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                                                                   EXHIBIT 10.47











                             MEDCATH HOLDINGS, INC.

                               OUTSIDE DIRECTORS'

                                STOCK OPTION PLAN


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                             MEDCATH HOLDINGS, INC.
                               OUTSIDE DIRECTORS'
                               STOCK OPTION PLAN

         MedCath Holdings, Inc. does hereby establish the MedCath Holdings, Inc.
Outside Directors' Stock Option Plan for the benefit of certain members of the
Board of the Company subject to the following provisions:

         SECTION 1.        PURPOSE.  The purpose of the Plan is to secure for
the Company and its shareholders the benefits of the incentive inherent in
increased common stock ownership by the outside members of the Board who are not
officers or employees of the Company or any of its Subsidiaries.

         SECTION 2.         DEFINITIONS.  For the purpose of this Plan as well
as for any Option Agreement, unless the context clearly requires otherwise, the
following words shall have the meanings indicated:

                  (a)      "BOARD" means the Board of Directors of the Company.

                  (b)      "CODE" means the Internal Revenue Code of 1986, as
         amended from time to time, or any successor statute, and applicable
         regulations.

                  (c)      "COMMENCEMENT DATE" means the date, on or after the
         Effective Date, on which a resolution of the Board to authorize the
         commencement of the operation of the Plan becomes effective.

                  (d)      "COMMITTEE" means the Compensation Committee of the
         Board.

                  (e)      "COMMON STOCK" or "SHARE" means the common stock of
         the Company which may be authorized but unissued, or issued and
         reacquired.

                  (f)      "COMPANY" means MedCath Holdings, Inc., a Delaware
         corporation.

                  (g)       "DIRECTOR" means a member of the Board.

                  (h)      "DIRECTOR STOCKHOLDER'S AGREEMENT" means an agreement
         between the Company and an Optionee that sets forth the terms and
         conditions and limitations applicable to any Shares purchased pursuant
         to Options granted under this Plan.

                  (i)      "EFFECTIVE DATE" means the date, following adoption
         of the Plan by the Company, on which the shareholders of the Company
         approve and ratify the Plan pursuant to Section 12 hereunder.

                  (j)      "EXCHANGE ACT" means the Securities Exchange Act of
         1934, as amended.


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                  (k)      "FAIR MARKET VALUE" of a Share means:

                           (i)      As of any date the Shares are not listed on
                  a national securities exchange or traded on the Nasdaq
                  National Market, such value of a Share as determined at the
                  relevant time in good faith by the Board on the basis of the
                  value of the Company as a whole divided by the fully diluted
                  equity of the Company; or

                           (ii)     As of any other date, the closing sale price
                  at which the Shares are sold regular way on a national
                  securities exchange or the Nasdaq National Market on said
                  date, or, if no sales occur on such date, then on the next
                  preceding date on which there were such sales of the Shares.

                  (l)      "OPTION" means a non-qualified stock option described
         in Treasury Regulation section 1.83-7 to which section 422 of the Code
         does not apply, which shall be granted by the Company to Optionees
         pursuant to the terms of this Plan.

                  (m)      "OPTION AGREEMENT" means the written instrument
         executed by the Company and the Optionee that sets forth the terms,
         conditions and limitations applicable to a grant of Options pursuant to
         the Plan.

                  (n)      "OPTIONEE" means an Outside Director of the Company
         who has been granted an option pursuant to the terms of this Plan.

                  (o)      "OPTION STOCK" means shares of Common Stock issued to
         an Optionee upon the exercise of an Option granted under the Plan.

                  (p)      "OUTSIDE DIRECTOR" means any Director who is not an
         employee of the Company or any corporation which is a Subsidiary.

                  (q)      "PLAN" means the MedCath Holdings, Inc. Outside
         Directors' Stock Option Plan, as amended from time to time in
         accordance herewith.

                  (r)      "SUBSIDIARY" means any corporation, partnership,
         limited liability company, association, joint venture or other entity
         whose accounts are consolidated with the accounts of the Company in the
         Company's consolidated financial statements.

         SECTION 3.         ADMINISTRATION OF PLAN.

                  (a)      The Plan shall be administered by the Committee;
         provided, however, that the members of the Committee shall qualify to
         administer the Plan for purposes of Rule 16b-3 (and any other
         applicable rule) promulgated under Section 16(b) of the Exchange Act to
         the extent that the Company is subject to such rule. The Committee may
         adopt its own rules of procedure, and action of a majority of the
         members of the Committee taken at a meeting, or action taken without a
         meeting by unanimous written consent, shall constitute action by the
         Committee. The Committee shall have the power and authority to
         administer, construe and interpret the Plan, to make rules for carrying
         it


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         out and to make changes in such rules. Any such interpretations, rules
         and administration shall be consistent with the basic purposes of the
         Plan.

                  (b)      The Committee may delegate to the Chief Executive
         Officer and to other senior officers of the Company its duties under
         the Plan subject to such conditions and limitations as the Committee
         shall prescribe except that only the Committee may designate and make
         Option grants to Optionees who are subject to Section 16 of the
         Exchange Act.

