EXHIBIT 10.1

                               FIRST AMENDMENT TO
                          CREDIT AGREEMENT AND WAIVER



         THIS  FIRST   AMENDMENT   TO  CREDIT   AGREEMENT   AND   WAIVER   (this
"AMENDMENT")is  made and dated as of May 31, 1997 among SIERRA HEALTH  SERVICES,
INC.,  a Nevada  corporation  (the  "COMPANY"),  the Banks  party to the  Credit
Agreement  referred  to below,  and BANK OF AMERICA  NATIONAL  TRUST AND SAVINGS
ASSOCIATION, a national banking association,  as Agent (the "AGENT"), and amends
that  certain  Credit  Agreement  dated  as  of  April  11,  1996  (the  "CREDIT
AGREEMENT").


                                    RECITALS

         WHEREAS,  the  Company has  requested  the Agent and the Banks to amend
certain  provisions  of the  Credit  Agreement,  and the Agent and the Banks are
willing to do so, on the terms and conditions specified herein;

         NOW, THEREFORE,  for good and valuable  consideration,  the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:

         1.    TERMS.  All terms used herein shall have the same  meanings as in
               the Credit Agreement unless otherwise defined herein.

     2. AMENDMENT. The Credit Agreement is hereby amended as follows:

                  2.1      AMENDED AND RESTATED DEFINITIONS.

                           (a) The definitions of the terms  "Commitment",  "L/C
                  Borrowing",  "L/C  Commitment" and "Revolving Loan" in Section
                  1.1 of the Credit Agreement are hereby amended and restated to
                  read in their entirety as follows:

                           "Commitment",  as to each Bank,  means the  Tranche A
                  Commitment and the Tranche B Commitment.

                           "L/C   Borrowing"   means  an   extension  of  credit
                  resulting  from a  drawing  under any  Letter of Credit  which
                  shall  not have  been  reimbursed  on the date  when  made nor
                  converted into a Borrowing of Tranche A Revolving  Loans under
                  subsection 3.03(b).

                           "L/C Commitment"  means the commitment of the Issuing
                  Bank to Issue,  and the  commitment of the Banks  severally to
                  participate  in, Letters of Credit from time to time Issued or
                  outstanding  under Article III, in an aggregate  amount not to
                  exceed  on any date the  amount  of  $40,000,000,  as the same
                  shall  be  reduced  as a  result  of a  reduction  in the  L/C
                  Commitment  pursuant to Section  2.06;  PROVIDED  that the L/C
                  Commitment  is a part of the combined  Tranche A  Commitments,
                  rather than a separate, independent commitment.


39176203.6 81397 151P 96246459

                                                        -1-

<PAGE>



                           "Revolving Loans" means the Tranche A Revolving Loans
                  and the Tranche B Revolving Loans.

     (b) Clause (iii) of the definition of Interest Period is hereby amended and
restated to read in its entirety as follows:

                           (iii) no Interest  Period for any Tranche A Revolving
                  Loan shall extend  beyond the Tranche A Revolving  Termination
                  Date and no Interest  Period for any Tranche B Revolving  Loan
                  shall extend beyond the Tranche B Revolving Termination Date.

     2.2  ADDITION OF NEW  DEFINITIONS.  Section 1.1 of the Credit  Agreement is
further  amended  by adding the  following  definitions  thereto in  appropriate
alphabetic order:

     "Tranche A  Commitment",  as to each Bank,  has the  meaning  specified  in
Section 2.01(a).

     "Tranche A Revolving  Loan" has the meaning  specified in Section  2.01(a),
and may be a Base Rate Loan or a LIBOR Rate Loan  (each,  a "TYPE" of  Revolving
Loan).

     "Tranche A Revolving Termination Date" means the earlier to occur of:

     (a) the fifth (5th)  anniversary  of the Closing  Date (as such date may be
extended pursuant to Section 2.16); and

                           (b) the  date on  which  the  Tranche  A  Commitments
                  terminate in accordance with the provisions of this Agreement.

     "Tranche B  Commitment",  as to each Bank,  has the  meaning  specified  in
Section 2.01(b).

                  "Tranche  B  Revolving  Loan"  has the  meaning  specified  in
         Section 2.01, and may be a Base Rate Loan or a LIBOR Rate Loan (each, a
         "TYPE" of Revolving Loan).

     "Tranche B Revolving Termination Date" means the earlier to occur of:

                           (a)      May 30, 1998; and

                           (b) the  date on  which  the  Tranche  B  Commitments
                  terminate in accordance with the provisions of this Agreement.

