UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-Q

(Mark One)

-------------------------------------------------------------------------------
  X

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
EXCHANGE ACT OF 1934


For the quarterly period ended       March 31, 2000
                               --------------------

     OR

     TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES

EXCHANGE ACT OF 1934


For the transition period from _________________ to ___________________________
Commission File Number 1-8865


                          SIERRA HEALTH SERVICES, INC.

                 (Exact name of registrant as specified in its charter)

                          NEVADA                      88-0200415
              (State or other jurisdiction of         (I.R.S. Employer
              incorporation or organization)          Identification No.)


                   2724 NORTH TENAYA WAY
                       LAS VEGAS, NV                  89128
         (Address of principal executive offices)     (Zip Code)

                                 (702) 242-7000
              (Registrant's telephone number, including area code)

                                                         N/A

 (Former name, former address and former fiscal year, if changed since
last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No

  As of May 1, 2000, there were 27,041,000 shares of common stock outstanding.


<PAGE>



                  SIERRA HEALTH SERVICES, INC. AND SUBSIDIARIES
                                    FORM 10-Q

                    FOR THE THREE MONTHS ENDED MARCH 31, 2000

                                      INDEX
<TABLE>

<CAPTION>
                                                                                                           Page No.

Part I - FINANCIAL INFORMATION

      Item l.     Financial Statements

                  Condensed Consolidated Balance Sheets -
<S>                       <C> <C>               <C> <C>                                                          <C>
                    March 31, 2000 and December 31, 1999.....................................................    3

                  Condensed Consolidated Statements of Operations -
                    three months ended March 31, 2000 and 1999...............................................    4

                  Condensed Consolidated Statements of Cash Flows -
                    three months ended March 31, 2000 and 1999...............................................    5

                  Notes to Condensed Consolidated Financial Statements.......................................    6

      Item 2.     Management's Discussion and Analysis of

                    Financial Condition and Results of Operations............................................    9

      Item 3.     Quantitative and Qualitative Disclosures

                    about Market Risk........................................................................   14



Part II - OTHER INFORMATION

      Item l.     Legal Proceedings..........................................................................   15

      Item 2.     Changes in Securities and Use Of Proceeds..................................................   15

      Item 3.     Defaults Upon Senior Securities............................................................   15

      Item 4.     Submission of Matters to a Vote of Security Holders........................................   15

      Item 5.     Other Information..........................................................................   15

      Item 6.     Exhibits and Reports on Form 8-K...........................................................   15

Signatures...................................................................................................   16
</TABLE>



<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                  SIERRA HEALTH SERVICES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS
<TABLE>

<CAPTION>
                                                                                          March 31           December 31
                                                                                           2000                1999
                                                                                           ----                ----
CURRENT ASSETS:
<S>                                                                               <C>                   <C>
     Cash and Cash Equivalents..............................................      $      39,616,000     $     55,936,000
     Investments............................................................            203,592,000          218,951,000
     Accounts Receivable (Less:  Allowance for Doubtful
         Accounts 2000 - $15,496,000; 1999 - $15,551,000).............................             49,015,000           43,036,000
     Military Accounts Receivable (Less: Allowance for Doubtful
         Accounts 2000 - $899,000, 1999 - $800,000).........................             81,000,000           60,340,000
     Reinsurance Recoverable................................................             59,627,000           54,563,000
     Prepaid Expenses and Other Current Assets..............................             93,591,000           91,767,000
                                                                                  -----------------    -----------------
         Total Current Assets...............................................            526,441,000          524,593,000

PROPERTY AND EQUIPMENT, NET.................................................            261,858,000          264,549,000
LONG-TERM INVESTMENTS.......................................................             20,631,000           14,862,000
RESTRICTED CASH AND INVESTMENTS.............................................             22,092,000           21,705,000
REINSURANCE RECOVERABLE, Net of Current Portion.............................             91,780,000           82,300,000
GOODWILL ...................................................................            158,300,000          159,514,000
OTHER ASSETS................................................................             57,605,000           62,589,000
                                                                                  -----------------    -----------------
TOTAL ASSETS................................................................         $1,138,707,000       $1,130,112,000
                                                                                     ==============       ==============
</TABLE>

<TABLE>

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<CAPTION>
CURRENT LIABILITIES:
<S>                                                                                <C>                   <C>
  Accounts Payable and Accrued Liabilities..................................       $     98,916,000      $   102,573,000
  Medical Claims Payable....................................................             74,817,000           91,607,000
  Current Portion of Reserve for
       Losses and Loss Adjustment Expense ..................................            101,317,000           93,768,000
  Unearned Premium Revenue..................................................             47,585,000           45,333,000
  Military Health Care Payable..............................................             59,710,000           50,831,000
  Premium Deficiency Reserve................................................              9,115,000           21,000,000
  Current Portion of Long-term Debt.........................................              4,591,000            4,741,000
                                                                                 ------------------   ------------------
       Total Current Liabilities............................................            396,051,000          409,853,000

RESERVE FOR LOSSES AND
  LOSS ADJUSTMENT EXPENSE, Net of Current Portion...........................            152,859,000          150,626,000
LONG-TERM DEBT..............................................................            273,320,000          258,854,000
OTHER LIABILITIES ..........................................................             31,531,000           32,367,000
                                                                                  -----------------    -----------------
TOTAL LIABILITIES...........................................................            853,761,000          851,700,000
                                                                                   ----------------     ----------------

