EXHIBIT 10.2

                                GUARANTY

      GUARANTY dated August 23, 2000 (the  "Guaranty")  made by each of
the companies listed on Schedule 1 together with any future Subsidiary,  if any,
of Sierra Health Services, Inc., a Nevada corporation ("Sierra") (as hereinafter
defined) that becomes a party to this Guaranty,  a "Guarantor" and collectively,
"Guarantors")  in favor of each of the Agent (as  hereinafter  defined)  and the
Banks (as defined in the Credit Agreement  referred to below)  (collectively the
"Bank Parties").

         PRELIMINARY STATEMENTS:

     (1) Bank of America,  N.A., as administrative  agent for the Banks (in such
capacity,  the "Agent"),  the Banks and Sierra Health  Services,  Inc., a Nevada
corporation  ("Borrower")  have  entered  into a  Credit  Agreement  dated as of
October 30, 1998, as amended (said Agreement,  as it may hereafter be amended or
otherwise modified from time to time, being the "Credit Agreement";  capitalized
terms used  herein and not  otherwise  defined  herein  shall have the  meanings
assigned to such terms in the Credit  Agreement),  pursuant to which Banks have,
among other  things,  and subject to the terms and  conditions  set forth in the
Credit  Agreement,  agreed to make  available to the Borrower  certain Loans and
Letters of Credit.

     (2)  Pursuant to that  certain  Waiver and Fourth  Amendment  to the Credit
Agreement dated as of August 14, 2000 ("Fourth  Amendment"),  Sierra agreed that
each Guarantor shall execute and deliver this Guaranty.

     (3) The  Guarantors  have  duly  authorized  the  execution,  delivery  and
performance of this Guaranty.

     (4) Each Guarantor  hereby confirms that it will derive direct and indirect
benefit from the  transactions  contemplated by the Credit  Agreement,  and that
Banks' continued financing of Borrower is in each Guarantor's best interest.

     NOW, THEREFORE, in consideration of the premises and in order to induce the
Bank Parties to execute the Fourth Amendment,  each Guarantor hereby agrees, for
the benefit of the Bank Parties, as follows:

2.                Section   Guaranty: Limitation of Liability.
                            ---------------------------------


     a. Each Guarantor hereby absolutely,  unconditionally  and irrevocably,  as
primary  obligor  and not merely as  surety,  guarantees  the full and  punctual
payment when due, whether at stated maturity, by acceleration or otherwise,  and
at all times  thereafter,  of all  obligations  (monetary or  otherwise)  of the
Borrower to each of the Bank Parties,  howsoever created,  arising or evidenced,
whether direct or indirect,  absolute or contingent,  now or hereafter existing,
or due or to become  due,  which arise out of or in  connection  with the Credit
Agreement,  any Letter of Credit, any other Loan Document,  or any Swap Contract
entered into with a Bank and permitted under the Credit Agreement,  in each case
as the same may be amended, modified, extended or renewed from time to time (all
such Obligations being herein collectively called the "Guaranteed Obligations").
Without  limiting the generality of the foregoing,  each  Guarantor's  liability
shall extend to all amounts that constitute  part of the Guaranteed  Obligations
and would be owed by the Borrower to the Agent or any other Bank Party under the
Loan Documents but for the fact that they are unenforceable or not allowable due
to the existence of a bankruptcy, reorganization or similar proceeding involving
the  Borrower.  Notwithstanding  the  foregoing,  it has  been  agreed  that CII
Financial,  Inc.  shall not be required to make any payment  under this Guaranty
unless and until it shall have  received a written  demand for such payment from
the Agent.

     b. This Guaranty  constitutes a guaranty by each  Guarantor of payment when
due and not of collection,  and each Guarantor specifically agrees that it shall
not be  necessary  or required  that the Agent or any Bank  exercise  any right,
assert any claim or demand or enforce any remedy whatsoever against the Borrower
(or any  other  Person)  before or as a  condition  to the  obligations  of such
Guarantor hereunder.

     c. Any term or provision of this Guaranty or any other Loan Document to the
contrary  notwithstanding,  the  aggregate  maximum  amount  of  the  Guaranteed
Obligations  for which  each  Guarantor  shall be liable  shall not  exceed  the
maximum amount for which such Guarantor can


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     be liable without  rendering this Guaranty or any other Loan Document as it
relates to such Guarantor,  voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer.

     3. Section Guaranty Absolute. Each Guarantor guarantees that the Guaranteed
Obligations  will be paid  strictly  in  accordance  with the  terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any  jurisdiction  affecting  any of such terms or the rights of the Agent or
any other Bank Party with respect  thereto.  The  Obligations  of each Guarantor
under this Guaranty are  independent of the Guaranteed  Obligations or any other
Obligations of any other Person under the Loan Documents,  and a separate action
or actions may be brought and  prosecuted  against any Guarantor to enforce this
Guaranty,  irrespective of whether any action is brought against the Borrower or
any other  Person or whether the  Borrower or any other  Person is joined in any
such  action  or  actions.  The  creation  or  existence  from  time  to time of
additional Guaranteed  Obligations to the Agent or the other Bank Parties or any
of them is  authorized,  without  notice to any  Guarantor,  and shall in no way
impair the rights of the Agent or the other Bank Parties or the  obligations  of
any Guarantor  under this  Guaranty,  including  the Guaranty  hereunder of such
additional  Guaranteed  Obligations.  The liability of each Guarantor under this
Guaranty shall be irrevocable,  absolute and unconditional  irrespective of, and
each Guarantor  hereby  irrevocably  waives any defenses it may now or hereafter
have in any way relating to, any or all of the following:

     a. any lack of validity, legality or enforceability of the Credit Agreement
or any Loan Document;

     b. the failure of the Agent or any Bank

     (i) to assert any claim or demand or to enforce any right or remedy against
the  Borrower or any other  Person  (including  any other  guarantor)  under the
provisions of the Credit Agreement, any other Loan Document or otherwise, or

