
parties hereto under this Agreement.

     Section 4.11. Remedies. The parties hereto acknowledge and agree that in
the event of any breach of this Agreement, the parties would be irreparably
harmed and could not be made whole by monetary damages. Each party hereto
accordingly agrees (i) not to assert by way of defense or otherwise that a
remedy at law would be adequate, and (ii) that the parties agree, in addition
to any other remedy to which they may be entitled, that the remedy of specific
performance of this Agreement is appropriate in any action in court.

     Section 4.12. Fees and Expenses. (a) Unless otherwise provided herein or in
the other Transaction Agreements, all costs and expenses incurred in connection
with the transactions contemplated by the Transaction Agreements shall be paid
by the party incurring such costs and expenses.

     (b) Notwithstanding anything herein to the contrary, the Issuer shall (i)
bear all the costs and expenses relating to any acquisition by the Issuer or
its Subsidiaries of a hospital, hospital system, healthcare facility or related
assets and (ii) reimburse the MSCP Funds and their Affiliates for the
reasonable fees and expenses incurred by any of them or on their behalf in
connection with any such acquisition; provided that MSCP III shall, upon the
request of the Issuer, promptly provide an estimate of such reimbursable
expenses.

     Section 4.13. Reasonable Best Efforts. Subject to the terms and conditions
of this Agreement, the Issuer and each of the Holders will use its reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all things necessary or desirable under applicable laws and
regulations to give effect to the terms and conditions of the Transaction
Agreements.

     Section 4.14. Effectiveness of This Agreement. Upon the consummation of a
Liquidity Event, the Shareholders Agreement shall terminate (except as
otherwise provided therein) and this Agreement shall become effective against
(x) each of the parties hereto and (y) each Person who has executed and
delivered to the Issuer an instrument(s) pursuant to Section 2.02 of the
Shareholders Agreement confirming that such Person has agreed to be bound as a
"Holder" by the terms of this Agreement.


                                      31
<PAGE>


     Section 4.15. Termination of Article 2. Article 2 shall terminate as to any
Holder upon the earlier to occur of (i) the sale of all of the Common Shares
owned by such Holder or (ii) the tenth anniversary of the consummation of the
Liquidity Event; provided that nothing in this Section 4.15 shall relieve any
such Holder(s) of liability for a breach prior to such termination of any of
its covenants or agreements contained in Article 2.


                                      32
<PAGE>


     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

                                   MORGAN STANLEY CAPITAL PARTNERS, L.P.
                                   By: MSCP III, L.P., as general partner
                                   By: MORGAN STANLEY CAPITAL PARTNERS III,
                                         INC., as General Partner


                                   By: /s/ Alan Goldberg
                                      ------------------------------------------
                                      Name:  Alan Goldberg
                                      Title: Managing Director

                                   By: /s/ Michael Janson
                                      ------------------------------------------
                                      Name:      Michael Janson
                                      Title:     Managing Director
                                      Address:   1221 Avenue of the Americas
                                                 33rd Floor
                                                 New York, New York 10017
                                      Telephone: (212) 762-6000
                                      Telecopy:  (212) 762-7951


                                   MSCP III 892 INVESTORS, L.P.
                                   By: MSCP III, L.P., as General Partner
                                   By: MORGAN STANLEY CAPITAL PARTNERS III,
                                         INC., as General Partner


                                   By: /s/ Alan Goldberg
                                      ------------------------------------------
                                      Name:      Alan Goldberg
                                      Title:     Managing Director
                                      Address:   1221 Avenue of the Americas
                                                 33rd Floor
                                                 New York, New York 10017
                                      Telephone: (212) 762-6000
                                      Telecopy:  (212) 762-7951


                                      33
<PAGE>


                                   MORGAN STANLEY CAPITAL INVESTORS, L.P.
                                   By: MSCP III, L.P., as General Partner
                                   By: MORGAN STANLEY CAPITAL PARTNERS III,
                                         INC., as General Partner


                                   By: /s/ Alan Goldberg
                                      ------------------------------------------
                                      Name:      Alan Goldberg
                                      Title:     Managing Director
                                      Address:   1221 Avenue of the Americas
                                                 33rd Floor
                                                 New York, New York 10017
                                      Telephone: (212) 762-6000
                                      Telecopy:  (212) 762-7951


                                   VANGUARD HEALTH SYSTEMS, INC.