STOCKHOLDERS' EQUITY:
  Preferred Stock, $.01 Par Value, 1,000,000
       Shares Authorized; None Issued or Outstanding
  Common Stock, $.005 Par Value, 40,000,000
       Shares Authorized; Shares Issued:  2000 - 28,564,000;
     1999 - 28,400,000......................................................                143,000              142,000
  Additional Paid-in Capital................................................            176,818,000          175,915,000
  Treasury Stock; 2000 -1,523,000; 1999 - 1,523,000
       Common Shares........................................................            (22,789,000)         (22,789,000)
  Accumulated Other Comprehensive Income:
       Unrealized Holding Loss on Available-for-Sale

            Investments.....................................................            (11,989,000)         (16,063,000)
  Retained Earnings.........................................................            142,763,000          141,207,000
                                                                                   ----------------     ----------------
       Total Stockholders' Equity...........................................            284,946,000          278,412,000
                                                                                   ----------------     ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..................................         $1,138,707,000       $1,130,112,000

                                                                                     ==============       ==============
</TABLE>



                See accompanying notes to condensed consolidated
                             financial statements.


<PAGE>



                  SIERRA HEALTH SERVICES, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>

<CAPTION>
                                                                                                     Three Months Ended

                                                                                                               March 31

                                                                                                  2000                  1999
                                                                                                  ----                  ----
OPERATING REVENUES:
<S>                                                                                             <C>                   <C>
  Medical Premiums................................................................              $218,678,000          $207,311,000
  Military Contract Revenues......................................................                64,881,000            70,088,000
  Specialty Product Revenues......................................................                28,024,000            20,679,000
  Professional Fees...............................................................                11,021,000            14,017,000
  Investment and Other Revenues...................................................                 4,572,000             5,979,000
                                                                                             ---------------       ---------------
    Total ........................................................................               327,176,000           318,074,000
                                                                                               -------------         -------------

OPERATING EXPENSES:
  Medical Expenses (Note 2).......................................................               192,338,000           189,042,000
  Military Contract Expenses......................................................                62,833,000            67,644,000
  Specialty Product Expenses......................................................                26,848,000            19,396,000
  General, Administrative and Marketing Expenses..................................                34,329,000            33,897,000
  Reorganization, Impairment and Other Costs (Note 2).............................                 2,900,000             5,106,000
                                                                                             ---------------        --------------
    Total ........................................................................               319,248,000           315,085,000

OPERATING  INCOME.................................................................                 7,928,000             2,989,000

INTEREST EXPENSE AND OTHER, NET  .................................................                (5,588,000)           (4,049,000)
                                                                                              --------------        --------------

INCOME (LOSS) BEFORE INCOME TAXES.................................................                 2,340,000            (1,060,000)

(PROVISION) BENEFIT FOR INCOME TAXES..............................................                  (784,000)              354,000
                                                                                             ----------------      ---------------

NET INCOME (LOSS).................................................................             $   1,556,000        $     (706,000)
                                                                                               =============        ==============

NET INCOME (LOSS) PER COMMON SHARE................................................                   $.06                 $(.03)
                                                                                                     ====                 ======

NET INCOME (LOSS) PER COMMON SHARE ASSUMING DILUTION..............................                   $.06                 $(.03)
                                                                                                     ====                 ======

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING........................................                26,985,000            27,186,000

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
  ASSUMING DILUTION...............................................................                26,985,000            27,186,000

</TABLE>


                See accompanying notes to condensed consolidated
                             financial statements.


<PAGE>


                  SIERRA HEALTH SERVICES, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>

<CAPTION>
                                                                                        Three Months Ended March 31

                                                                                           2000             1999
                                                                                           ----             ----

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                  <C>                <C>
   Net Income (Loss).......................................................          $  1,556,000       $    (706,000)
   Adjustments to Reconcile Net Income to Net Cash
       Used For Operating Activities:
          Depreciation and Amortization....................................             8,693,000           6,823,000
          Provision for Doubtful Accounts..................................             1,072,000           1,306,000
   Changes in Assets and Liabilities ......................................           (52,691,000)        (57,200,000)
                                                                                     ------------        ------------
       Net Cash Used for Operating Activities .............................           (41,370,000)        (49,777,000)
                                                                                     ------------        ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital Expenditures, Net of Equipment Dispositions.....................            (6,246,000)        (14,160,000)
   Changes in Investments..................................................            16,076,000         (13,293,000)
   Corporate Acquisition...................................................                                (3,000,000)
   Net Cash Provided By (Used for) Investing Activities....................             9,830,000         (30,453,000)
                                                                                    -------------        -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from Borrowings................................................            32,000,000          21,000,000
   Payments on Debt and Capital Leases.....................................           (17,684,000)         (1,001,000)
   Purchase of Treasury Stock..............................................                                (6,792,000)
   Exercise of Stock in Connection with Stock Plans........................               904,000           1,239,000
                                                                                   --------------      --------------
          Net Cash Provided by Financing Activities........................            15,220,000          14,446,000
                                                                                     ------------       -------------

NET DECREASE IN CASH AND CASH EQUIVALENTS..................................           (16,320,000)        (65,784,000)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD...........................            55,936,000          83,910,000
                                                                                     ------------       -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................................           $39,616,000        $ 18,126,000
                                                                                      ===========        ============


                                                                                       Three Months Ended March 31

Supplemental Condensed Consolidated

  Statements of Cash Flows Information:                                                    2000              1999
------------------------------------------------------------------------                   ----              ----
Cash Paid During the Period for Interest

   (Net of Amount Capitalized).............................................           $ 6,298,000          $5,387,000
Net Cash Received (Paid) During the Period for Income Taxes................             2,628,000             (27,000)

Non-cash Investing and Financing Activities:
   Note Received for Sale of Investment....................................             3,700,000
</TABLE>





                See accompanying notes to condensed consolidated
                             financial statements.