                  2.3  DELETION  OF  DEFINITION.   Section  1.1  of  the  Credit
Agreement is further amended by deleting the definition of Revolving Termination
Date. "Tranche A Revolving Termination Date" shall be substituted for "Revolving
Termination  Date" in each  place in which the latter  term  appears in the Loan
Documents.

     2.4 AMENDMENT AND  RESTATEMENT OF SECTION 2.01.  Section 2.01 of the Credit
Agreement is hereby amended and restated to read in its entirety as follows:


39176203.6 81397 151P 96246459

                                       -2-

<PAGE>



                           2.01  AMOUNTS AND TERMS OF COMMITMENTS.

                           (a) Each  Bank  severally  agrees,  on the  terms and
                  conditions  set forth  herein,  to make  loans to the  Company
                  (each such loan,  a "TRANCHE A  REVOLVING  LOAN") from time to
                  time on any  Business  Day during the period  from the Closing
                  Date  to the  Tranche  A  Revolving  Termination  Date,  in an
                  aggregate  amount  not to exceed at any time  outstanding  the
                  amount set forth on SCHEDULE 2.01 (such amount as the same may
                  be reduced  under  Section  2.05 or as a result of one or more
                  assignments   under  Section  11.08,  the  Bank's  "TRANCHE  A
                  COMMITMENT");  PROVIDED,  HOWEVER that after giving  effect to
                  any Borrowing of Tranche A Revolving  Loans, (i) the Effective
                  Amount of all  outstanding  Tranche A Revolving  Loans and the
                  Effective Amount of all L/C Obligations  shall not at any time
                  exceed  the  combined  Tranche  A  Commitments  and  (ii)  the
                  Effective Amount of all outstanding  Tranche A Revolving Loans
                  of any  Bank  plus  the  participation  of  such  Bank  in the
                  Effective Amount of all L/C Obligations  shall not at any time
                  exceed such Bank's Tranche A Commitments. Within the limits of
                  each  Bank's  Tranche A  Commitment,  and subject to the other
                  terms and conditions hereof, the Company may borrow under this
                  Section  2.01,  prepay under  Section 2.06 and reborrow  under
                  this Section 2.01.

                           (b) Each  Bank  severally  agrees,  on the  terms and
                  conditions  set forth  herein,  to make  loans to the  Company
                  (each such loan,  a "TRANCHE B  REVOLVING  LOAN") from time to
                  time on any Business Day during the period from April 30, 1997
                  to the Tranche A Revolving  Termination  Date, in an aggregate
                  amount  not to exceed at any time  outstanding  the amount set
                  forth on SCHEDULE 2.01 (such amount as the same may be reduced
                  under  Section 2.05 or as a result of one or more  assignments
                  under  Section  10.08,  the Bank's  "TRANCHE  B  COMMITMENT");
                  PROVIDED,  HOWEVER,  that after giving effect to any Borrowing
                  of Tranche B Revolving  Loans, (i) the Effective Amount of all
                  outstanding  Tranche B  Revolving  Loans shall not at any time
                  exceed  the  combined  Tranche  B  Commitments  and  (ii)  the
                  Effective  Amount of the Tranche B Revolving Loans of any Bank
                  shall not at any time exceed such Bank's Tranche B Commitment.
                  Within the limits of each  Bank's  Tranche B  Commitment,  and
                  subject to the other terms and conditions  hereof, the Company
                  may borrow under this Section 2.01,  prepay under Section 2.06
                  and reborrow under this Section 2.01.

     2.5 AMENDMENT AND  RESTATEMENT OF SECTION  3.01(A).  Section 3.01(a) of the
Credit  Agreement  is hereby  amended and  restated  to read in its  entirety as
follows:

                           (a) On the terms and  conditions set forth herein (i)
                  the Issuing Bank agrees, (A) from time to time on any Business
                  Day during the period from the  Closing  Date to the Tranche A
                  Revolving  Termination Date to issue Letters of Credit for the
                  account  of the  Company,  and to amend or  renew  Letters  of
                  Credit previously issued by it, in accordance with subsections
                  3.02(c) and 3.02(d), and (B) to honor drafts under the Letters
                  of Credit;  and (ii) the Banks  severally agree to participate
                  in Letters of Credit  Issued for the  account of the  Company;
                  PROVIDED,  that the  Issuing  Bank shall not be  obligated  to
                  Issue,  and no Bank shall be obligated to participate  in, any
                  Letter of Credit if as of the date of  Issuance of such Letter
                  of Credit (the  "ISSUANCE  DATE") (1) the Effective  Amount of
                  all L/C Obligations plus the Effective Amount of all Tranche A
                  Revolving  Loans exceeds the combined  Tranche A  Commitments,
                  (2) the  participation  of any Bank in the Effective Amount of
                  all L/C Obligations plus the Effective Amount of the Tranche A
                  Revolving  Loans of such Bank  exceeds  such Bank's  Tranche A
                  Commitment,  or (3) the  Effective  Amount of L/C  Obligations
                  exceeds the L/C

