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                                                                  EXHIBIT 10.7


                              EMPLOYMENT AGREEMENT

             By this Agreement, Medical Alliance, Inc., ("Employer"), located at
2445 Gateway Drive, Suite 150, Irving, Texas 75063, agrees to employ GARY HILL,
of 4206 San Carlos Drive, Dallas, Texas 75205 ("Employee").
This Agreement is made and entered into this 2nd day of December, 1997.

                                    RECITALS

             WHEREAS, Employer desires to employ Employee, and Employee desires
to perform services for the Employer, which will allow Employee access to
various trade secrets and confidential information belonging to Employer and
which will require Employee to perform services of a unique and special nature;

             WHEREAS, as a condition of Employee's employment, Employer desires
to receive from the Employee certain covenants and agreements; and

             WHEREAS, Employer and Employee desire to set forth in writing the
terms and conditions of their agreements and understandings with respect to
these covenants, as this Agreement is a condition of Employee's continued
employment and ancillary thereto, and does not purport to set forth all the
terms of such employment.

                                    AGREEMENT

             NOW THEREFORE, in consideration of the foregoing, of the mutual
promises herein contained, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged and confessed, Employer
and Employee do hereby agree as follows:

             1. Terms. (a) Employer agrees to employ Employee and Employee
agrees to accept employment with the Employer, for a period of time beginning
December 2, 1997 and continuing until terminated by: (i) Employer upon twelve
months prior written notice; or (ii) Employee upon three months prior written
notice; in each case, unless terminated by either Employer or Employee pursuant
to paragraph (b) below. Employer may, at its option, require Employee to vacate
the premises at any time after any of such notices. In addition, if Employer
terminates this Agreement, then upon receipt of such notice, Employee shall have
the option of resigning at any time prior to the termination date set forth in
the notice or continuing to be employed until such specified termination date
(although Employee shall not be required to devote the time and effort required
in Section 4 during such period, and paragraph (b)(5) below shall not be
applicable). In any of the above circumstances, Employer shall be liable to
Employee for salary and benefits through the termination date specified in the
termination notice.



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                  (b) This Agreement shall also terminate immediately on the
occurrence of any one of the following events:

                      (1)   the death of Employee;

                      (2) the permanent disability of Employee (with permanent
disability being determined by Employer's disability insurance carrier);

                      (3) if the Board of Directors of Employer believes in
good faith that Employee has engaged in any activity in connection with the
business of Employer involving fraud, theft or a criminal act, or if Employee
has engaged in a criminal activity involving moral turpitude, it being
understood and agreed that if Employee is not convicted of such act at the trial
court level by a trial court of competent jurisdiction within (2) years after
the date of the termination notice, that Employer shall be liable for twelve
(12) months salary hereunder, although this Agreement shall be deemed terminated
as of the date of the notice to Employee of Employer's termination of this
Agreement;

                      (4) if Employee fails to devote the time and effort to
Employer and his duties hereunder that a chief operating officer and president
of a company of similar size industry would devote to his company; or

                      (5) if Employee fails without good reason to follow any
requirement, order or mandate of the Board of Directors of Employer.

                  (c) Employee, at this option, may terminate this Agreement for
"good reason" by giving written notice to Employer. For purposes hereof, "good
reason" shall mean the occurrence of any of the following events: (i) Employee's
title as President and Chief Operating Officer of Employer is changed without
Employee's written acceptance; (ii) a decrease in Employee's compensation as
provided in Section 2 (unless, however, Employer reduces the compensation of
each member of executive management of Employer by at least an equal
percentage); or (iii) Employer's principal executive offices are relocated more
than fifty miles from its current executive offices. In the event of any such
termination, Employee shall immediately cease to be employed by Employer,
however, Employer shall continue to pay to Employee, Employee's then current
monthly salary for a period of three (3) months following such termination.

                 (d) Employee agrees to return on the date of termination or
before, all of Employer's property in good condition, including all manuals,
notebooks or written documentation, and other information pertaining to Company
services, medical instruments, medical supplies, office supplies, etc.

                 (e) In the event of termination of this Agreement for any of
the reasons set forth above, the Employee shall be entitled to the compensation
earned prior to the date of termination, computed pro rata up to and including
the date of termination.



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                (f) In the event the Employee cannot agree on the applicability
of subparagraphs (b)(3), (b)(4), and/or (b)(5) such matter (s) shall be
submitted to binding arbitration within 14 days of any effective date of
termination hereunder. The non-prevailing party will pay the cost and expenses
of both parties.

             2. Compensation. Employee shall initially have a compensation
package as outlined on Appendix A; (b) stock options as provided in Appendix B
attached hereto; and (c) business expenses as described in Section 5. In the
event Employee is terminated by Employer pursuant to Section 1(a)(i) above, and
Employee has not accepted a consulting or employment position at the end of such
twelve-month period, the Employee's employment hereunder shall continue until
earlier of: (i) Six months after the end of such twelve-month period; or (ii)
the date that Employee accepts a consulting or employment position.