<PAGE>


                  SIERRA HEALTH SERVICES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

     1. The accompanying unaudited financial statements include the consolidated
accounts of Sierra Health Services, Inc. ("Sierra", a holding company,  together
with its subsidiaries,  collectively  referred to herein as the "Company").  All
material  intercompany  balances and transactions  have been  eliminated.  These
statements have been prepared in conformity with accounting principles generally
accepted in the United  States of America and used in  preparing  the  Company's
annual audited  consolidated  financial statements but do not contain all of the
information and disclosures  that would be required in a complete set of audited
financial statements.  They should,  therefore,  be read in conjunction with the
Company's  annual audited  consolidated  financial  statements and related notes
thereto  for the years  ended  December  31,  1999 and 1998.  In the  opinion of
management,   the  accompanying   unaudited  condensed   consolidated  financial
statements  reflect  all  adjustments,   consisting  only  of  normal  recurring
adjustments,  necessary for a fair presentation of the financial results for the
interim periods presented.

2.         Premium Deficiency, Reorganization, Impairment and Other Charges:

                    Medical Expenses:

                             Medical  expenses  reported in the first quarter of
                             1999 included a premium  deficiency  charge of $8.1
                             million  related  to  losses  in   under-performing
                             markets primarily in Arizona and rural Nevada.

                    Reorganization, Impairment and Other Charges:

                             In the first quarter of 2000, the Company  incurred
                             $1.5  million  of costs,  consisting  primarily  of
                             consulting  fees, in conjunction  with a review and
                             reorganization  of its managed care  operations  in
                             Texas.

                             In  March  2000,  the  Company  announced  a  major
                             restructuring of its managed healthcare  operations
                             in Texas.  As a result of this  restructuring,  the
                             Company  incurred  approximately  $1.4  million  of
                             severance pay for employees who were terminated. Of
                             this amount,  approximately  $550,000 has been paid
                             as of March 31, 2000.  The remainder is expected to
                             be  paid  by  the  end  of  the  year   2000.   The
                             restructuring involves changes in senior management
                             at the Texas facilities and  centralization  of key
                             services in Las Vegas.

                             In March  1999,  the Company  closed all  inpatient
                             operations  at  Mohave  Valley  Hospital,  a 12-bed
                             acute care facility in Bullhead  City,  Arizona and
                             terminated  approximately 45 employees. The Company
                             recorded a charge of $4.3 million related primarily
                             to the  write-off of goodwill  associated  with the
                             Mohave Valley operations.

                             In the first  quarter  of 1999,  the  Company  also
                             incurred $450,000 for certain legal and contractual
                             settlements   and   $400,000  to  provide  for  the
                             Company's  portion  of the  write-off  of  start-up
                             costs at the  Company's  equity  investee,  TriWest
                             Healthcare  Alliance.  In accordance with Statement
                             of Position  98-5,  TriWest  expensed all remaining
                             start-up costs in their fiscal year beginning April
                             1, 1999.

3.         During the first  quarter of 2000,  the Company  sold its interest in
           TriWest  Healthcare  Alliance.  The Company  received a note for $3.7
           million which approximated the carrying value of this investment.


<PAGE>


                  SIERRA HEALTH SERVICES, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)


4.The following table provides a reconciliation of basic and diluted earnings
per share ("EPS"):
<TABLE>

<CAPTION>
                                                                                        Dilutive

                                                                        Basic         Stock Options        Diluted

           For the Three Months ended March 31, 2000:

<S>                                                                 <C>                                 <C>
             Net Income                                             $  1,556,000                        $ 1,556,000
             Shares                                                   26,985,000                         26,985,000
             Per Share Amount                                           $.06                               $.06

           For the Three Months ended March 31, 1999:

             Net Loss                                               $   (706,000)                       $  (706,000)
             Shares                                                   27,186,000                         27,186,000
             Per Share Amount                                          $(.03)                             $(.03)
</TABLE>

           CII Financial,  Inc., a wholly owned  subsidiary of the Company,  has
           outstanding  convertible  subordinated  debentures (the "Debentures")
           due September 15, 2001. Each $1,000 in principal is convertible  into
           25.382 shares of the Company's  common stock at a conversion price of
           $39.40 per share. The Debentures were not included in the computation
           of EPS because their effect would be antidilutive.  Outstanding stock
           options were not included in the  computation  of diluted EPS in 2000
           and 1999 because  their effect would have been  antidilutive  in both
           periods.

5.         The following table presents comprehensive income for the
                three-month periods ended March 31, 2000 and 1999:
<TABLE>
<CAPTION>
                                                                       Three Months Ended March 31

                                                                        2000                  1999
                                                                        ----                  ----

<S>                                                                   <C>                <C>
           NET INCOME (LOSS).........................                 $1,556,000         $   (706,000)
           Change in net Unrealized Holding
             Gains and Losses on Investments,
                    net of income taxes..............                  4,074,000           (5,471,000)
                                                                      ----------         ------------

           COMPREHENSIVE INCOME (LOSS)...............                 $5,630,000          $(6,177,000)

                                                                      ==========          ============
</TABLE>

6.         Segment Reporting

           The Company has three  reportable  segments based on the products and
           services  offered:  managed care and corporate  operations,  military
           health services operations and workers' compensation operations.  The
           managed care segment includes  managed health care services  provided
           through HMOs,  managed  indemnity plans,  third-party  administrative
           services   programs  for   employer-funded   health   benefit  plans,
           multi-specialty   medical  groups,   other  ancillary   services  and
           corporate   operations.   The  military   health   services   segment
           administers  a managed care federal  contract for the  Department  of
           Defense's  TRICARE  program in Region 1. This  contract is  currently
           structured as five one-year  option  periods with option period three
           commencing  June 1, 2000. The workers'  compensation  segment insures
           workers' compensation claims risk in return for premium revenues.