     (ii) to exercise  any right or remedy  against any other  guarantor  of, or
collateral securing, any Guaranteed Obligations;


<PAGE>



     c. any change in the time,  manner or place of payment  of, or in any other
term of,  all or any of the  Guaranteed  Obligations,  or any  other  extension,
compromise or renewal of any Guaranteed Obligation;

     d. any reduction,  limitation,  impairment or termination of any Guaranteed
Obligations for any reason,  including any claim of waiver, release,  surrender,
alteration or compromise, and shall not be subject to (and such Guarantor hereby
waives any right to or claim of) any defense or setoff, counterclaim, recoupment
or   termination   whatsoever   by   reason  of  the   invalidity,   illegality,
nongenuineness,  irregularity,  compromise,  unenforceability  of,  or any other
event or occurrence affecting, any Guaranteed Obligations;

     e. any amendment to,  rescission,  waiver, or other modification of, or any
consent to departure from, any of the terms of the Credit Agreement or any other
Loan Document;

     f. (i) any addition,  exchange, release, surrender or non-perfection of any
collateral  or (ii) any  amendment  to or waiver or release or  addition  of, or
consent to departure  from,  any other  guaranty  held by the Agent or any Bank,
securing or supporting any of the Guaranteed Obligations;

     g. any  other  circumstance  which  might  otherwise  constitute  a defense
available to, or a legal or equitable discharge of, any Guarantor, the Borrower,
any surety or any other guarantor; or

     h. any  failure  of any Bank  Party to  disclose  to the  Borrower  or each
Guarantor  any  information  relating to the  financial  condition,  operations,
properties  or  prospects  of any other Person now or in the future known to any
Bank Party (each  Guarantor  acknowledges  that the Bank Parties have no duty to
disclose such information).

     This Guaranty shall continue to be effective or be reinstated,  as the case
may  be,  if at any  time  any  payment  (in  whole  or in  part)  of any of the
Guaranteed  Obligations  is rescinded or must  otherwise be returned by any Bank
Party or any other Person upon the insolvency,  bankruptcy or  reorganization of
the Borrower, all as though such payment had not been made.


<PAGE>



4.                Section   Waivers and Acknowledgments.
                            ---------------------------

     a. Each Guarantor hereby waives promptness, diligence, notice of acceptance
and any other notice with respect to any of the Guaranteed  Obligations and this
Guaranty  and any  requirement  that the Agent or any other Bank Party  protect,
secure, perfect or insure any security interest or Lien, or any property subject
thereto,  or exhaust any right or take any action  against  the  Borrower or any
other Person (including any Guarantor) or entity or any collateral  securing any
Guaranteed Obligations.

     b. Each  Guarantor  hereby  irrevocably  waives  any  right to revoke  this
Guaranty,  and  acknowledges  that this  Guaranty  is  continuing  in nature and
applies to all Guaranteed Obligations, whether existing now or in the future (it
being  understood and agreed that if,  notwithstanding  the foregoing,  any such
revocation  shall occur or be attempted,  such revocation shall not in any event
reduce or otherwise affect any Guarantor's  liability with respect to Guaranteed
Obligations  arising  prior to receipt by the Bank Parties of written  notice of
such revocation or attempted revocation).

     c. Each Guarantor hereby waives: (i) any rights to assert against Banks any
defense  (legal  or  equitable),  set-off,  counterclaim,  or claim  which  such
Guarantor may now or at any time  hereafter  have against  Borrower or any other
party liable to Banks; (ii) any defense, set-off, counterclaim, or claim, of any
kind or nature,  arising  directly or indirectly from the present or future lack
of  perfection,  sufficiency,  validity,  or  enforceability  of the  Guaranteed
Obligations or any security therefor; (iii) any defense arising by reason of any
claim or defense based upon an election of remedies by Banks; (iv) the
benefit  of any  statute  of  limitations  affecting  such  Guarantor's
liability hereunder or the enforcement thereof, and any act which shall defer or
delay the operation of any statute of  limitations  applicable to the Guaranteed
Obligations shall similarly operate to


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     defer or delay the operation of such statute of  limitations  applicable to
such Guarantor's liability hereunder; and (v) to the fullest extent permitted by
law,  any defense or benefit  that may be derived  from or afforded by law which
limits the liability of or exonerates  guaranties or sureties or requires  Banks
to exhaust  remedies  against the  Borrower  prior to  commencing  any action or
foreclosure  against  such  Guarantor  or  its  properties  including,   without
limitation,  the benefits of Sections 2787 through 2855, inclusive, and Sections
2899 and 3433 of the California Civil Code and any successor  provisions to such
Sections.

