<PAGE>
                                                                   EXHIBIT 10.65


                       MEDICAL DIRECTOR SERVICES AGREEMENT

         THIS MEDICAL DIRECTOR SERVICES AGREEMENT (the "Agreement") is made and
entered into this 1st day of May, 2002, effective as of May 1, 2000, by and
between RENAL CARE GROUP TEXAS, INC., a Texas corporation (the "Company"), and
TYLER NEPHROLOGY ASSOCIATES, P.A., a Texas professional corporation (the
"Practice"). In addition, each Practice Physician, as defined below, has
executed the attached Physician Joinder and by which each such Practice
Physician has agreed to be bound by certain terms of this Agreement as provided
in the Physician Joinder.

                                W I T N E S S E T H:

         WHEREAS, the Company has developed and owns and operates a renal
dialysis facility at 425 South Carroll Street, Athens, Texas 75751 (the
"Facility"), which Facility will provide outpatient dialysis services;

         WHEREAS, the Facility is an outpatient dialysis facility certified by
the Center for Medicare and Medicaid Services ("CMS") for payment under the
Medicare program, which program requires the Facility to obtain the services of
a physician or group of physicians to perform prescribed medical director
services for the Facility;

         WHEREAS, the Company desires to engage one or more nephrologists
skilled in dialysis center administration to provide medical director services
at the Facility in accordance with the requirements established by CMS and as
provided in this Agreement;

         WHEREAS, the Practice desires and is qualified to provide the medical
director services contemplated by this Agreement to the Facility through one or
more of its Practice Physicians, each of whom will be licensed to Practice
medicine and prescribe drugs without restriction in the State of Texas, will
specialize in nephrology and dialysis services and will be experienced in
dialysis center administration;

         WHEREAS, the Practice has provided medical director services at the
Facility since May 1, 2000, when the Facility opened, pursuant to an oral
agreement, while the terms of this Agreement were being finalized.

         NOW, THEREFORE, in consideration of the premises set forth above and
the mutual covenants and agreements of the parties set forth in this Agreement,
the receipt and sufficiency of which are acknowledged, the parties agree as
follows:

                                    ARTICLE I
                             ENGAGEMENT AND SERVICES

         1.1 Engagement. The Company engages the Practice to provide, and the
Practice shall provide, services for the Company as medical director of the
Facilities in accordance with the requirements of applicable CMS regulations
(including, without limitation, 42 C.F.R. Section 405.2100 et seq. and any
successor regulations) and all applicable state regulations, as the same may be
amended or supplemented, together with such other services as are customarily
performed by medical directors at high quality dialysis facilities and such
other tasks related to the oversight of dialysis treatments administered at the
Facilities as the Company may from time to time reasonably designate. The
Practice agrees that matters affecting the operating and capital budget of the
Facility shall be presented to and require the approval of the Company.


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         1.2 Responsibilities. Without limiting the generality of this Article
I, the Practice shall provide the medical director services described in EXHIBIT
A, which may be revised and updated from time to time by the Company, provided
that any change that is not a CMS or other legal requirement must first be
approved by the Practice if it materially increases the medical director duties
hereunder.

         1.3 Principal Contact. The Practice shall from time to time designate
in writing to the Company a Practice Physician to serve as the principal contact
at the Facility and who shall provide or arrange for the provision of the
services required hereunder, and who shall serve as the principal contact for a
period of no less than 12 months. The initial principal contact for the Facility
will be Roy Gerard, M.D.

         1.4 Patient Care Manual. The Practice shall advise the Company in
developing and maintaining a patient care policy and procedures manual for the
Facility and will assure its implementation by delegating to the supervising
nurse the duty to oversee the implementation of the policies and providing
medical guidance when needed. The manual will describe:

               (a) The types of dialysis used in the Facility and the procedures
to be followed in performing each type of dialysis;

               (b) Procedures for implementing universal precautions for the
prevention of disease transmission;

               (c) Procedures for properly handling blood-borne and infectious
pathogens; and

               (d) A disaster readiness plan.

         1.5 Supervising Nurse. The Company shall provide a full time nurse to
manage the provision of patient care in the Facility. The Practice may delegate
to the supervising nurse the responsibility for the execution of patient care
policies on a day-to-day basis, and the principal contact will provide medical
guidance to the supervising nurse in the execution of these duties.