           Sierra  evaluates  each  segment's   performance   based  on  segment
           operating  profit  before  interest  expense  and  income  taxes  and
           excludes  charges  for  premium  deficiencies,  impairment  and  non-
           recurring gains and losses. The accounting  policies of the operating
           segments are the same as those of the consolidated company.


<PAGE>



                  SIERRA HEALTH SERVICES, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)


Information concerning the operations of the reportable segments is as follows:
(Amounts in thousands)
<TABLE>

<CAPTION>
                                                        Managed Care            Military            Workers'
                                                        and Corporate        Health Services      Compensation          Total

Three Months Ended March 31, 2000


<S>                                                       <C>                        <C>               <C>            <C>
Medical Premiums...........................               $218,678                   0                 0              $218,678
Military Contract Revenues.................                                      $64,881                                64,881
Specialty Product Revenues.................                  2,322                                   $25,702            28,024
Professional Fees..........................                 11,021                                                      11,021
Investment and Other Revenues..............                    995                   202               3,375             4,572
                                                      ------------            ----------           ---------       -----------
   Total Revenue...........................               $233,016               $65,083             $29,077          $327,176
                                                          ========             =======               =======          ========

Segment Operating Profit...................             $    4,245              $  3,250            $  5,833         $  13,328
Interest Expense and Other.................                 (4,528)                 (242)               (818)           (5,588)
Reorganization, Impairment and Other Costs.                 (3,900)                   _               (1,500)           (5,400)
                                                       ------------         ------------           ---------        ----------
Net (Loss) Income Before Income Taxes .....             $   (4,183)             $  3,008            $  3,515        $    2,340
                                                        ==========              ========            ========        ==========

Three Months Ended March 31, 1999

Medical Premiums...........................               $207,311                                                    $207,311
Military Contract Revenues.................                                      $70,088                                70,088
Specialty Product Revenues.................                  2,446                                   $18,233            20,679
Professional Fees..........................                 14,017                                                      14,017
Investment and Other Revenues..............                  1,649                   153               4,177             5,979
                                                       -----------            ----------           ---------       -----------
   Total Revenue...........................               $225,423               $70,241             $22,410          $318,074
                                                          ========               =======             =======          ========

Segment Operating Profit...................             $    8,555              $  2,678            $  4,962         $  16,195
Interest Expense and Other.................                 (2,953)                 (168)               (928)           (4,049)
Premium Deficiency, Impairment and Other Costs             (13,206)                                                    (13,206)
Net (Loss) Income Before Income Taxes......             $   (7,604)             $  2,510            $  4,034        $   (1,060)
                                                        ===========             ========            ========        ==========
</TABLE>



7.       In the  second  quarter  of 1997,  the  Company's  Board  of  Directors
         authorized  a $3.0  million  line of  credit  from the  Company  to the
         Company's Chief Executive  Officer  ("CEO").  As of March 31, 2000, the
         aggregate principal  outstanding and accrued interest was $2.7 million.
         In April 2000,  the  Company's  Board of  Directors  authorized  a $2.5
         million  loan from the  Company  to the CEO which,  along with  accrued
         interest,  is due on June 30, 2002. All borrowed  amounts bear interest
         at a rate equal to the rate at which the  Company  could have  borrowed
         funds under its line of credit  facility  at the time of the  borrowing
         plus 10 basis points.

8.       Certain amounts in the Condensed  Consolidated Financial Statements for
         the three months ended March 31, 1999 have been reclassified to conform
         with the current year presentation.


<PAGE>




                  SIERRA HEALTH SERVICES, INC. AND SUBSIDIARIES

ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following  discussion and analysis  provides  information  which  management
believes  is relevant  for an  assessment  and  understanding  of the  Company's
consolidated  financial  condition  and results of  operations.  The  discussion
should  be  read  in  conjunction  with  the  Condensed  Consolidated  Financial
Statements and Related Notes thereto. Any forward-looking  information contained
in this Management's  Discussion and Analysis of Financial Condition and Results
of  Operations  and any other  sections  of this  Quarterly  Report on Form 10-Q
should be considered in connection with certain cautionary  statements contained
in the Company's  Current Report on Form 8-K dated March 15, 2000,  incorporated
herein by reference.  Such cautionary  statements are made pursuant to the "safe
harbor" provisions of the Private  Securities  Litigation Reform Act of 1995 and
identify important risk factors that could cause the Company's actual results to
differ from those  expressed  in any  projected,  estimated  or  forward-looking
statements relating to the Company.

Results of  Operations,  three months  ended March 31,  2000,  compared to three
months ended March 31, 1999.

The  Company's  total  operating  revenues  for the three months ended March 31,
2000, increased approximately 2.9% to $327.2 million from $318.1 million for the
three months ended March 31, 1999.  The increase was  primarily due to increases
in medical  premium  revenue of $11.4 million,  or 5.5%,  and specialty  product
revenues of $7.3 million,  offset by a decrease in military  contract revenue of
$5.2 million.  Approximately  90% of the increase in medical premium revenue was
attributable to the Company's HMO and insurance subsidiaries in Nevada.