     d. Each  Guarantor  agrees that if all or a portion of the  Obligations  or
this  Guaranty is at any time  secured by a deed of trust or  mortgage  covering
interests in real property,  Banks, in their sole discretion,  without notice or
demand  and  without  affecting  the  liability  of such  Guarantor  under  this
Guaranty,  may  foreclose  pursuant  to the  terms of the  Credit  Agreement  or
otherwise  the deed of trust or  mortgage  and the  interests  in real  property
secured  thereby  by  non-judicial  sale  pursuant  to the terms  thereof.  Each
Guarantor  understands  that the  exercise  by the Banks of  certain  rights and
remedies  contained  in the  Credit  Agreement  and any  such  deed of  trust or
mortgage may affect or eliminate such Guarantor's  right of subrogation  against
Borrower  and that such  Guarantor  may  therefore  incur a partially or totally
non-reimbursable  liability  hereunder.   Nevertheless,  each  Guarantor  hereby
authorizes  and empowers the Banks to exercise,  in their sole  discretion,  any
rights and remedies,  or any combination  thereof,  which may then be available,
since it is the  intent  and  purpose  of such  Guarantor  that the  obligations
hereunder  shall be absolute,  independent and  unconditional  under any and all
circumstances.  Notwithstanding any foreclosure of the lien of any deed of trust
or  security  agreement  with  respect  to any or all of any  real  or  personal
property secured thereby, whether by the exercise of the power of sale contained
therein, by an action for judicial  foreclosure or by an acceptance of a deed in
lieu of foreclosure, each Guarantor shall remain bound


<PAGE>


     under  this  Guaranty  including  its  obligation  to  pay  any  deficiency
following a non-judicial foreclosure.

     e. Each  Guarantor  acknowledges  that it will receive  direct and indirect
benefits from the financing arrangements  contemplated by the Loan Documents and
that the waivers set forth in this Section 3 are knowingly made in contemplation
of such benefits.

     5. Section Subrogation. Each Guarantor agrees that it will not exercise any
rights that it may now or  hereafter  acquire  against the Borrower or any other
Person that arise from the  existence,  payment,  performance  or enforcement of
such  Guarantor's  Obligations  under this Guaranty or any other Loan  Document,
including,   without  limitation,  any  right  of  subrogation,   reimbursement,
exoneration, contribution or indemnification and any right to participate in any
claim or remedy of the Agent or any other Bank Party against the Borrower or any
other Person or any  collateral  which the Agent or any other Bank Party now has
or  hereafter  acquires,  whether or not such claim,  remedy or right  arises in
equity or under contract, statute or common law, including,  without limitation,
the right to take or  receive  from the  Borrower  or any  Person,  directly  or
indirectly,  in cash or other  property  or by set-off  or in any other  manner,
payment or security on account of such claim,  remedy or right, unless and until
all of the  Guaranteed  Obligations  and all other  amounts  payable  under this
Guaranty  shall  have been paid in full in cash and the  Commitment  shall  have
expired or terminated. If any amount shall be paid to any Guarantor in violation
of the  preceding  sentence at any time prior to the later of (i) the payment in
full in cash of the Guaranteed  Obligations  and all other amounts payable under
this Guaranty and (ii) the Revolving Termination Date, such amount shall be held
in trust for the  benefit  of the Agent and the  other  Bank  Parties  and shall
forthwith  be paid to the Agent to be  credited  and  applied to the  Guaranteed
Obligations and any other amounts payable under this Guaranty whether matured or
unmatured,  in accordance with the terms of the Loan Documents, or to be held as
collateral  for any Guaranteed  Obligations or other amounts  payable under this
Guaranty  thereafter  arising.  If (i) each Guarantor  shall make payment to the
Agent or any other Bank Party of all or any part of the Guaranteed  Obligations,
(ii) all of the Guaranteed  Obligations and all other amounts payable under this
Guaranty shall be paid in full


<PAGE>


     in cash and (iii) the Revolving  Termination Date shall have occurred,  the
Agent and the other Bank Parties shall, at each Guarantor's request and expense,
execute and deliver to each Guarantor  appropriate  documents,  without recourse
and without  representation  or warranty,  necessary to evidence the transfer by
subrogation  to each  Guarantor  of an  interest in the  Guaranteed  Obligations
resulting from such payment by each Guarantor.

6.                Section   Payments Free and Clear of Taxes, Etc.
                            --------------------------------------

     a. Any and all payments made by any Guarantor  hereunder  shall be made, in
accordance  with  Section  4.01 of the Credit  Agreement,  free and clear of and
without  deduction  for any and all present or future Taxes.  In addition,  each
Guarantor  agrees to pay any present or future  Other  Taxes.  If any  Guarantor
shall be  required  by law to deduct  any Taxes  from or in  respect  to any sum
payable  hereunder  to the Agent or any other Bank  Party,  (i) the sum  payable
shall be  increased  as may be  necessary  so that  after  making  all  required
deductions  (including  deductions  applicable to additional  sums payable under
this  Section)  the Agent or such other Bank Party (as the case may be) receives
an amount equal to the sum it would have  received had no such  deductions  been
made, (ii) such Guarantor shall make such deductions, (iii) such Guarantor shall
pay the  full  amount  deducted  to the  relevant  taxation  authority  or other
authority in accordance  with applicable law, and (iv) such Guarantor shall also
pay to each Bank Party or the Agent for the account of such Bank  Party,  at the
time  interest is paid,  Further  Taxes in the amount that the  respective  Bank
Party  specifies as necessary  to preserve  the  after-tax  yield the Bank Party
would have  received  if such Taxes,  Other Taxes or Further  Taxes had not been
imposed;

     provided,  that  the  foregoing  obligation  of any  Guarantor  to pay such
additional amounts shall not apply