39176203.6 81397 151P 96246459

                                                        -3-

<PAGE>



                  Commitment.  Within the foregoing  limits,  and subject to the
                  other terms and conditions  hereof,  the Company's  ability to
                  obtain  Letters  of  Credit  shall  be fully  revolving,  and,
                  accordingly,  the Company may,  during the  foregoing  period,
                  obtain  Letters of Credit to replace  Letters of Credit  which
                  have expired or which have been drawn upon and reimbursed. All
                  Letters  of  Credit  shall  be  issued  under  the  Tranche  A
                  Commitment.

                  2.6  AMENDMENT  OF ARTICLE III. In Article III (The Letters of
Credit),  each  reference  to  "Revolving  Loans"  shall be deleted and the term
"Tranche A Revolving Loans" substituted therefor.

     2.7 AMENDMENT AND  RESTATEMENT OF SECTION 2.08.  Section 2.08 of the Credit
Agreement is hereby amended and restated to read in its entirety as follows:

                           2.08  REPAYMENT.

                           (a) The  Company  shall  repay  to the  Banks  on the
                  Tranche A Revolving  Termination Date the aggregate  principal
                  amount of Tranche A Loans outstanding on such date.

                           (b) The  Company  shall  repay  to the  Banks  on the
                  Tranche B Revolving  Termination Date the aggregate  principal
                  amount of Tranche B Loans outstanding on such date.

     2.8 AMENDMENT AND  RESTATEMENT OF SECTION  6.12(B).  Section 6.12(b) of the
Credit  Agreement  is hereby  amended and  restated  to read in its  entirety as
follows:

                           (b) Since  December 31,  1996,  (i) there has been no
                  Material Adverse Effect and (ii) there has been no development
                  in any of the matters  disclosed in Schedule  6.05 which would
                  reasonably be expected to have a Material Adverse Effect.

     2.9 AMENDMENT AND RESTATEMENT OF SECTION  8.10(A)(II).  Section 8.10(a)(ii)
of the Credit  Agreement  is hereby  amended  and  restated  in its  entirety as
follows:

                           (ii)   either  (A)  after   giving   effect  to  such
                  Restricted  Payment,  the aggregate  amount of all  Restricted
                  Payments  made  from  the  Closing  Date  to the  date of such
                  Restricted  Payment shall not exceed the sum of (x) 25% of net
                  income (or minus 100% of  consolidated  net income in the case
                  of a loss) of the Company and its  Subsidiaries  arising after
                  the Closing  Date and  computed on a  cumulative  consolidated
                  basis plus (y) 50% of the net cash proceeds of any issuance of
                  capital  stock of the Company  subsequent to the Closing Date,
                  exclusive  of any  such  issuance  made in  connection  with a
                  merger or  Acquisition;  or (B) with respect to any  purchase,
                  redemption or other acquisition of any shares of the Company's
                  capital stock by the Company ("STOCK  BUYBACK"),  after giving
                  effect to such  Stock  Buyback,  the  aggregate  amount of all
                  Stock  Buybacks made from the Closing Date to the date of such
                  Stock Buyback shall not exceed $25,000,000.

                  2.10  AMENDMENT AND  RESTATEMENT OF SCHEDULE 2.01 AND SCHEDULE
6.05.  Schedule 2.01 of the Credit  Agreement is hereby  amended and restated to
read in its entirety as set forth in Schedule  2.01  attached  hereto.  Schedule
6.05 of the Credit  Agreement  is hereby  amended  and  restated  to read in its
entirety as set forth in Schedule 6.05 attached hereto.


39176203.6 81397 151P 96246459

                                                        -4-

<PAGE>



     3. WAIVER.  The Agent and the Banks hereby  waive  compliance  with Section
8.14(c) of the Credit  Agreement  for the fiscal  quarter  ended March 31, 1997,
provided that the Fixed Charges  Coverage  Ratio is at least 2.225 to 1.00 as of
such date.