Total member  months (the number of months of each period that an  individual is
enrolled  in  a  plan)  for  the  HMO  and  insurance   subsidiaries   decreased
approximately  4%.  Commercial and Medicaid HMO member months in total decreased
approximately 5% and managed indemnity member months decreased approximately 8%.
These  decreases were partially  offset by an increase in Medicare member months
of  approximately  6%. In Nevada,  commercial  and  Medicaid  HMO member  months
decreased  approximately  3% and  Medicare  member  months  remained  relatively
constant.  In Texas commercial  member months decreased  approximately 8%, while
Medicare  member months  increased  31%.  Such growth in Medicare  member months
contributes  significantly  to the increase in premium  revenues as the Medicare
per member premium rates are over three times higher than the average commercial
premium rate.

The Company's HMO and insurance  subsidiaries'  average  premium rate per member
increased  approximately  10% for the three months ended March 31, 2000 compared
to the same three-month period in the prior year. Nevada commercial and Medicaid
HMO  average  premium  rate per  member  increased  approximately  6% and Nevada
Medicare HMO average rate per member increased  approximately  12%. The increase
in Nevada  Medicare HMO rates is primarily  due to a shift in members to the Las
Vegas area from  other  parts of Nevada as well as from  Arizona.  The amount of
premium  received  from the Health Care  Financing  Administration  ("HCFA") per
Medicare member is higher in Las Vegas. The increase in HCFA's  established rate
per member  increased 4% for the Las Vegas area.  Over 95% of the  Company's Las
Vegas  Medicare  members are  enrolled in the HCFA Social HMO  Medicare  Program
("Social HMO").  The Company's  premium  received from HCFA is higher for Social
HMO members.  HCFA is  considering  adjusting the  reimbursement  factor for the
Social  HMO  members  in the  future.  If the  reimbursement  for these  members
decreases  significantly and related benefit changes are not made timely,  there
could be a material adverse effect on the Company's business.  Managed indemnity
premium rates per member increased approximately 5%.

Texas commercial HMO average premium rate per member increased  approximately 7%
in the quarter  ended March 31, 2000  compared to the same  quarter of the prior
year.  Commercial  rate  increases on renewals were greater than 10% for Dallas.
Texas Medicare rates decreased  approximately 3% primarily due to an increase in
Medicare   membership  in  Dallas  as  a  percentage  of  total  Texas  Medicare
membership.


<PAGE>




                  SIERRA HEALTH SERVICES, INC. AND SUBSIDIARIES

ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
              RESULTS OF OPERATIONS (continued)
              -------------------------------------------------------------

Results of  Operations,  three months  ended March 31,  2000,  compared to three
months ended March 31, 1999 (continued).

Medicare premium rates as established by HCFA for the Dallas area are lower than
rates  for  certain  counties  in the  Houston  area.  As part of the  Company's
reorganization,  it will no longer actively  market its HMO Medicare  product in
Texas for the remainder of calendar year 2000.  The  Company  will  continue  to
enroll  Medicare  eligible  members who proactively  seek  coverage in Texas and
will continue  customer  service to its existing membership.

The Company markets its HMO and managed indemnity  insurance  products primarily
to employer groups, labor unions and individuals  enrolled in Medicare,  through
its internal sales personnel and  independent  insurance  brokers.  Such brokers
receive  commissions  based  on the  premiums  received  from  each  group.  The
Company's  agreements  with its member  groups are usually for twelve months and
are  subject to annual  renewal.  For the  quarter  ended  March 31,  2000,  the
Company's ten largest  commercial  HMO employer  groups were, in the  aggregate,
responsible  for less  than 10% of its  total  revenues.  Although  none of such
employer  groups  accounted for more than 2% of total  revenues for that period,
the loss of one or more of the larger  employer  groups  could,  if not replaced
with  similar  membership,  have a  material  adverse  effect  on the  Company's
business.

Military contract revenue decreased to $64.9 million from $70.1 million,  a 7.4%
decrease.  The reduction in revenue is primarily  attributable  to a decrease in
the at-risk health care population of beneficiaries from  approximately  440,000
to 400,000 as additional beneficiaries enrolled with military treatment facility
primary care  managers.  The Company is not at-risk for those TRICARE  eligibles
and receives less revenue related to them from the government. This decrease was
offset by a $1.0 million  increase in change order  revenue for the three months
ended March 31, 2000 compared to the three months ended March 31, 1999.

Specialty product revenue increased $7.3 million, or 35.5%, for the three months
ended March 31, 2000, compared to the same prior year period.  Specialty product
revenue and expense are primarily related to the workers' compensation insurance
business.  The  increase  was  due to  workers'  compensation  insurance,  which
increased $7.5 million,  offset by a slight decrease in administrative  services
revenue.  The increase in  specialty  product  revenues  related to the workers'
compensation  insurance  segment was primarily due to premium growth,  which has
occurred  since July 1999 and premium rate  increases  for  California  policies
issued in 2000,  as well as new  business in Nevada and  Colorado.  Beginning in
July 1999,  the State of Nevada  allowed  private  insurance  companies to offer
workers' compensation products.

Professional fee revenue decreased  approximately  $3.0 million primarily due to
the sale of the  pharmacy  operations  in Texas  and the  closure  of  inpatient
operations at Mohave Valley Hospital in the first quarter of 1999.