     (A) to any  payment to any Bank Party that is subject to  deduction  for or
withholding for taxes pursuant to the Code, unless, as of the Closing Date


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     or the date it  becomes a Bank  pursuant  to  Section  11.08 of the  Credit
Agreement,  such Bank Party is entitled to submit a Form 1001  (relating to such
Bank and entitling it to a complete  exemption from  withholding on all interest
to be  received  by it under this  Agreement)  or a Form 4224  (relating  to all
interest to be received by such Bank Party under the Credit Agreement in respect
of the Loans) (and,  in that regard,  each such Bank Party shall  deliver to the
Agent and  Sierra the  documentation  required  by  Section  10.10 of the Credit
Agreement), or

     (B) to any taxes imposed solely by reason of the failure of such Bank Party
to comply with applicable  certification,  information,  documentation  or other
reporting  requirements  concerning  the  nationality,  residence,  identity  or
connections  with the  United  States of such Bank Party if such  compliance  is
required by statute or  regulations  of the United States as a  precondition  to
relief or exemption from such Taxes.

b.                [intentionally omitted]

     c. Each  Guarantor  will  indemnify the Agent and each other Bank Party for
the full  amount of Taxes or Other Taxes  (including,  without  limitation,  any
Taxes or Other Taxes imposed by any  jurisdiction  on amounts payable under this
Section) paid by the Agent or such other Bank Party (as the case may be) and any
liability (including penalties, additions to tax, interest and expenses) arising
therefrom or with respect thereto.  This indemnification shall be made within 30
days from the date the Agent or such other Bank Party (as the case may be) makes
written demand therefor.

     d. Within 30 days after the date of any payment of Taxes by or on behalf of
any Guarantor, such Guarantor will furnish to the Agent, at its address referred
to in the  Credit  Agreement,  the  original  receipt  of  payment  thereof or a
certified copy of such receipt.

     e. Upon the reasonable request in writing of any Guarantor, each Bank Party
organized under the laws of


<PAGE>


     a jurisdiction  outside the United States of America shall,  on or prior to
the date of its  execution  and delivery of the Credit  Agreement in the case of
each  such  Bank,  and on the date of the  Assignment  and  Acceptance  or other
agreement  pursuant  to which it became a Bank  Party in the case of each  other
Bank Party,  and from time to time  thereafter  upon the  reasonable  request in
writing  by such  Guarantor  (but only so long  thereafter  as such  Bank  Party
remains  lawfully  able to do so),  provide  the Agent and such  Guarantor  with
Internal Revenue Service form 1001 or W-8ECI,  as appropriate,  or any successor
form prescribed by the Internal Revenue Service, certifying that such Bank Party
is entitled to benefits under an income tax treaty to which the United States of
America is a party that reduces the rate of  withholding  tax on payments  under
this Guaranty or certifying that the income receivable  pursuant to the Guaranty
is  effectively  connected with the conduct of a trade or business in the United
States of  America.  If the form  provided by a Bank Party at the time such Bank
Party first  becomes a party to the Credit  Agreement  indicates a United States
interest  withholding  tax rate in excess of zero,  withholding tax at such rate
shall be  considered  excluded  from  Taxes  unless  and until  such Bank  Party
provides the appropriate  form certifying that a lesser rate applies,  whereupon
withholding tax at such lesser rate only shall be considered excluded from Taxes
for periods governed by such form;  provided,  however,  that, if at the date of
the Assignment and Acceptance  pursuant to which a Bank Party assignee becomes a
party to the Credit Agreement,  the Bank Party assignor was entitled to payments
under subsection (a) in respect of United States withholding tax with respect to
interest paid at such date,  then, to such extent,  the term Taxes shall include
(in  addition  to  withholding  taxes that may be imposed in the future or other
amounts  otherwise  includable in Taxes) United States  withholding tax, if any,
applicable  with respect to the Bank Party assignee on such date. If any form or
document  referred to in this  subsection  (e) and  requested  by any  Guarantor
pursuant to this subsection (e) requires the disclosure of information,


<PAGE>


     other than information necessary to compute the tax payable and information
required on the date hereof by Internal  Revenue Service form 1001 or 4224, that
the Bank Party  reasonably  considers to be  confidential,  the Bank Party shall
give notice  thereof to such  Guarantor and shall not be obligated to include in
such form or document such confidential information.

     f. For any period with  respect to which a Bank Party has failed to provide
any Guarantor following such Guarantor's request therefor pursuant to subsection
(e) above with the  appropriate  form described in subsection (e) (other than if
such failure is due to a change in law occurring  after the date on which a form
originally was required to be provided or if such form otherwise is not required
under subsection (e)), such Bank Party shall not be entitled to  indemnification
under  subsection  (a) or (c) with respect to Taxes imposed by the United States
of America; provided,  however, that should a Bank Party become subject to Taxes
because of its  failure to deliver a form  required  hereunder,  each  Guarantor
shall take such steps as such Bank Party shall reasonably request to assist such
Bank Party to recover such Taxes.

     g.  Without  prejudice  to the  survival  of  any  other  agreement  of any
Guarantor  hereunder  or under any  other  Loan  Document,  the  agreements  and
obligations  of each  Guarantor  contained in this  Section 6 shall  survive the
payment in full of the  Guaranteed  Obligations  and all other  amounts  payable
under this Guaranty.