                                   By: /s/ Charles N. Martin, Jr.
                                      ------------------------------------------
                                      Name:      Charles N. Martin, Jr.
                                      Title:     Chairman, President and Chief
                                                 Executive Officer
                                      Address:   20 Burton Hills Blvd.
                                                 Suite 100
                                                 Nashville, Tennessee 37215
                                      Telephone: (615) 665-6000
                                      Telecopy:  (615) 665-6197


                                       /s/ Charles N. Martin, Jr.
                                      ------------------------------------------
                                      Name:      Charles N. Martin, Jr.
                                      Address:   20 Burton Hills Blvd.
                                                 Suite 100
                                                 Nashville, Tennessee 37215
                                      Telephone: (615) 665-6000
                                      Telecopy:  (615) 665-6197


                                      34
<PAGE>



                                       /s/ W. Lawrence Hough
                                      ------------------------------------------
                                      Name:      W. Lawrence Hough
                                      Address:   20 Burton Hills Blvd.
                                                 Suite 100
                                                 Nashville, Tennessee 37215
                                      Telephone: (615) 665-6000
                                      Telecopy:  (615) 665-6197



                                       /s/ Joseph D. Moore
                                      ------------------------------------------
                                      Name:      Joseph D. Moore
                                      Address:   20 Burton Hills Blvd.
                                                 Suite 100
                                                 Nashville, Tennessee 37215
                                      Telephone: (615) 665-6000
                                      Telecopy:  (615) 665-6197



                                       /s/ Ronald P. Soltman
                                      ------------------------------------------
                                      Name:      Ronald P. Soltman
                                      Address:   20 Burton Hills Blvd.
                                                 Suite 100
                                                 Nashville, Tennessee 37215
                                      Telephone: (615) 665-6000
                                      Telecopy:  (615) 665-6197



                                       /s/ Bruce Chafin
                                      ------------------------------------------
                                      Name:      Bruce Chafin
                                      Address:   1440 New York Avenue, N.W.
                                                 Suite 400
                                                 District of Columbia 20005
                                      Telephone: (202) 393-3920
                                      Telecopy:  (202) 393-4130


                                      35
<PAGE>



                                       /s/ Robert E. Galloway
                                      ------------------------------------------
                                      Name:      Robert E. Galloway
                                      Address:   20 Burton Hills Blvd.
                                                 Suite 100
                                                 Nashville, Tennessee 37215
                                      Telephone: (615) 665-6000
                                      Telecopy:  (615) 665-6197



                                       /s/ John M. Geer
                                      ------------------------------------------
                                      Name:      John M. Geer
                                      Address:   20 Burton Hills Blvd.
                                                 Suite 100
                                                 Nashville, Tennessee 37215
                                      Telephone: (615) 665-6000
                                      Telecopy:  (615) 665-6197



                                       /s/ James Johnston
                                      ------------------------------------------
                                      Name:      James Johnston
                                      Address:   20 Burton Hills Blvd.
                                                 Suite 100
                                                 Nashville, Tennessee 37215
                                      Telephone: (615) 665-6000
                                      Telecopy:  (615) 665-6197



                                       /s/ Phillip W. Roe
                                      ------------------------------------------
                                      Name:      Phillip W. Roe
                                      Address:   20 Burton Hills Blvd.
                                                 Suite 100
                                                 Nashville, Tennessee 37215
                                      Telephone: (615) 665-6000
                                      Telecopy:  (615) 665-6197


                                      36
<PAGE>



                                      /s/ Dennis Jacobs
                                     ------------------------------------------
                                     Name:      Dennis Jacobs
                                     Address:   20 Burton Hills Blvd.
                                                Suite 100
                                                Nashville, Tennessee 37215
                                     Telephone: (615) 665-6000
                                     Telecopy:  (615) 665-6197



                                      /s/ Anne L. Sanford
                                     ------------------------------------------
                                     Name:      Anne L. Sanford
                                     Address:   20 Burton Hills Blvd.
                                                Suite 100
                                                Nashville, Tennessee 37215
                                     Telephone: (615) 665-6000
                                     Telecopy:  (615) 665-6197