             3. Duties Of Employee. Employee shall initially have the title,
and perform the duties, of President and Chief Operating Officer of Employer.
Employee shall devote the time, effort and skills to Employer and his duties
hereunder that a chief operating officer or president of a company of similar
size and similar industry would devote to his company. Employee's specific
duties shall be to devote all of his time to the management of the company or
other responsibilities delegated to Employee by the Board of Directors or Chief
Executive Officer of Employer. Additionally, Employee is required to perform
other duties typical of a president and chief operating officer of a company of
similar size in this industry. During the term of this Agreement, Employee shall
not directly or indirectly render any services of a business, commercial or
professional nature to any other person or organization, whether or not for
compensation, without the prior written consent of the Board of Directors of
Employer. Upon notice of termination pursuant to Section 1 above, Employee's
title and duties may be changed by the Board of Directors of Employer.

             4. Employee Benefits. Employer agrees to include Employee and his
family in the hospital, surgical and medical benefit plans from time to time
covering employees of Employer, and to provide to Employee such other benefits
(or benefits comparable thereto) as are provided generally to employees by
Employer from time to time.

             5. Business Expenses. Employee is authorized to incur reasonable
expenses for promoting the business of Employer, including airfare, lodging,
mileage, tolls, parking fees and long distance telephone calls made in the
pursuit of the business of the Employer. Employer will reimburse Employee for
all such reasonable expenses upon the Employee's presentation and itemized
account of such expenditures. Employee shall receive a monthly car allowance of
$350.

             Employee agrees to procure and maintain in force at his cost an
automobile liability insurance policy covering any personal automobile used by
Employee in performing his duties for Employer with Employer as a named insured
for bodily injury in the minimum amount of $100,000 per person and $300,000 per
occurrence and for property damage in the minimum amount of $50,000 in one
accident. Employee agrees to provide Employer with a copy of Employee's
insurance certificate evidencing such coverage at the beginning of each renewal
period for the insurance.


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             6. Covenant Not To Compete. Employee acknowledges that the services
rendered to Employer by Employee have been and will continue to be of a special
and unusual character which have a unique value to Employer and Employee has had
or will have access to trade secrets and confidential information belonging to
Employer, the loss of which cannot adequately be compensated by damages in an
action of law. Employee acknowledges that Employer's business and services are
highly specialized, that the identity and particular needs of Employer's
customers and suppliers are not generally known, and that the documents and
information regarding Employer's customers, provider contracts, suppliers,
services, methods of operation, sales, pricing and costs are highly confidential
and constitute trade secrets.

             During the term of Employee's employment with Employer and for a
period of twelve (12) months following the effective date of termination of
Employee's employment with Employer for any reason whatsoever, Employee:

                (a) will not, directly or indirectly, own, manage, operate,
control, be employed by, perform services for, connected with the ownership,
management, operation, or control of any business which performs services
similar to or competitive with those provided by Employer of which provides
medical equipment or similar services to any person or entity, in any territory
where Employer conducts business or in any territory identified in Employer's
business plan as a territory in which Employer intends to develop within the
next twelve (12) months;

                (b) will not, either on his own account or for any person,
firm, partnership, corporation or other entity, solicit, interfere with, or
endeavor to cause any employee of Employer to leave his employment, or induce or
attempt to induce any such employee to breach his employment agreement with
Employer;

                (c) shall not solicit, induce or attempt to induce any past or
current customer of the Employer to cease doing business in whole or in part
with or through Employer, or to do business with any other person, firm,
partnership, corporation or other entity. In this regard, Employer's customers
include all insurance companies, vendors, physicians, clinics, health
maintenance organizations, hospitals, surgical centers, and other health care
providers who have ever been charged for, bought, rented, leased, or have been
provided with any medical equipment being offered or provided for sale, rent or
lease by Employer; and

                (d) Employee shall, from the date of this Agreement, refrain
from making disparaging, negative or other similar remarks concerning Employer
or any of its affiliates to any third party. Similarly, Employer and its
affiliates shall, from the date of this Agreement, refrain from making
disparaging, negative or other similar remarks concerning Employee to any third
party.



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             Employee acknowledges that this covenant not to compete is
reasonable, both in time and scope considering the special training Employee has
received from Employer and the special knowledge about the business and
customers of Employer that Employee has received. Employee agrees that this
covenant not to compete is necessary in order to protect the legitimate business
interest of Employer and has been given by Employee in consideration of the
special training and knowledge provided to Employee by Employer.

             7. Covenant Against Disclosure Of Confidential Information. During
the term of Employee's employment with Employer and thereafter, Employee shall
not use for any purpose or disclose to any person or entity any confidential
information acquired during the course of employment with Employer. The term
"confidential information" as used in this Agreement means any confidential
information of Employer and its affiliates, including, but not limited to,
documents, records, lists, and knowledge of Employer's customers, suppliers,
methods of operation, processes, trade secrets, method of determination of
prices, financial condition, profits, sales, net income and indebtedness as the
same may exist from time to time and which is not otherwise available to the
public domain.