         4. RELEASE OF COLLATERAL  AND COVENANT TO REPLEDGE.  The parties hereto
acknowledge that due to changes to California  Insurance Code Section 1215.5, it
may be  necessary  to obtain the consent of the  Insurance  Commissioner  of the
State of  California  (the  "COMMISSIONER")  in order for  California  Indemnity
Insurance Company ("CIIC") to maintain the pledge of 10,000 shares of the common
stock of Commercial  Casualty Insurance Company pursuant to the Pledge Agreement
dated  as of  April  11,  1996  by CIIC  in  favor  of the  Agent  (the  "PLEDGE
AGREEMENT").  Accordingly,  the Agent hereby releases the Collateral (as defined
in the Pledge Agreement) to the Company and the Company hereby agrees to use its
best  efforts to obtain the  consent  of the  Commissioner  to the pledge of the
Collateral by not later than 90 days after the date of this Amendment.  Promptly
upon  obtaining  any such  consent,  the Company shall cause CIIC to deliver the
Collateral  to the Agent to be pledged  pursuant  to the Pledge  Agreement.  For
avoidance of doubt,  the parties hereto  acknowledge  that the shares  described
above  remain  subject  to the  negative  pledge of  Section  8.01 of the Credit
Agreement

     5.  REPRESENTATIONS AND WARRANTIES.  The Company represents and warrants to
the Agent and the Banks that,  on and as of the date  hereof,  and after  giving
effect to this Amendment:

                  5.1 AUTHORIZATION.  The execution, delivery and performance by
the  Company  of this  Amendment  has  been  duly  authorized  by all  necessary
corporate action, and this Amendment has been duly executed and delivered by the
Company.

                  5.2 BINDING OBLIGATION.  This Amendment constitutes the legal,
valid  and  binding  obligations  of  the  Company,  enforceable  against  it in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy,  insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.

                  5.3 NO LEGAL OBSTACLE TO AMENDMENT.  The  execution,  delivery
and  performance of this  Amendment  will not (a)  contravene  the  Organization
Documents  of the  Company;  (b)  constitute  a  breach  or  default  under  any
contractual  restriction  or  violate  or  contravene  any  law or  governmental
regulation or court decree or order binding on or affecting the Company;  or (c)
result in, or require  the  creation  or  imposition  of, any Lien on any of the
Company's  properties.  Except  as set  forth  on  Schedule  6.03 of the  Credit
Agreement,  no  approval  or  authorization  of any  governmental  authority  is
required to permit the execution, delivery or performance by the Company of this
Amendment, or the transactions contemplated hereby.

                  5.4    INCORPORATION   OF   CERTAIN    REPRESENTATIONS.    The
representations  and  warranties  of the  Company set forth in Article VI of the
Credit  Agreement  are true and  correct in all  respects  on and as of the date
hereof  as  though  made  on  and as of  the  date  hereof,  except  as to  such
representations made as of an earlier specified date.

     5.5 DEFAULT. After giving effect to this Amendment,  no Default or Event of
Default under the Credit Agreement has occurred and is continuing.

                  6.  CONDITIONS TO  EFFECTIVENESS.  This Amendment shall become
effective as of the date first written above, provided that the Agent shall have
received all of the  following  by such date and dated as of such date,  in form
and substance satisfactory to the Agent and the Banks:

     6.1 A  counterpart  hereof  executed  by a duly  authorized  officer of the
Company;

39176203.6 81397 151P 96246459

                                                        -5-

<PAGE>




                  6.2 an  acknowledgement  from each Pledgor  Subsidiary that it
consents to this Amendment and that its respective  Pledge  Agreement is in full
force and effect and that the Secured  Obligations as defined  therein  includes
all Obligations after giving effect to this Amendment;

                  6.3 Certified  copies of the charter and bylaws of the Company
or, in lieu thereof, a certificate from the Secretary or an Assistant  Secretary
of the Company certifying that such documents  previously delivered to the Agent
are true, correct and complete as of the date hereof;

                  6.4 A certificate from the Secretary or an Assistant Secretary
of the  Company in respect of all  corporation  action  taken by the  Company in
approving the execution,  delivery and performance of this Amendment and stating
that the  resolutions  previously  adopted  which  authorized  and  approved the
execution,  delivery and performance of the Loan Documents are in full force and
effect and have not been amended, rescinded or otherwise modified;