                                      /s/ Tony W. Simpson
                                     ------------------------------------------
                                     Name:      Tony W. Simpson
                                     Address:   20 Burton Hills Blvd.
                                                Suite 100
                                                Nashville, Tennessee 37215
                                     Telephone: (615) 665-6000
                                     Telecopy:  (615) 665-6197



                                      /s/ James H. Spalding
                                     ------------------------------------------
                                     Name:      James H. Spalding
                                     Address:   20 Burton Hills Blvd.
                                                Suite 100
                                                Nashville, Tennessee 37215
                                     Telephone: (615) 665-6000
                                     Telecopy:  (615) 665-6197


                                      37
<PAGE>



                                      /s/ Alan G. Thomas
                                     ------------------------------------------
                                     Name:      Alan G. Thomas
                                     Address:   20 Burton Hills Blvd.
                                                Suite 100
                                                Nashville, Tennessee 37215
                                     Telephone: (615) 665-6000
                                     Telecopy:  (615) 665-6197


                                      /s/ Thomas M. Ways
                                     ------------------------------------------
                                     Name:      Thomas M. Ways
                                     Address:   20 Burton Hills Blvd.
                                                Suite 100
                                                Nashville, Tennessee 37215
                                     Telephone: (615) 665-6000
                                     Telecopy:  (615) 665-6197


                                      /s/ Clifford Adlerz
                                     ------------------------------------------
                                     Name:      Clifford Adlerz
                                     Address:   3401 West End Avenue
                                                Suite 760
                                                Nashville, Tennessee 37203
                                     Telephone: (615) 460-1681
                                     Telecopy:  (615) 460-1690


                                      /s/ Ray Denson
                                     ------------------------------------------
                                     Name:      Ray Denson
                                     Address:   20 Burton Hills Blvd.
                                                Suite 100
                                                Nashville, Tennessee 37215
                                     Telephone: (615) 665-6000
                                     Telecopy:  (615) 665-6449


                                      /s/ Paula Y. Eleazar
                                     ------------------------------------------
                                     Name:      Paula Y. Eleazar
                                     Address:   20 Burton Hills Blvd.
                                                Suite 100
                                                Nashville, Tennessee 37215
                                     Telephone: (615) 665-6000
                                     Telecopy:  (615) 665-6399


                                      38
<PAGE>



                                      /s/ Jerry M. Eyler
                                     ------------------------------------------
                                     Name:      Jerry M. Eyler
                                     Address:   20 Burton Hills Blvd.
                                                Suite 100
                                                Nashville, Tennessee 37215
                                     Telephone: (615) 665-6000
                                     Telecopy:  (615) 665-6299



                                      /s/ Richard Francis
                                     ------------------------------------------
                                     Name:      Richard Francis
                                     Address:   3401 West End Avenue
                                                Suite 760
                                                Nashville, Tennessee 37203
                                     Telephone: (615) 460-1682
                                     Telecopy:  (615) 460-1690



                                      /s/ Anthony C. Krayer
                                     ------------------------------------------
                                     Name:      Anthony C. Krayer
                                     Address:   340 West Tropical Way
                                                Plantation, Florida 33317
                                     Telephone: (954) 985-3451
                                     Telecopy:  (954) 985-6193



                                      /s/ Carol A. Murdock
                                     ------------------------------------------
                                     Name:      Carol A. Murdock
                                     Address:   20 Burton Hills Blvd.
                                                Suite 100
                                                Nashville, Tennessee 37215
                                     Telephone: (615) 665-6000
                                     Telecopy:  (615) 665-6499


                                      39
<PAGE>



                                      /s/ Keith B. Pitts
                                     ------------------------------------------
                                     Name:      Keith B. Pitts



                                     Address:   c/o Paragon Health Network, Inc.
                                                One Ravinia Drive
                                                Suite 1500
                                                Atlanta, Georgia 30346
                                     Telephone: (770) 393-0199
                                     Telecopy:  (770) 393-8054


                                  MPSW PARTNERS


                                  By: /s/ Morton Pierce
                                     ------------------------------------------
                                     Name:      Morton Pierce
                                     Title:     Managing Partner
                                     Address:   1301 Avenue of the Americas
                                                New York, New York 10019
                                     Telephone: (212) 259-8000
                                     Telecopy:  (212) 259-6333