             Employee shall not directly or indirectly copy, tape or remove from
the Employer's premises any of the Employer's books, records, customer lists,
contracts or any other documents or materials that constitute confidential
information except in connection with performance of his duties hereunder.
Employee agrees to return immediately to Employer any records of Employer which
Employee has in his possession upon the termination of Employee's employment.

             8. Representations of Employee. Employee represents and warrants to
Employer that by continuing Employment with Employer, Employee is not in
violation of any agreement between Employee and any other party, particularly
any covenant not to compete included in any agreement with a previous employer.
Employee agrees to hold Employer harmless from any and all claims, demands and
causes of action (including reasonable attorneys' fees, expenses, and court
costs incurred for the defense of Employer) asserted against Employer by any
third party because of the employment of Employee by Employer or because of the
alleged violation of any agreement between Employee and a third party.

             9. Corporate Opportunities And Property Rights Of Parties. Employee
agrees to promptly and fully inform and disclose to Employer all business
opportunities to which Employee becomes aware related to the selling, renting,
leasing or providing of medical equipment or medical services, all inventions,
designs, improvements and discoveries that Employee may have relating to the
selling, renting, leasing or providing of medical equipment during the term of
this Agreement, whether conceived by Employee alone or with others and whether
or not conceived during regular working hours. All such opportunities,
inventions, designs, improvements and discovery shall be the property of
Employer and not the Employee.



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             10. Notices. Any notice or communication hereunder must be in
writing and given by depositing the same in the United States mail, addressed to
the party to be notified, postage prepaid and registered or certified with
return receipt requested, or by delivering the same in person or by facsimile
transmission. Such notice shall be deemed received on the date of which it is
hand delivered or received by facsimile transmission or on the third business
day following the date on which it is so mailed. For purpose of notice, the
address of the parties shall be:

                 Employer:    Medical Alliance, Inc.
                              2445 Gateway Dr., Suite 150
                              Irving, TX 75063
                              (972) 550-7330


                 Employee:    Gary Hill
                              4206 San Carlos Drive
                              Dallas, TX 75205

             Any party may change its address for notice by written notice given
to the other parties in accordance with Section 11.

             11. Enforcement. A party to this Agreement may enforce the duties
and obligations prescribed by this Agreement in a court of competent
jurisdiction by specific performance, injunction, money judgment, or any other
remedy. It is the intent of each of the parties that the Covenants Not To
Compete contained in Section 6 above be enforced to the fullest extent permitted
by applicable law. Accordingly, should a court of competent jurisdiction
determine that the scope of any covenant is too broad to be enforced as written,
it is the intent of each of the parties that the court should reform such
covenant to such narrower scope as it determines enforceable. If a party fails
to perform any duty or obligation prescribed by this Agreement, and the other
party recovers a judgement against the defaulting party, the prevailing party in
the lawsuit is entitled to recover, in addition to his or its claims and costs,
a reasonable amount as attorneys fees from the defaulting party and other
reasonable expenses including premiums for bonds required for injunctive relief.

             12. Parole Evidence Rule. This instrument constitutes the entire
Agreement of the parties concerning the subject matter of this Agreement and may
not be contradicted by evidence of any prior agreement or any contemporaneous
oral agreement. Neither party is relying on any representations except those
representations which are specifically incorporated in this Agreement.

             13. Amendment. At the time this Agreement was executed, Employer
was a Texas corporation with its principal place of business located in Irving,
Texas. This Agreement, following its execution, was accepted by Employer in the
State of Texas. BOTH PARTIES TO THIS AGREEMENT AGREE THAT THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.



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             14. Severability. If any provision of this Agreement is invalid or
unenforceable, the provision shall be deleted, construed, modified, or reformed
to meet the minimum requirements to be valid and enforceable. Whether or not
deleted, construed, modified or reformed to be valid and enforceable, the
invalidity or unenforceability of any provision shall not affect the remainder
of this Agreement, which shall remain in full force and effect.

             15. Binding Effect. This Agreement is binding on and shall inure to
the benefit of the parties and their respective heirs, successors,
administrators and assigns.



             EXECUTED as of the date first set forth above.

                    EMPLOYER:        Medical Alliance, Inc.


                          By:   /S/ PAUL HERCHMAN
                             ----------------------------------

                          Its:  Chief Executive Officer
                             ----------------------------------

                    EMPLOYEE:

                             /s/ GARY HILL
                             ----------------------------------
                             Gary Hill


                             ----------------------------------
                             Social Security Number



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                                   APPENDIX A


Compensation: Employee shall initially be paid a salary of $16,667 per month
prorated for any partial month, along with quarterly and year end performance
bonuses as approved by the Compensation Committee of the Board of Directors.