     7. Section Representations and Warranties. Each Guarantor hereby represents
                --------------- --- -----------
and warrants as follows:

     a. Such Guarantor (i) is a corporation duly organized,  validly existing in
good standing under the laws of the jurisdiction of its  incorporation,  (ii) is
duly  qualified  and in good  standing  as a foreign  corporation  in each other
jurisdiction  in which it owns or leases property or in which the conduct of its
business requires it to so qualify or be licensed except where the failure to so
qualify or be licensed would not have a Material Adverse Effect and (iii) has


<PAGE>


     all requisite corporate power and authority to own or lease and operate its
properties  and to carry on its business as now  conducted and as proposed to be
conducted.

     b. The  execution,  delivery  and  performance  by such  Guarantor  of this
Guaranty and all other  instruments  executed in  connection  herewith,  and the
transactions  contemplated hereby, are within such Guarantor's corporate powers,
have been duly  authorized by all  necessary  corporate  action,  and do not (i)
contravene such Guarantor's charter or by-laws, (ii) violate any law (including,
without  limitation,  the  Securities  Exchange  Act of 1934  and the  Racketeer
Influenced and Corrupt  Organizations Chapter of the Organized Crime Control Act
of 1970), rule, regulation (including,  without limitation,  Regulation X of the
Board of  Governors  of the Federal  Reserve  System),  order,  writ,  judgment,
injunction, decree, determination or award, (iii) conflict with or result in the
breach  of, or  constitute  a  default  under,  any  contract,  loan  agreement,
indenture,  mortgage,  deed of trust,  lease or other  instrument  binding on or
affecting such Guarantor or any of its properties,  or (iv) result in or require
the  creation  or  imposition  of any Lien  upon or with  respect  to any of the
properties of such  Guarantor.  Such Guarantor is not in violation of or subject
to any contingent liability on account of any such law, rule, regulation, order,
writ, judgment,  injunction,  decree, determination or award or in breach of any
such contract,  loan agreement,  indenture,  mortgage,  deed of trust,  lease or
other instrument, the violation or breach of which could have a Material Adverse
Effect.

     c. Except in the case of SMHS, no authorization or approval or other action
by, and no notice to or filing or registration with, any governmental  authority
or  regulatory  body  or any  other  third  party  is  required  for (i) the due
execution,  delivery,  recordation,  filing or  performance by such Guarantor of
this Guaranty or any other instrument  executed in connection  herewith,  or for
the consummation of the


<PAGE>


     transactions  contemplated  hereby or (ii) the exercise by the Agent or any
Bank of its rights under this Guaranty.

     d. This Guaranty has been, and each other instrument executed in connection
herewith when delivered hereunder will have been, duly executed and delivered by
such  Guarantor.  This  Guaranty  is,  and each  other  instrument  executed  in
connection  herewith  when  delivered  hereunder  will be, the legal,  valid and
binding  obligation of such  Guarantor,  enforceable  against such  Guarantor in
accordance with its terms.

     e. Such  Guarantor is not subject to  regulation  under the Public  Utility
Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act,
the  Investment  Company Act of 1940, or any other  federal or state  regulatory
scheme  such  that its  ability  to incur  Debt is  limited  or its  ability  to
consummate the transactions contemplated hereby is materially impaired.

     f.  There is no  action,  suit,  investigation,  litigation  or  proceeding
affecting such Guarantor, including any Environmental Action, pending or, to the
best  of  the  knowledge  of  such  Guarantor,   threatened  before  any  court,
governmental  agency or arbitrator that (i) would reasonably be expected to have
a Material  Adverse Effect or (ii) purports to affect the legality,  validity or
enforceability  of this Guaranty or any other instrument  executed in connection
herewith or the consummation of the transactions contemplated hereby.

     g. Such  Guarantor  is solvent  (e.g.,  it is able to pay its debts as they
mature,  it does not have  unreasonably  small  capital or assets in view of its
business and the present fair value of its assets exceeds its liabilities).

     h. There are no conditions  precedent to the effectiveness of this Guaranty
that have not been satisfied or waived.


<PAGE>



     i. Such Guarantor has, independently and without reliance upon the Agent or
any other  Bank  Party and based on such  documents  and  information  as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Guaranty,  and such Guarantor has  established  adequate means of obtaining from
Sierra and the other Guarantors on a continuing basis information pertaining to,
and is now and on a  continuing  basis will be  completely  familiar  with,  the
financial  condition,  operations,  properties  and prospects of Sierra and such
other Guarantors.

     8. Section Affirmative Covenants. Each Guarantor covenants and agrees that,
so long as any part of the  Guaranteed  Obligations  shall  remain  unpaid,  any
Letter  of  Credit  shall  be  outstanding  or any  Bank  Party  shall  have any
Commitment,  if,  under the  terms of the  Credit  Agreement,  the  Borrower  is
required to cause such  Guarantor  or any of such  Guarantor's  Subsidiaries  to
take, or to refrain from taking, any action, or to comply with any requirements,
obligations, limitations or restrictions contained therein, in each case whether
individually or together with any other Bank Parties,  such Guarantor shall, and
shall cause each of its  Subsidiaries  to,  take or refrain  from taking (as the
case may be) any such action and comply with all such requirements, obligations,
limitations and  restrictions and not take any action that would create an Event
of Default.