                                      /s/ Carl F. Chafin
                                     ------------------------------------------
                                     Name:      Carl F. Chafin
                                     Address:   10801 Ramshorn Rd.
                                                Midlothian, Virginia 23113
                                     Telephone: (804) 330-4383
                                     Telecopy:  (202) 393-4130



                                      /s/ Mark Price
                                     ------------------------------------------
                                     Name:      Mark Price
                                     Address:   20 Burton Hills Blvd.
                                                Suite 100
                                                Nashville, Tennessee 37215
                                     Telephone: (615) 665-6000
                                     Telecopy:  (615) 665-6399


                                      40
<PAGE>


                                      /s/ William V.B. Webb
                                     ------------------------------------------
                                     Name:      William V.B. Webb
                                     Address:   20 Burton Hills Blvd.
                                                Suite 100
                                                Nashville, Tennessee 37215
                                     Telephone: (615) 665-6000
                                     Telecopy:  (615) 665-6299



                                      /s/ Harold H. Pilgrim, Jr.
                                     ------------------------------------------
                                     Name:      Harold H. Pilgrim, Jr.
                                     Address:   2503 Lakeview Drive
                                                Decatur, AL 35601
                                     Telephone: (205) 355-6394
                                     Telecopy:  (205) 355-4674


                                      41
<PAGE>


                                  WILLIAM LAWRENCE HOUGH
                                  GRANTOR RETAINED ANNUITY TRUST


                                  By: /s/ Leslie J. Hough
                                     ------------------------------------------
                                     Name:      Leslie J. Hough
                                     Title:     Trustee
                                     Address:   20 Burton Hills Blvd.
                                                Suite 100
                                                Nashville, Tennessee 37215
                                     Telephone: (615) 665-6000
                                     Telecopy:  (615) 665-6197


                                      42
<PAGE>


                                                                      EXHIBIT A


                        [FORM OF AGREEMENT TO BE BOUND]

                                                                         [Date]


To the Parties to the Surviving
Shareholders Agreement dated as of
June 1, 1998

Ladies and Gentlemen:

     Reference is made to the Surviving Shareholders Agreement dated as of June
1, 1998 (the "Surviving Shareholders Agreement") among Vanguard Health Systems,
Inc., Morgan Stanley Capital Partners III, L.P., MSCP III 892 Investors, L.P.,
Morgan Stanley Capital Investors, L.P., the other Persons listed on the
signature pages thereof and each other Person who has or shall become a party
to the Surviving Shareholders Agreement as provided therein. Capitalized terms
used herein and not defined have the meanings ascribed to them in the Surviving
Shareholders Agreement.

     In consideration of the covenants and agreements contained in the
Surviving Shareholders Agreement, the undersigned hereby confirms and agrees
that it shall be bound as a "Holder" by all of the provisions thereof.

     This letter shall be construed and enforced in accordance with the
internal laws of the State of Delaware.

                                     Very truly yours,



                                     ------------------------------------------


                                      A-1
<PAGE>


                                                                        ANNEX I


                Allocation of Initial Shares and Initial Options


                            Initial Shares                Initial Options
                     --------------------------   ------------------------------
Management Investor  No. of Shares   % of Total    No. of Options Aggregate Cost
-------------------  -------------   ----------    -------------- --------------
Martin.............     9,151         37.834%         587        $  898,733.39
Hough Trust........     3,659         15.128%           0                 0.00
Hough                       0          0.000%         359           549,651.26
Moore..............     3,659         15.128%         310           474,629.22
Soltman............     3,136         12.966%         228           349,082.14
Thomas.............       654          2.704%         146           223,535.05
Chafin.............       654          2.704%         163           249,563.11
Roe................       654          2.704%         163           249,563.11
Johnston...........       654          2.704%         146           223,535.05
Galloway...........       654          2.704%         146           223,535.05
Simpson............       328          1.356%          97           148,513.01
Spalding...........       328          1.356%          97           148,513.01
Sanford............       328          1.356%          97           148,513.01
Geer...............       328          1.356%          81           124,016.02
Ways                        0          0.000%         695                 0.00
Jacobs                      0          0.000%          81           124,016.02
                       ------        -------        -----        -------------
     Total.........    24,187        100.000%       3,396        $4,135,398.45
                       ======        =======        =====        =============