         1.6 Records. The Company and the Practice acknowledge that attending
physicians have medical responsibility for the content of medical records of the
Facility pertinent to the care of their patients. Furthermore, the Company and
the Practice acknowledge that the head nurse or manager of the Facility has
operational responsibility for the day-to-day maintenance of the Facility's
records including records of nurses, technicians, dieticians and social workers
providing services in the Facility. The Company, through a medical records
supervisor designated for the Facility, with the assistance and support of the
Practice shall oversee the maintenance of current medical and business records
relating to the care and treatment of patients in the Facility in accordance
with 42 CFR 405.2139 and 25 TAC ss. 117.45 and in accordance with Company
policies and applicable regulations of governmental agencies, including:

               (a) Patient long-term care plans, patient short-term care plans
and medical histories;

               (b) Results of physical examinations and laboratory tests; and

               (c) Progress notes by all patient care staff, and complete and
legibly signed orders and discharge summaries.

         1.7 Documentation. The Practice and Practice Physicians who provide
services hereunder shall maintain, and provide to the Company upon request,
reasonably complete and detailed documentation of the



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services performed in providing medical director services under this Agreement.
This documentation shall be maintained in a form reasonably satisfactory to or
prescribed by the Company and, at the reasonable request of the Company, will
include documentation of the time spent performing services under this
Agreement.

         1.8 Medical Staff. The Practice shall review the applications of
physicians requesting to attend to patients at the Facility and forward a
recommendation concerning such applications to the body making credentialing
decisions for the Facility under its Professional Staff Bylaws. Subject to the
Facility's Professional Staff Bylaws, a member of the Practice shall, at the
request of the Company or the Executive Board of the Medical Staff acting under
such bylaws, serve on the peer review committee that maintains oversight of all
disciplinary actions with regard to any matter of such physicians or patient
care personnel as needed to assure the quality of services and conformity to
Company and Facility rules and policies.

         1.9 Coverage. The Practice shall make available one or more Practice
Physicians, as appropriate, to provide medical director services at the Facility
for its hours of operation. The Practice and the Company shall confer from time
to time in good faith concerning the appropriate level of physician coverage to
provide medical director services hereunder.

         1.10 Practice Physicians. (a) The Practice represents and warrants that
all physicians who as of the date of this Agreement meet the definition of a
Practice Physician have executed the Physician Joinder attached hereto. As a
condition to engaging any physician in a manner that causes such physician to
become a Practice Physician, the Practice shall obtain the signature of such
physician on the Physician Joinder in consideration for such engagement the fees
payable to the Practice hereunder.

               (b) For purposes of this Agreement, the term "Practice Physician"
means any physician who is a physician performing services on behalf of the
Practice at any of the Facilities (whether as an employee, partner, member,
shareholder or independent contractor of the Practice), any other physician
performing services on behalf of the Practice hereunder (as may be approved by
the Company), and any other physician in any way affiliated or associated with
the Practice, or regularly seeing patients of the Practice (other than on a
covering or locum tenens basis).

         1.11 No Required Referrals. Notwithstanding any other provision of this
Agreement, each of the Company, the Practice and the Practice Physicians
acknowledges and agrees that neither the Practice nor any Practice Physician is
required to make referrals of patients to the Company or any affiliate of the
Company or to the Facility. Each of the Practice Physicians is free to maintain
professional staff privileges at any dialysis facility, to refer patients to any
other facility for dialysis or other services, and, subject to Article VII,
otherwise to perform professional medical services at or through any entity,
whether or not it is competing with the Facility, the Company or with any
affiliates of the Company.

         1.12 Personnel. The Company and the Practice acknowledge that the
Practice has no control over the processes of hiring or firing of associates
employed at the Facility. The Company and the Practice further acknowledge and
agree that the Practice's involvement in the training of associates is confined
to providing advice and counsel to the Company.




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                                   ARTICLE II
                              TERM AND TERMINATION

         2.1 Initial and Renewal Terms. This Agreement shall be deemed effective
as of May 1, 2000, the date on which the Company opened the Facility for
services to patients (the "Effective Date") and shall remain in full force and
effect until 12:00 p.m. midnight on the tenth anniversary of the Effective Date
(the "Initial Term"), unless earlier terminated as provided in this Article II.
This Agreement shall automatically renew for additional successive terms of
three years each (the "Renewal Terms"), unless either party gives written notice
of non-renewal to the other party not less than 90 days prior to the expiration
of the Initial Term or then-current Renewal Term, as applicable. If such notice
is given, this Agreement shall expire as of the last day of the Initial Term or
the then-current Renewal Term, as applicable.