     9. Section Amendments, Etc. No amendment or waiver of any provision of this
Guaranty and no consent to any departure by any Guarantor therefrom shall in any
event be  effective  unless the same shall be in writing and signed by the Agent
and the Majority Banks,  and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; provided,
however,  that no  amendment,  waiver or consent  shall,  unless in writing  and
signed by all of the Bank  Parties,  (a) limit the  liability  of any  Guarantor
hereunder,  (b) postpone any date fixed for payment  hereunder or (c) change the
number of Bank Parties required to take any action hereunder. Anything contained
herein to the contrary notwithstanding,  any amendment to this Guaranty pursuant
to the form  attached  hereto  shall be  effective  upon  execution by the party
thereto and acceptance thereof by the Agent, in each case


<PAGE>


     without  further  consent by or notice to the Majority  Banks or any of the
other Bank Parties.

     10. Section Notices, Etc. All notices and other communications provided for
hereunder  shall  be  in  writing  (including  telegraphic,  telecopy  or  telex
communication),  telegraphed,  telecopied, telexed or delivered to it, if to any
Guarantor,  addressed  to it at its address  specified  on the  signature  pages
hereto,  if to the Agent or any Bank  Party,  at its  address  specified  in the
Credit  Agreement,  or as to any  party  at  such  other  address  as  shall  be
designated  by such  party in a written  notice to each  other  party.  All such
notices and other communications  shall, when mailed,  telegraphed,  telecopied,
telexed or cabled be effective  three  Business Days after deposit in the mails,
or when  delivered  to the  telegraph  company,  transmitted  by  telecopier  or
confirmed by telex answerback, or delivered to the cable company, respectively.

     11. Section No Waiver; Remedies. No failure on the part of the Agent or any
other Bank Party to exercise,  and no delay in exercising,  any right  hereunder
shall operate as a waiver thereof;  nor shall any single or partial  exercise of
any right  hereunder  preclude  any other or  further  exercise  thereof  or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.

     12.  Section Right of Set-off.  If an Event of Default  exists or the Loans
have been  accelerated  pursuant  to  Section  9.02,  each Bank  Party is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all  deposits  (general  or  special,  time or
demand,  provisional  or final) at any time held and other  indebtedness  at any
time  owing  by such  Bank  Party to or for the  credit  or the  account  of any
Guarantor  against  any and all of the  Obligations  of  such  Guarantor  now or
hereafter  existing  under this  Guaranty,  whether or not such Bank Party shall
have made any demand under this  Guaranty and although such  Obligations  may be
unmatured.  Each Bank Party agrees  promptly to notify each Guarantor  after any
such set-off and application;  provided,  however, that the failure to give such
notice shall not affect the validity of such set-off and application. The rights
of each Bank Party  under  this  Section  are in  addition  to other  rights and
remedies (including, without limitation, other rights of set-off) that such Bank
Party may have.


<PAGE>



     13. Section Indemnification. Without limitation on any other Obligations of
any  Guarantor  or  remedies  of the Bank  Parties  under  this  Guaranty,  each
Guarantor shall, to the fullest extent permitted by law,  indemnify,  defend and
save and hold  harmless  each  Bank  Party  from and  against,  and shall pay on
demand, any and all reasonable losses, liabilities, damages, costs, expenses and
charges  (including  the fees  and  disbursements  of such  Bank  Party's  legal
counsel)  suffered  or incurred by such Bank Party as a result of any failure of
any Guaranteed Obligations to be the legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their terms.

     14. Section  Continuing  Guaranty;  Assignments under the Credit Agreement.
This  Guaranty is a  continuing  guaranty and shall (a) remain in full force and
effect  until the  later of (i) the  payment  in full in cash of the  Guaranteed
Obligations  and all other  amounts  payable  under this  Guaranty  and (ii) the
Revolving  Termination Date, (b) be binding upon each Guarantor,  its successors
and assigns and (c) inure to the benefit of and be  enforceable by the Agent and
the other Bank Parties and their  successors,  transferees and assigns.  Without
limiting the  generality of the foregoing  clause (c), any Bank Party may assign
or otherwise transfer all or any portion of its rights and obligations under the
Credit  Agreement  (including,  without  limitation,  all or any  portion of its
Commitments,  the  Loans  owing to it and the  Note or Notes  held by it) to any
other Person,  and such other Person shall thereupon  become vested with all the
benefits in respect thereof  granted to such Bank Party herein or otherwise,  in
each  case  as and  to the  extent  provided  in  Section  11.07  of the  Credit
Agreement.

     15. Section Governing Law; Jurisdiction; Waiver of Jury Trial, Etc.
                 --------- ---- ------------- ------ -- ---- ------ ----

     a. THIS GUARANTY  SHALL BE GOVERNED BY, AND  CONSTRUED IN ACCORDANCE  WITH,
THE LAW OF THE STATE OF CALIFORNIA  EXCEPT TO THE EXTENT THAT THE REMEDIES UNDER
THE GUARANTY ARE GOVERNED BY THE LAWS OF A STATE OTHER THAN CALIFORNIA; PROVIDED
THAT THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