Investment  and other  revenue  decreased  approximately  $1.4  million over the
comparable prior year period  primarily due to a decrease in invested  balances.
Approximately  $451,000 of the difference was due to realized losses  recognized
in the current year compared to slight gains in the prior year.

Total medical expenses  increased $3.3 million over the same three-month  period
last year.  Included in medical expense for the  three-month  period ended March
31, 2000, is $1.0 million of adverse development related to prior years' medical
claims.  Included in medical expense for the three-month  period ended March 31,
1999 is $8.1  million of  premium  deficiency  expense.  Excluding  the  adverse
development in 2000 and the premium deficiency accrual in 1999, medical expenses
increased  $10.4  million,  or 5.7%,  and medical  expenses as a  percentage  of
medical  premiums and  professional  fees ("Medical Care Ratio")  increased from
81.8% to 83.3% for the quarter  ended March 31, 2000  compared to the same prior
year period.  The  increase in the Medical  Care Ratio is  primarily  due to the
increase in Medicare members as a percentage of fully insured members.  The cost
of  providing  medical  care to Medicare  members  generally  requires a greater
percentage of the premiums  received.  In addition,  hospital  costs in southern
Nevada were higher primarily due to an increase in bed days and Houston


<PAGE>


                 SIERRA HEALTH SERVICES, INC. AND SUBSIDIARIES

ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (continued)
              ---------------------------------------------------------------

Results of  Operations,  three months  ended March 31,  2000,  compared to three
months ended March 31, 1999 (continued).

hospital  costs were higher due to increased  cost of care.  Included in medical
expenses  is the  utilization  of $6.3  million  and  $4.6  million  of  premium
deficiency  reserve to offset losses on contracts in Texas for the periods ended
March 31, 2000 and 1999, respectively.  Also included in medical expense for the
three months ended March 31, 1999 is the  utilization of $2.6 million of premium
deficiency  reserve to offset  losses  primarily  on  Medicare  risk  members in
Arizona and rural Nevada.

Total military contract expense decreased  approximately $4.8 million,  or 7.1%.
This decrease is consistent with the decrease in revenues discussed previously.

Specialty  product expenses  increased $7.5 million.  The combined ratio for the
workers'  compensation  insurance  business for the three months ended March 31,
2000 was 98.6%  compared  to 96.4% for the  comparable  prior year  period.  The
increase was due to an increase in the loss and loss adjustment  expense ("LAE")
ratio to 65.7% from 59.0% in 1999, partially offset by a decrease in the expense
ratio  to  31.7%  from  37.4%  in  1999.  The  remaining   variance  is  due  to
policyholders' dividends incurred for participating policies issued in the state
of  Nevada.  The  policyholders'  dividend  ratio  in 2000  was  1.2%,  while no
dividends were incurred in 1999.

The  higher  loss and LAE  ratio  for  2000 is due to $1.5  million  in  adverse
development  related to accident  years 1999 and prior.  In the first quarter of
1999, no prior accident year development was incurred. While accident years 1995
and prior  continue  to develop  favorably,  estimated  ultimate  losses and LAE
incurred in accident  years 1996 to 1999 have been  increased in response to the
continuation of increasing claim severity  patterns on the Company's  California
book of business.  Many workers'  compensation  insurance carriers in California
are experiencing  higher claim severity.  For claims occurring on and after July
1, 1998,  the Company has reinsured a percentage of the higher claim severity to
its reinsurer under the Company's  low-level  reinsurance  treaty. The low-level
reinsurance  treaty will expire at June 30, 2000,  on which date the Company has
the option to continue  ceding premiums and losses under the treaty on a run-off
basis for all policies in force at June 30, 2000.  The Company is in the process
of exploring  various  reinsurance  options to replace the expiring coverage for
policies issued after June 30, 2000.

The reduction in the expense ratio is due to the higher premium volume earned in
2000 compared to 1999. For the quarter ended March 31, 2000, net premiums earned
are 41.4% higher than the comparable  quarter in 1999. While policy  acquisition
costs,  comprised of commissions,  premium taxes and boards and bureaus expense,
increased  to 10.2% of net  premiums  earned  from  9.7% in  1999,  general  and
administrative expenses decreased to 21.5% from 27.7% in 1999. The expense ratio
reduction is also due to continued  cost  containment  and expense  efficiencies
employed  by the  Company.  Total  non-policy  acquisition  expenses,  including
policyholders'  dividends,  in the quarter  were $5.8  million  compared to $5.0
million in 1999, an increase of 16.0%.  Gross premiums earned for 2000 increased
from $32.1 million in 1999 to $44.4 million in 2000, an increase of 38.2%.

General,  administrative  and marketing ("G&A") costs increased $432,000 or 1.3%
compared to the first quarter of 1999.  As a percentage  of revenues,  G&A costs
for the first quarter of 2000 decreased slightly from 10.7% to 10.5% compared to
the same period in 1999. G&A expense is net of utilization of premium deficiency
reserves for maintenance  costs of  approximately  $5.6 million and $2.3 million
for the three-month periods ended March 31, 2000 and 1999, respectively.  A $1.6
million   increase   in   depreciation   expense,   primarily   related  to  the
implementation  of new  computer  systems,  was offset by decreases in other G&A
expenses, including printing, postage and freight.