                  (c)      The Committee may employ attorneys, consultants,
         accountants, appraisers, brokers or other persons. The Committee, the
         Company, and the officers and directors of the Company shall be
         entitled to rely upon the advice, opinions or valuations of any such
         persons. All actions taken and all interpretations and determinations
         made by the Committee in good faith shall be final and binding upon all
         Optionees, the Company and all other interested persons. No member of
         the Committee shall be personally liable for any action, determination
         or interpretation made in good faith with respect to the Plan or Option
         grants, and all members of the Committee shall be fully protected by
         the Company with respect to any such action, determination or
         interpretation.

         SECTION 4.        AMOUNT OF STOCK. The stock which may be issued and
sold under the Plan will be the Common Stock of the Company, of a total number
not exceeding one hundred thousand (100,000) shares, subject to adjustment as
provided in Section 7. The stock to be issued may be either authorized and
unissued shares or issued shares acquired by the Company or its subsidiaries. In
the event that Options granted under the Plan shall terminate or expire without
being exercised in whole or in part, new Options may be granted covering the
shares not purchased under such lapsed Options.

         SECTION 5.        ELIGIBILITY.  Each Outside Director shall receive an
Option or Options in accordance with Section 6.

         SECTION 6.        TERMS AND CONDITIONS OF OPTIONS. On or after the
Commencement Date of the Plan, the Committee shall commence to grant Options
hereunder. Each Option granted under the Plan shall be evidenced by an Option
Agreement in such form as the Committee shall prescribe from time to time in
accordance with the Plan and shall comply with and be subject to the following
terms and conditions:

                  (a)      Each Outside Director who is a Director on the
         Commencement Date shall, as of the Commencement Date of the Plan,
         automatically receive an initial Option for two thousand (2,000) shares
         of Common Stock. Each Outside Director who is first elected or
         appointed a Director after the Commencement Date shall, as of the date
         of his first election or appointment as a Director after the
         Commencement Date, automatically receive an initial Option for three
         thousand five hundred (3,500) shares of Common Stock.

                  (b)      Each year, as of the last day of the fiscal year of
         the Company, each Outside Director described in (a) who has been
         re-elected as a Director or who is continuing as a Director as of the
         adjournment of the immediately preceding Annual Meeting of shareholders
         of the Company (other than an Annual Meeting at which the


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         Director is first elected or appointed as a Director), shall
         automatically receive an additional Option for three thousand five
         hundred (3,500) shares of Common Stock.

                  (c)      The Option exercise price shall be the Fair Market
         Value of the Common Stock shares subject to such Option on the date the
         Option is granted.

                  (d)      Each Option shall not be transferable by the Optionee
         otherwise than by will or the laws of descent and distribution, and
         shall be exercisable during his lifetime only by him.

                  (e)      Each Option shall expire ten years from the date of
         the grant of the Option.

                  (f)      To exercise an Option the Optionee must deliver
         written notice of the exercise to the Company specifying the number of
         whole Shares to be purchased accompanied by payment in full for the
         Shares being acquired thereunder. Such payment shall be made

                           (i)      in United States dollars by registered check
                  or bank draft, or

                           (ii)     by tendering to the Company Common Stock
                  shares owned for at least six months by the person exercising
                  the Option and having a Fair Market Value as of the date of
                  exercise equal to the cash exercise price applicable to such
                  Option, or

                           (iii)    by a combination of United States dollars
                  and Common Stock shares as aforesaid.

                  (g)      Except as provided in the Director Stockholder's
         Agreement, during the Optionee's lifetime, only the Optionee may
         exercise an Option or any portion thereof. After the death of the
         Optionee, any exercisable portion of an Option may, prior to the time
         when an Option becomes unexercisable pursuant to the terms of the
         Option Agreement, be exercised by the Optionee's executors,
         administrators, heirs, or distributees, as the case may be.

                  (h)      If any Option is exercised by the executor,
         administrator, heirs, or distributees of the estate of a deceased
         Optionee, the Company shall be under no obligation to issue stock
         thereunder unless and until the Company is satisfied that the person or
         persons exercising the Option are the duly appointed legal
         representatives of the deceased Optionee's estate or the proper heirs
         or distributees thereof.

         SECTION 7.        EFFECT OF CERTAIN TRANSACTIONS. The number of Shares
reserved for the Plan, the maximum number of Shares an Optionee may purchase
pursuant to an outstanding Option, and the determination of the exercise price
of an outstanding Option shall be appropriately adjusted by the Committee, whose
determination shall be conclusive, to reflect any increase or decrease in the
number of issued Shares resulting from a stock split, a consolidation of Shares,
the payment of a stock dividend, or any other capital adjustment affecting the
number of issued Shares. In the event that the outstanding Shares shall be
changed into or exchanged for


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a different number or kind of shares of stock or other securities of the Company
or another corporation, whether through reorganization, recapitalization,
merger, consolidation, or otherwise, there shall be substituted for each share
of Common Stock reserved for issuance under the Plan, but not yet purchased by
Optionees, the number and kind of shares of stock or other securities into which
each outstanding Share shall be so changed or for which each such share shall be
exchanged.