     b. ANY LEGAL ACTION,  PROCEEDING OR LITIGATION BASED HEREON, OR ARISING OUT
OF, UNDER, OR IN CONNECTION


<PAGE>


     WITH,  THIS  GUARANTY,  OR  ANY  COURSE  OF  CONDUCT,  COURSE  OF  DEALING,
STATEMENTS  (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENT,  THE BANKS OR ANY
GUARANTOR MAY BE BROUGHT AND MAINTAINED IN THE COURTS OF THE STATE OF CALIFORNIA
OR IN THE UNITED STATES  DISTRICT COURT FOR THE CENTRAL  DISTRICT OF CALIFORNIA;
PROVIDED,  HOWEVER,  THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
OTHER  PROPERTY  MAY BE  BROUGHT,  AT THE AGENT'S  OPTION,  IN THE COURTS OF ANY
JURISDICTION  WHERE  SUCH  COLLATERAL  OR OTHER  PROPERTY  MAY BE FOUND.  BY THE
EXECUTION AND DELIVERY OF THIS GUARANTY, EACH GUARANTOR, THE BANKS AND THE AGENT
HEREBY  CONSENTS  FOR ITSELF AND IN RESPECT OF ITS PROPERTY  AND  EXPRESSLY  AND
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE
OF CALIFORNIA AND OF THE UNITED STATES  DISTRICT COURT FOR THE CENTRAL  DISTRICT
OF  CALIFORNIA  FOR THE  PURPOSE OF ANY SUCH  LITIGATION  AS SET FORTH ABOVE AND
IRREVOCABLY  AGREES TO BE BOUND BY ANY JUDGMENT  RENDERED  THEREBY IN CONNECTION
WITH  SUCH  LITIGATION.   THE  AGENT,  THE  BANKS  AND  EACH  GUARANTOR  FURTHER
IRREVOCABLY  CONSENT  TO THE  SERVICE  OF  PROCESS  BY ANY  MEANS  PERMITTED  BY
CALIFORNIA LAW INCLUDING BY REGISTERED  MAIL,  POSTAGE  PREPAID,  OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF CALIFORNIA. THE AGENT, THE BANKS AND EACH
GUARANTOR  HEREBY  EXPRESSLY  AND  IRREVOCABLY  WAIVE,  TO  THE  FULLEST  EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH THEY MAY HAVE OR HEREAFTER MAY HAVE TO THE
LAYING OF VENUE OF ANY SUCH  LITIGATION  BROUGHT IN ANY SUCH COURT  REFERRED  TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.  TO THE  EXTENT  THAT THE  AGENT,  THE  BANKS AND ANY  GUARANTOR  HAVE OR
HEREAFTER  MAY ACQUIRE ANY IMMUNITY FROM  JURISDICTION  OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,  ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT  IN AID OF  EXECUTION  OR  OTHERWISE)  WITH  RESPECT TO THEM OR THEIR
PROPERTY,  THE AGENT, THE BANKS AND EACH GUARANTOR HEREBY IRREVOCABLY WAIVE SUCH
IMMUNITY IN RESPECT OF THEIR OBLIGATIONS UNDER THIS GUARANTY.

     c. EACH  GUARANTOR,  THE BANKS AND THE AGENT  EACH WAIVE  THEIR  RESPECTIVE
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION  BASED UPON OR ARISING
OUT OF


<PAGE>


     OR RELATED TO THIS  GUARANTY,  ANY COURSE OF  CONDUCT,  COURSE OF  DEALING,
STATEMENTS  (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY GUARANTOR,  THE BANKS OR
THE AGENT, OR THE TRANSACTIONS  CONTEMPLATED  HEREBY OR THEREBY,  IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR ANY AGENT-RELATED  PERSON,  PARTICIPANT OR ASSIGNEE,  WHETHER
WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.  EACH GUARANTOR, THE
BANKS AND THE AGENT EACH  AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION  SHALL BE
TRIED BY A COURT TRIAL  WITHOUT A JURY.  WITHOUT  LIMITING  THE  FOREGOING,  THE
PARTIES FURTHER AGREE THAT THEIR  RESPECTIVE  RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION,  COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS GUARANTY.  THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,  RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY.  EACH GUARANTOR  ACKNOWLEDGES AND
AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION
(AND EACH OTHER  PROVISION  OF EACH OTHER LOAN  DOCUMENT TO WHICH IT IS A PARTY)
AND THAT THIS  PROVISION  IS A MATERIAL  INDUCEMENT  FOR THE AGENT AND THE BANKS
ENTERING INTO THIS GUARANTY.  d. Section  captions used in this Guaranty are for
convenience  of reference  only, and shall not affect the  construction  of this
Guaranty.

     e. Any provision of this Guaranty which is prohibited or  unenforceable  in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such  prohibition  or  unenforceability   without   invalidating  the  remaining
provisions  hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.

     f. This  Guaranty,  taken together with all of the other Loan Documents and
all  certificates  and  other  documents  delivered  by  the  Borrower  and  the
Guarantors to the Agent or the other Bank Parties, embodies the entire agreement
and supersedes all prior agreements,  written and oral,  relating to the subject
matter hereof.


<PAGE>



     g. This  Guaranty  may be  executed  in any number of  counterparts  and by
different  parties  hereto  in  separate  counterparts,  each of  which  when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.  Delivery of an executed counterpart of a
signature  page to this Guaranty by facsimile  shall be as effective as delivery
of a manually executed counterpart of this Guaranty.


<PAGE>



     IN WITNESS  WHEREOF,  the undersigned  have caused this Guaranty to be duly
executed and delivered by its officers  thereunto duly authorized as of the date
first above written.