         2.2 Termination By Agreement. The Company and the Practice may agree in
writing signed by both parties to terminate this Agreement at a time and date
stipulated in such writing.

         2.3 Termination by the Practice for Cause. (a) The Practice may during
the Initial Term or any Renewal Term terminate this Agreement upon written
notice to the Company in the event of the occurrence of either of the following:

               (i) material breach of any covenant, agreement, term,
representation or warranty of the Company in this Agreement or the failure of
any representation or warranty of the Company in this Agreement to be true and
correct in all material respects when made or deemed made hereunder, which
breach or failure, if susceptible of cure, continues uncured for 30 days after
the Practice gives written notice of such breach or failure to the Company; any
notice of breach or failure will describe such breach or failure with reasonable
particularity; or

               (ii) the revocation of the Medicare certification of the Facility
or the exclusion of the Company from participation in the Medicare or Medicaid
program which exclusion or revocation has not been cured, stayed or rescinded
within 90 days.

               (iii) any felony conviction (including a plea of nolo contendre)
of any officer or management-level employee of the Company relating to the
provision of health care services at the Facility;

               (iv) dishonesty, misappropriation of property, or false or
defamatory disparagement of the Practice or any of its medical staff,
affiliates, representatives or employees;

               (v) the failure of the Company reasonably to consider or
reasonably to act upon a written request by the Practice that the Company
provide equipment, personnel or training for personnel necessary to operate the
Facility in accordance with applicable law and the conditions of participation
in the Medicare program, which failure continues for 30 days after the Practice
gives the Company notice written notice that the Practice intends to terminate
this Agreement under this Section 2.3(a)(v); or

               (vi) the existence of an immediate threat to the health or safety
of any patient receiving treatment at the Facility, which threat results from
any act or omission of the Company or any of its employees (and not from any act
or omission of the Practice).

               (b) Upon the occurrence of any event described in Section
2.3(a)(iii) or 2.3(a)(iv), the Practice shall not terminate this Agreement if,
within 10 days after the Practice gives the Company written



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notice of the action or event giving the Practice the right to terminate this
Agreement, the Company agrees that the individual who is the subject of such
cause will not have any further involvement with the Facilities.

         2.4 Termination by the Company.

               (a) The Company may during the Initial Term or any Renewal Term
terminate this Agreement upon written notice to the Practice in the event of the
occurrence of any of the following with respect to the Practice or any one of
the Practice Physicians:

                    (i) dishonesty, misappropriation of property, disparagement
of the Company, the Facility or Renal Care Group, Inc., the parent company of
the Company ("RCG"), or any of their affiliates, representatives or employees;

                    (ii) negligence in the performance of any duty or
responsibility as medical director under this Agreement, which negligence was
not occasioned in whole or in part by any negligence by the management or
employees of the Company, the Facility or RCG, and which negligence results in
substantial harm to the reputation or ongoing ability to conduct the business of
the Facility or the Company, provided that the results of such negligence
continue for thirty (30) days after the Company gives the Practice written
notice of such negligence and that the Company intends to terminate this
Agreement under this Section 2.4(a)(ii);

                    (iii) suspension, revocation or limitation of the licenses
or authorizations required to be maintained by the Practice or the Practice
Physicians;

                    (iv) exclusion of the Practice or any Practice Physician
from participation under Medicare, Medicaid or any other federal health benefits
program;

                    (v) revocation, suspension, probation, removal or
resignation under investigation of any Practice Physician from membership or
privileges on the medical staff of the Facility or of any other health care
facility at which such Practice Physician has medical staff privileges;

                    (vi) the existence of an immediate threat to the health or
safety of any patient receiving treatment at the Facility, which threat results
from any act or omission of the Practice or any Practice Physician;

                    (vii) the requirement, or threatened requirement, by any
federal or state agency having jurisdiction over the Company or the Facility
that the Practice or any Practice Physician cease to provide medical director
services at the Facility;

                    (viii) commission or conviction, including a plea of nolo
contendere, of any felony or of any crime involving moral turpitude; or

                    (ix) material breach of any covenant, agreement, term,
representation or warranty of the Practice or any Practice Physician in this
Agreement or the failure of any representation or warranty of the Practice in
this Agreement to be true and correct in all material respects when made or
deemed made hereunder, which breach or failure, if susceptible of cure,
continues uncured for 30 days after the Company gives written notice of such
breach or failure to the Practice; any notice of breach will describe such
breach with reasonable particularity.