                  6.5 A certificate  of the Secretary or an Assistant  Secretary
of the Company  which shall certify the names and offices of the officers of the
Company  who are  authorized  to sign  this  Amendment,  together  with the true
signatures of such officers;

                  6.6 A good standing  certificate  with respect to the Company,
as of a recent  date prior to the  effective  date of this  Amendment,  from the
Secretary of State of Nevada; and

     6.7 An  opinion  of counsel  to the  Company  substantially  in the form of
Exhibit A hereto.

         7.       MISCELLANEOUS.

                  7.1 EFFECT OF  AMENDMENT.  It is hereby  agreed that all terms
and  conditions  of the Loan  Documents  are to remain in full  force and effect
unless otherwise  specifically amended,  waived or changed pursuant to the terms
of this  Amendment and are hereby  ratified and confirmed in all respects on and
as of the date hereof.  The Loan Documents shall, where the context so requires,
be read and construed throughout so as to incorporate this Amendment.

                  7.2 WAIVERS.  This  Amendment is limited solely to the matters
expressly  set forth  herein and is  specific in time and in intent and does not
constitute,  nor should it be  construed  as, a waiver or amendment of any other
term or condition, right, power or privilege under the Credit Agreement or under
any agreement,  contract,  indenture,  document or instrument mentioned therein;
nor  does it  preclude  or  prejudice  any  rights  of the  Agent  or the  Banks
thereunder, or any exercise thereof or the exercise of any other right, power or
privilege,  nor shall it require the Banks to agree to an  amendment,  waiver or
consent for a similar transaction or on a future occasion,  nor shall any future
waiver  of any  right,  power,  privilege  or  default  hereunder,  or under any
agreement,  contract,  indenture, document or instrument mentioned in the Credit
Agreement,  constitute a waiver of any other right, power,  privilege or default
of the same or of any other term or provision.

     7.3  COUNTERPARTS.  This  Amendment  may  be  executed  in  any  number  of
counterparts,  and all of such  counterparts  taken  together shall be deemed to
constitute one and the same instrument.

     7.4  GOVERNING  LAW. This  Amendment  shall be governed by and construed in
accordance with the laws of the State of California.


39176203.6 81397 151P 96246459

                                                        -6-

<PAGE>



                  7.5  CONSENT  AND  INSTRUCTIONS.  Each of the Banks by signing
this  Amendment  hereby (i)  consents  to the  execution  and  delivery  of this
Amendment and (ii) instructs the Agent to execute and deliver this Amendment.


39176203.6 81397 151P 96246459

                                                        -7-

<PAGE>



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


                          SIERRA HEALTH SERVICES, INC.


                          By:       /S/ JAMES L. STARR
                          Name:     JAMES L. STARR
                          Title:    VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND 
                                    TREASURER



                          BANK OF AMERICA NATIONAL TRUST AND SAVINGS
                              ASSOCIATION, as Agent


                                            By:     /S/ EDWARD S. HAN
                                            Name:    EDWARD S. HAN
                                            Title:    VICE PRESIDENT



                          BANK OF AMERICA NATIONAL TRUST AND SAVINGS
                          ASSOCIATION, as Issuing Bank


                                            By:    /S/ EDWARD S. HAN
                                            Name:    EDWARD S. HAN
                                            Title:    VICE PRESIDENT



                          BANK OF AMERICA NATIONAL TRUST AND SAVINGS
                             ASSOCIATION, as a Bank


                                            By:    /S/ EDWARD S. HAN
                                            Name:    EDWARD S. HAN
                                            Title:    VICE PRESIDENT



<PAGE>



                                  SCHEDULE 2.01

                         COMMITMENTS AND PRO RATA SHARES



Tranche A Commitments
<TABLE>
<CAPTION>

BANK                                                          COMMITMENT                  PRO RATA SHARE

Bank of America National Trust
<S>                                                           <C>                                  <C> 
and Savings Association                                       $50,000,000                          100%

TOTAL                                                         $50,000,000                          100%



Tranche B Commitments

BANK                                                          COMMITMENT                  PRO RATA SHARE

Bank of America National Trust
and Savings Association                                       $50,000,000                          100%

TOTAL                                                         $50,000,000                          100%
</TABLE>




39176203.6 81397 151P 96246459


<PAGE>


                                  SCHEDULE 6.05

                                   LITIGATION


As disclosed in the  Company's  Report on Form 10-K for the year ended  12/31/96
and Report on Form 8-K, each filed with the SEC on March 28, 1997.


<PAGE>