In the first  quarter  of 2000,  the  Company  incurred  $1.5  million of costs,
consisting  primarily  of  consulting  fees,  in  conjunction  with a review and
reorganization  of its managed care  operations  in Texas.  Also recorded in the
first  quarter of 2000 was $1.4  million  in  restructuring  charges  consisting
primarily of


<PAGE>



                  SIERRA HEALTH SERVICES, INC. AND SUBSIDIARIES

ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (continued)
              ------------------------------------------------------------
Results of  Operations,  three months  ended March 31,  2000,  compared to three
months ended March 31, 1999 (continued).

severance  pay  for  employees  who  were  terminated  in  conjunction   with  a
restructuring  of the Company's  managed  healthcare  operations  in Texas.  The
restructuring  involves changes in senior management at the Texas facilities and
centralization of key services in Las Vegas.

In the first quarter of 1999, the Company recorded  impairment and other charges
of $5.1  million,  of which $4.3 million  related  primarily to the write-off of
goodwill associated with Mohave Valley Hospital, a 12-bed acute care facility in
Bullhead City,  Arizona for which all inpatient  operations were closed in March
1999.  Also in the first  quarter of 1999,  the Company  incurred  $450,000  for
certain  legal and  contractual  settlements  and  $400,000  to provide  for the
Company's  portion of the write-off of start-up  costs at the  Company's  equity
investee, TriWest Healthcare Alliance.

Interest  expense and other  increased  $1.5  million for the three months ended
March 31,  2000,  compared  to the same prior year  period due to an increase in
debt as well as an increase in the Company's cost of borrowing.

For the current year period, the Company recorded $784,000 of tax expense for an
effective tax rate of 33.5%  compared to 33.4% for the same prior year period.
The  Company's  effective  tax rate is less than the 35% statutory rate
primarily due to tax preferred investments.

Liquidity and Capital Resources

The Company had  negative  cash flows from  operations  of  approximately  $41.4
million for the three months ended March 31, 2000,  resulting  primarily  from a
net change in assets and  liabilities of $52.7 million offset by $8.7 million in
depreciation and  amortization,  $1.1 million in provision for doubtful accounts
and $1.6  million of net income.  The decrease in cash flow  resulting  from the
change in assets and  liabilities  was  primarily  due to  increases in military
receivable of $20.8 million and  reinsurance  recoverable of $14.5  million,  as
well as decreases in medical claims payable of $16.8 million and the utilization
of premium deficiency reserves of $11.9 million.

Sierra Military Health Services,  Inc.  ("SMHS")  receives monthly cash payments
equivalent to one-twelfth of its annual contractual price with the Department of
Defense ("DoD").  The contractual Bid Price Adjustment ("BPA") process serves to
adjust the DoD's  monthly  payments to SMHS,  because such payments are based in
part  on  DoD  estimates  for  beneficiary  population,  beneficiary  population
baseline   health  care  cost,   inflation  and  military   direct  care  system
utilization.  As actual information has been made available for the above items,
quarterly  adjustments are made to SMHS' monthly health care payment in addition
to lump sum adjustments for past months. In addition,  SMHS accrues change order
revenue for DoD-directed contract changes.

The increase in military  accounts  receivable  is primarily  related to accrued
change order revenue and uncompensated  health care revenue that will be paid as
part of the BPA process.  During April 2000, the Company received  payments from
the DoD of $6.0 million  related to change  orders and $13.0 million as a result
of the BPA process.  If the timing or amount of DoD payments vary  significantly
from the Company's expectations, there could be a material adverse effect on the
Company's  business and cash flows including the possibility the Company will be
unable to maintain  compliance  with  certain  covenants  related to its line of
credit.

The Company had net  borrowings  of $16.0 million under the line of credit which
was offset by $1.7 million used for the  reduction of other debt.  The remaining
$24.0  million  available  under the line of credit will be used for  additional
working  capital.  In addition to the borrowings,  cash inflows included a $16.1
million net change in investments  and $904,000  received in connection with the
sale of stock  through the  Company's  stock  plans.  Offsetting  the above cash
inflows was $6.2 million in net capital expenditures including costs


<PAGE>



                  SIERRA HEALTH SERVICES, INC. AND SUBSIDIARIES

ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (continued)
    --------------------------------------------------------------------------

Liquidity and Capital Resources (continued).

     associated with continued  implementation of a new computer system, as well
as furniture, equipment and
other capital needs to support the Company's  growth. In March 2000, the Company
sold  its  interest  in  TRIWEST  Healthcare  Alliance  in  exchange  for a note
receivable in the amount of $3.7 million.

The Company has a 2000 capital budget of approximately $25.0 million,  primarily
for  computer   hardware  and  software,   furniture  and  equipment  and  other
requirements  due to the  Company's  computer  system  conversion  and projected
growth and expansion.  The Company's  liquidity  needs over the next nine months
will primarily be for the capital items noted above,  debt service and expansion
of the Company's operations. The Company believes that existing working capital,
operating cash flow and, if necessary,  mortgage  financing,  equipment leasing,
and amounts  available  under its credit facility will be sufficient to fund its
capital  expenditures and debt service.  Additionally,  subject to unanticipated
cash  requirements,  the Company  believes that its existing working capital and
operating  cash flow and,  if  necessary,  its access to new credit  facilities,
should enable it to meet its liquidity needs on a longer term basis.

In the second  quarter of 1997,  the Company's  Board of Directors  authorized a
$3.0 million line of credit from the Company to the  Company's  Chief  Executive
Officer ("CEO"). As of March 31, 2000, the aggregate  principal  outstanding and
accrued  interest  was $2.7  million.  In April  2000,  the  Company's  Board of
Directors  authorized  a $2.5  million  loan from the  Company to the CEO which,
along with accrued interest,  is due on June 30, 2002. All borrowed amounts bear
interest  at a rate equal to the rate at which the Company  could have  borrowed
funds  under its line of credit  facility at the time of the  borrowing  plus 10
basis points.