<PAGE>

               (b) Upon the occurrence of any event described in paragraph (a)
of this Section 2.4 that is the result of an act or omission of one or more
specific Practice Physicians who do not constitute a majority of the Practice
Physicians then providing services hereunder, the Company shall not terminate
this Agreement if, within 10 days after the Company gives the Practice written
notice of the act or omission giving the Company the right to terminate this
Agreement, the Practice agrees that any Practice Physician who is the subject of
such cause will not provide further services under this Agreement and, if
requested by the Company, that the Practice will use its best efforts to cause
such physician to resign the privileges of such Practice Physician to attend
patients at the Facility.

               (c) Upon the occurrence of any event described in paragraph (a)
of this Section 2.4, the Company shall have, in addition to the right to
terminate this Agreement, the right to suspend the Practice from providing
services under this Agreement for a period of up to one year. In the event of
any such suspension, this Agreement shall remain in force, except that (i) the
Practice will not be required to perform services required under this Agreement,
(ii) the Company will not be required to pay the compensation contemplated by
this Agreement, and (iii) the term of this Agreement shall not be extended by
the occurrence of such suspension. At any time during or at the end of any such
period of suspension, the Company may elect to terminate this Agreement.

         2.5 Effect of Termination or Expiration. Upon and following the
expiration of this Agreement or its termination for any reason, the Practice
shall not interfere with any efforts by the Company to contract with any other
individual or entity for the provision of medical director services. Expiration
or termination of this Agreement shall not affect any rights or obligations of
the parties accruing hereunder through the date of expiration or termination,
including the Company's obligation to compensate Practice for medical director
services pro-rated through such date, and such rights and obligations shall
survive expiration or termination.

                                   ARTICLE III
                                  COMPENSATION

         3.1 Compensation.

               (a) In consideration of the services, covenants, and agreements
agreed to be performed by the Practice during the Initial Term and any Renewal
Term, beginning on the commencement of operations at the Facility, the Company
shall pay the Practice $25,000 per year for the year from the Effective Date
until the first anniversary thereof and $30,000 per year after such first
anniversary. Such medical director fee shall be payable in substantially equal
monthly installments in arrears on or before the 15th day of each month for
services rendered during the preceding month. In addition to the monthly medical
director fee prescribed above for years beginning on and after January 1, 2002,
the Practice shall be eligible for an annual bonus of up to 15% of the base
annual medical director fee payable hereunder based upon the success of the
Facility in meeting annual clinical outcomes targets and in achieving
performance objectives for the Facility and the Practice generally prescribed by
RCG for its dialysis facilities in the region in which the Facility is located.
The criteria for reviewing and determining the bonus amount will bee attached
hereto as EXHIBIT C. RCG may change such criteria annually, and the Company will
provide the revised criteria to the Practice when adopted. The Practice's
performance relative to these criteria will be evaluated as part of the peer
review and quality assurance process for the South Central Region of RCG. The
Practice agrees to accept the payment under this subsection (a) (as it may be
adjusted as provided below) as the total compensation for all services,
covenants and agreements pursuant to this Agreement.


<PAGE>

               (b) (i) If either party believes that the fair market value of
the services provided by the Practice under this Agreement has changed in any
material way since the most recent anniversary of the Effective Date (or since
the Effective Date with respect to the first anniversary), then such party may
notify the other that it believes such a change has occurred and the Practice
and the Company shall negotiate in good faith an adjustment to the compensation
described in Section 3.1(a) above so that it represents fair market value for
the duties and responsibilities of the Practice to be provided during the next
year under this Agreement. Notwithstanding the foregoing, no adjustment pursuant
to this subsection (b)(i) to the compensation payable under this Agreement shall
be effective unless set forth in writing signed by each of the Practice and the
Company, which writing shall be deemed an amendment to this Agreement.

                    (ii) If the Practice and the Company are unable to agree on
an adjustment, then either may require that an adjustment of the compensation
hereunder be submitted to a qualified independent third party mutually selected
by both the Practice and the Company to determine the fair market value of the
services required hereunder, the costs and fees of which shall be borne equally
by the Practice and the Company. If the Practice and the Company are unable to
agree on the third party, then each such party shall at its own cost and expense
select its own qualified independent third party and the average of such two
determinations of fair market value shall be the revised compensation unless
such determinations are more than 10% apart, in which case such third parties
shall mutually select an additional qualified independent third party, the fees
and expenses of which shall be shared equally, who shall determine the fair
market value of the services hereunder from between the range of the amounts
determined by the first two appraisals. The fair market value of the services as
determined in accordance with the provisions of this subsection (b)(ii) shall be
the compensation payable under this Agreement effective as of the applicable
anniversary of the Effective Date, and such final determination shall be deemed
an amendment to this Agreement.