         SECTION 8.        MERGER, CONSOLIDATION, EXCHANGE, ACQUISITION,
LIQUIDATION OR DISSOLUTION. In its absolute discretion, and on such terms and
conditions as it deems appropriate, coincident with or after the grant of any
Option, the Committee may provide that such Option cannot be exercised after (i)
the merger or consolidation of either the Company, MedCath Intermediate
Holdings, Inc., or MedCath Incorporated into another corporation, (ii) the
exchange of all or substantially all of the assets of either the Company,
MedCath Intermediate Holdings, Inc., or MedCath Incorporated for the securities
of another corporation, (iii) the acquisition by another corporation of 80% or
more of the Company's, MedCath Intermediate Holdings, Inc.'s, or MedCath
Incorporated's then outstanding shares of voting stock, or (iv) the
recapitalization, reclassification, liquidation or dissolution of the Company,
MedCath Intermediate Holdings, Inc., or MedCath Incorporated, (a "Transaction"),
and if the Committee so provides that such Option cannot be exercised, it shall,
on such terms and conditions as it deems appropriate, also provide, either by
the terms of such Option or by a resolution adopted prior to the occurrence of
such Transaction, that, for some reasonable period of time prior to such
Transaction, such Option shall be exercisable as to all shares subject thereto,
notwithstanding anything to the contrary herein (but subject to the provisions
of Paragraph 6(e)) and that, upon the occurrence of such Transaction, such
Option shall terminate and be of no further force or effect; provided, however,
in lieu of so providing that an Option cannot be exercised after a Transaction,
the Committee may provide, in its absolute discretion, that the Option shall
remain exercisable after a Transaction in accordance with its original terms,
except upon exercise of such Option, the holder thereof shall receive the kind
and amount of securities and/or other property, or the cash equivalent thereof,
receivable as a result of such Transaction by the holder of a number of shares
of stock for which such Option could have been exercised immediately prior to
such Transaction.

         SECTION 9.        AMENDMENT OR DISCONTINUANCE. The Plan may be amended
at any time and from time to time by the Board as the Board shall deem advisable
including, but not limited to, amendments necessary to qualify for any exemption
or to comply with applicable law or regulations; provided, however, that except
as provided in Section 7, the Board may not, without further approval by the
shareholders of the Company, increase the maximum number of Shares as to which
Options may be granted under the Plan, increase the number of Shares subject to
an Option, reduce the Option exercise price described in Section 6(c), extend
the period during which Options may be granted or exercised under the Plan, or
change the class of persons eligible to receive Options under the Plan. No
amendment of the Plan shall materially and adversely affect any right of any
Optionee with respect to any Option theretofore granted without such Optionee's
written consent. Any such action to amend or discontinue the Plan shall be
adopted by formal action of the Board and executed by an officer or person
authorized to act on behalf of the Company.

         SECTION 10.       TERMINATION. Unless otherwise terminated by the Board
in accordance with Section 9, this Plan shall terminate upon the tenth
anniversary of the date the Plan is initially approved and adopted by the Board
of the Company.


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         SECTION 11.        MISCELLANEOUS PROVISIONS.

                  (a)      Except as expressly provided for in the Plan, no
         Outside Director or other person shall have any claim or right to be
         granted an Option under the Plan. Neither the Plan nor any action taken
         hereunder shall be construed as giving any Outside Director any right
         to be retained in the service of the Company.

                  (b)      Except as otherwise permitted under the Director
         Stockholder's Agreement, an Optionee's right and interest under the
         Plan may not be assigned or transferred in whole or in part either
         directly or by operation of law or otherwise (except in the event of an
         Optionee's death, by will or the laws of descent and distribution),
         including, but not by way of limitation, execution, levy, garnishment,
         attachment, pledge, bankruptcy, or in any other manner, and no such
         right or interest of any participant in the Plan shall be subject to
         any obligation or liability of such participant.

                  (c)      No Common Stock shares shall be issued hereunder
         unless counsel for the Company shall be satisfied that such issuance
         will be in compliance with applicable federal, state, and other
         securities laws and regulations.

                  (d)      The expenses of the Plan shall be borne by the
         Company.

                  (e)      By accepting any Option or other benefit under the
         Plan, each Optionee and each person claiming under or through such
         person shall be conclusively deemed to have indicated his acceptance
         and ratification of, and consent to, any action taken under the Plan by
         the Company or the Board.

                  (f)      All section references herein refer to sections of
         this Plan unless specifically noted otherwise.

                  (g)      Any notice or other communication provided for herein
         shall be given in writing by registered or certified mail, return
         receipt requested, or by facsimile, telecopy, or other means of
         electronic communication, reasonably calculated in any instance to be
         received by the receiving party or his or its authorized agent at the
         receiving party's last-known address. The notice or communication shall
         be deemed as delivered when it arrives at such address.

         SECTION 12.        APPROVAL OF PLAN. The  effectiveness of this Plan
is subject to its approval and ratification by the shareholders of the Company
within one year from the date of adoption hereof by the Board.


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