                              SIERRA HEALTH-CARE OPTIONS, INC.


                             By: /s/ Wayne R. Nippe

                                Title: Secretary

                              NEVADA ADMINISTRATORS, INC.


                              By: /s/ D. Sonenstein

                                Title: Secretary

                              BEHAVIORAL HEALTHCARE OPTIONS, INC.


                              By:    /s/  Stephen E. Shoop

                                Title: Secretary

                              SIERRA HOME MEDICAL PRODUCTS, INC.


                              By:    /s/   Lynn Rosenbach

                                Title: Secretary

                              FAMILY HEALTHCARE SERVICES


                              By: /s/ D. Sivertsen

                                Title: Secretary


<PAGE>



                              FAMILY HOME HOSPICE, INC.


                              By: /s/ D. Sivertsen

                                Title: Secretary

                              SIERRA MEDICAL MANAGEMENT, INC.


                              By:    /s/   Paul H. Palmer

                                Title: Secretary

                              SIERRA HEALTH HOLDINGS, INC.


                              By:    /s/   Erin MacDonald

                                Title: Secretary

                              SOUTHWEST MEDICAL ASSOCIATES, INC.


                              By: /s/ Steven Evans

                              Title: President & Secretary

                              NORTHERN NEVADA HEALTH NETWORK, INC.


                              By:   /s/  David M. Marlon

                                Title: Secretary

                              INTERMED, INC.


                              By: /s/ D. Sivertsen

                                Title: Secretary


<PAGE>


                              MOHAVE VALLEY HOSPITAL, INC.


                              By:   /s/   David M. Marlon

                                Title: Secretary

                              TOLEMAC, INC.


                              By:   /s/   David M. Marlon

                                Title: Secretary

                              M.E.G.A., INC.


                              By: /s/ Frank Collins

                                Title: Secretary

                              CII FINANCIAL, INC.


                              By: /s/ D. Sonenstein

                                Title: Secretary

                              SOUTHWEST REALTY, INC.


                              By: /s/ Frank Collins

                                Title: Secretary

                              PRIME HOLDINGS, INC.


                              By: /s/ Frank Collins

                                Title: Secretary

                              Address for all of the foregoing:

                              2724 North Tenaya Way

                             Las Vegas, Nevada 89128


<PAGE>


                                   SCHEDULE 1

Sierra Health-Care Options, Inc.
Nevada Administrators, Inc.
Behavioral Healthcare Options, Inc.
Sierra Home Medical Products, Inc.
Family Healthcare Services
Family Home Hospice, Inc.
Sierra Medical Management, Inc.
Sierra Health Holdings, Inc.
Southwest Medical Associates, Inc.
Northern Nevada Health Network, Inc.
Intermed, Inc.
Mohave Valley Hospital, Inc.
Tolemac, Inc.
M.E.G.A., Inc.
CII Financial, Inc.
Southwest Realty, Inc.
Prime Holdings, Inc.


<PAGE>


                              AMENDMENT TO GUARANTY

     This Amendment to Guaranty (this "Amendment"), dated as of _________, ____,
relates to the  Guaranty  dated as of August 23, 2000 (as  amended to date,  the
"Guaranty"),  among  certain  Subsidiaries  of SIERRA HEALTH  SERVICES,  INC., a
Nevada   corporation,   parties   thereto  as  Guarantors   (collectively,   the
"Guarantors")  in favor of the Banks (as  defined  in the Credit  Agreement  (as
hereinafter  defined)) and BANK OF AMERICA,  N.A., as Administrative  Agent (the
"Agent").

     In compliance  with the Credit  Agreement  dated as of October 30, 1998 (as
amended from time to time, the "Credit Agreement") among SIERRA HEALTH SERVICES,
INC., a Nevada  corporation  (collectively,  the "Borrower"),  the Agent and the
Banks,  [SUBSIDIARY],  (the  "Additional  Guarantor")  hereby  agrees as follows
(capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to them in the Credit Agreement):

     1.  Amendment.  The Guaranty is hereby amended to add as a party,  and more
         ---------
specifically, as a Guarantor, thereunder, the Additional Guarantor.

     2. Representations and Warranties.  The Additional Guarantor represents and
warrants  to the  Agent  an the  Banks  that  each  of the  representations  and
warranties  of a  Guarantor  contained  in the  Guaranty  is hereby  made by the
Additional  Guarantor  as of the date  hereof and is true and  correct as to the
Additional Guarantor as of the date hereof.

     3. Additional Guarantor as Guarantor.  The Additional Guarantor assumes all
of the obligations and liabilities of a Guarantor under the Guaranty,  agrees to
be bound thereby as if the  Additional  Guarantor  were an original party to the
Guaranty and shall be a Guarantor for all purposes under the Loan Documents.

     4.  Effectiveness.  This  Amendment  shall become  effective as of the date
         -------------
hereof upon  acceptance  by the Agent  (notice of which is hereby  waived by the
Additional Guarantors).


<PAGE>



     5.  Governing  Law. This  Amendment  shall be governed by, and construed in
         ---------  ---
accordance with, the laws of the State of California.

                                                     [ADDITIONAL GUARANTOR]


              By:________________________________
              Title:

              Notice Address:
              ===================================
              Attention: ________________________


Accepted:

BANK OF AMERICA, N.A., as
   Administrative Agent

By:_______________________________
   Title:

Dated: ____________, ____