The  holding   company  may  receive   dividends  from  its  HMO  and  insurance
subsidiaries  which  generally  must be  approved  by  certain  state  insurance
departments.  The Company's HMO and insurance subsidiaries are required by state
regulatory  agencies to maintain certain deposits and must also meet certain net
worth  and  reserve  requirements.   The  HMO  and  insurance  subsidiaries  had
restricted  assets on deposit in various  states  totaling  $22.1  million as of
March 31, 2000. The HMO and insurance  subsidiaries  must also meet requirements
to maintain minimum  stockholder's  equity,  on a statutory basis,  ranging from
$1.5 million to $5.2 million. Additionally, in conjunction with the Kaiser-Texas
acquisition,  Texas Health Choice, L.C. ("TXHC") entered into a letter agreement
with the Texas  Department  of  Insurance  whereby TXHC agreed to maintain a net
worth of $20.0 million. Of the cash and cash equivalents held at March 31, 2000,
$33.5 million is designated  for use only by the  regulated  subsidiaries.  Such
amounts are  available  for  transfer to the  holding  company  from the HMO and
insurance  subsidiaries  only  to  the  extent  that  they  can be  remitted  in
accordance  with the terms of existing  management  agreements and by dividends.
Remaining  amounts are available on an unrestricted  basis.  The holding company
will not receive  dividends  from its  regulated  subsidiaries  if such dividend
payment would cause violation of statutory net worth and reserve requirements.

CII Financial,  Inc., a  wholly-owned  subsidiary  that the Company  acquired in
1995,   has  $50.0  million  of   convertible   subordinated   debentures   (the
"Debentures") due September 15, 2001 and bearing interest at 7 1/2% which is due
semi-annually  on March  15 and  September  15.  Each  $1,000  in  principal  is
convertible  into 25.382  shares of the  Company's  common stock at a conversion
price of $39.40 per share. The Debentures are general  unsecured  obligations of
CII and are not  guaranteed  by Sierra.  During the three months ended March 31,
2000, the Company purchased $473,000 of the Debentures on the open market.


<PAGE>


                  SIERRA HEALTH SERVICES, INC. AND SUBSIDIARIES

ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (continued)
    ----------------------------------------------------------------------


Membership

         The Company's membership at March 31, 2000 and 1999 was as follows:
<TABLE>

<CAPTION>
                                                                          Number of Members at Period Ended

                                                                           March 31                March 31
                                                                           --------                --------
                                                                             2000                    1999
                                                                             ----                    ----

HMO

<S>                                                                         <C>                      <C>
  Commercial..................................................              252,900                  268,100
  Medicare....................................................               53,500                   50,000
  Medicaid (1)................................................               11,900                    7,400
Managed Indemnity.............................................               34,700                   42,900
Medicare Supplement...........................................               29,100                   27,400
Administrative Services.......................................              293,400                  298,300
TRICARE Eligibles.............................................              610,000                  606,400
                                                                         ----------               ----------
Total Members.................................................            1,285,500                1,300,500

                                                                          =========                =========
</TABLE>

(1)      In prior years Medicaid was included in commercial membership.


ITEM 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As  of  March  31,  2000,  unrealized  holding  losses  on  available  for  sale
investments  have  decreased  by $4.1  million  since the 1999 year end due to a
decrease in interest rates,  and thus, an increase in the market value of bonds.
The  Company  believes  that  changes in market  interest  rates,  resulting  in
unrealized holding gains or losses,  should not have a material impact on future
earnings or cash flows as it is unlikely  that the Company  would need or choose
to substantially liquidate its investment portfolio.


<PAGE>



                  SIERRA HEALTH SERVICES, INC. AND SUBSIDIARIES

                           PART II - OTHER INFORMATION

ITEM 1.       LEGAL PROCEEDINGS

The Company is subject to various  claims and other  litigation  in the ordinary
course of business.  Such  litigation  includes  claims of medical  malpractice,
claims for coverage or payment for medical services  rendered to HMO members and
claims by providers  for payment for medical  services  rendered to HMO members.
Also included in such litigation are claims for workers' compensation and claims
by providers for payment for medical services  rendered to injured  workers.  In
the  opinion of the  Company's  management,  the  ultimate  resolution  of these
pending  legal  proceedings  should  not have a material  adverse  effect on the
Company's financial condition.

ITEM 2.       CHANGES IN SECURITIES AND USE OF PROCEEDS

              None

ITEM 3.       DEFAULTS UPON SENIOR SECURITIES

               None

ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

               None

ITEM 5.       OTHER INFORMATION

              None

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

              (a)     Exhibits

                      (27)            Financial Data Schedule

                      (99)            Registrant's  current report on Form 8-K
                                      dated  March  15,   2000,   incorporated
                                      herein by reference.

              (b)     Reports on Form 8-K

                      The  Company  filed a Current  Report  on Form 8-K,  dated
                      March  15,  2000,   with  the   Securities   and  Exchange
                      Commission   in   connection   with   certain   cautionary
                      statements  made pursuant to the "safe harbor"  provisions
                      of the Private Securities Litigation Reform Act of 1995.


<PAGE>


                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                   SIERRA HEALTH SERVICES, INC.

                                   (Registrant)

Date:  May 12, 2000                /S/ PAUL H. PALMER
                                   ---------------------
                                   Paul H. Palmer

                                   Vice President of Finance,
                                   Chief Financial Officer and Treasurer
                                   (Principal Financial and Accounting Officer)