               (c) Any change to the compensation payable hereunder in
accordance with subsection (b) of this Section 3.1 shall be effective as of the
applicable anniversary of the Effective Date and shall remain effective, and not
subject to adjustment under Section 3.1(b) or otherwise, for at least 12 months
from the effective date of such change.

         3.2 Expenses. The Company shall be responsible for all reasonable
expenses incurred in the operation of the Facility and the support of the
services provided by Practice hereunder, including appropriate office space and
secretarial support, and shall reimburse the Practice for all reasonable
out-of-pocket expenses incurred by the Practice in attending meetings outside
the service area of the Facility as required or requested by the Company
pursuant to Article I of this Agreement.


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                                   ARTICLE IV
                                STATUS OF PARTIES

         4.1 Tax Status. The Company and the Practice acknowledge and agree that
the relationship created under this Agreement between them is that of
independent contractors and that nothing in this Agreement shall be deemed to
render either party the employer or employee of the other, agent or principal of
the other, or joint venturer or partner of the other. The parties acknowledge
and agree that the Practice Physicians will be engaged by the Practice and will
under no circumstances be considered the employee(s) of the Company, RCG or the
Facility, or any of their affiliates. The Practice shall be responsible for all
withholding, payroll and similar taxes related to its engagement of the Practice
Physicians, and neither the Practice nor the Practice Physicians shall be
entitled to any benefits afforded to the employees of the Company, RCG or the
Facility, or any of their affiliates. The Practice agrees that (i) neither it
nor any Practice Physician be treated as an employee of the Company for federal
tax purposes; (ii) the Company will not withhold on behalf of the Practice any
sums for income tax, unemployment insurance, social security, or any other
withholding pursuant to any law or requirement of any governmental body; (iii)
all of such taxes, payments and withholdings, if any, are the sole
responsibility of the Practice; and (iv) the Practice will indemnify and hold
the Company and RCG harmless from any and all loss or liability arising with
respect to such benefits, taxes, payments and withholdings, if any. If the
United States Internal Revenue Service ("IRS") should question or challenge the
worker status of the Practice or the Practice Physicians, then the parties agree
that both the Practice and the Company shall have the right to participate in
any discussion or negotiation occurring with the IRS, irrespective of which
party initiated such discussions or negotiations, and each party shall notify
the other in advance of any planned meeting or discussion.

         4.2 No Agency. The Practice shall not have the right or authority to,
and expressly agrees that it will not, enter into any contract in the name of
the Company or otherwise to bind the Company, in any way, without the express
written consent of the Company. The Practice shall indemnify and hold the
Company harmless from any and all loss or liability attributable to a violation
of this covenant. However, the Practice shall advise and assist the Company in
securing and retaining contracts in the name and for the account of the Company
with such individuals or entities necessary for the proper and efficient
functioning of the Company.

         4.3 Access to Records. If it is ultimately determined that ss. 952 of
the Omnibus Reconciliation Act of 1980 applies to this Agreement, then until the
expiration of four years after the furnishing of services provided under this
Agreement, the Practice will make available to the Secretary of the United
States Department of Health and Human Services, the United States Comptroller
General, and their representatives, this Agreement and all books, documents and
records necessary to certify the nature and extent of the costs of those
services. If the Practice carries out the duties of this Agreement through a
subcontract worth $10,000 or more over a twelve-month period with a related
organization, the subcontract will also contain an access clause to permit
access by the Secretary, Comptroller General, and their representatives to the
related organization's books, documents and records.

         4.4 The Company's Work Product. All operating procedures, protocols,
information systems, operating data, databases, reports and other non-public
proprietary business systems or information owned by the Company or RCG shall be
and remain the exclusive property of the Company or RCG, as appropriate. If the
Practice or any Practice Physician modifies, enhances or alters any of such
property such modification, enhancement or alteration will be deemed a
work-for-hire and shall be the property of the Company or RCG, as appropriate.
The Practice or Practice Physician making such modification, enhancement or
alteration will execute all documents reasonably requested by the Company to
vest fully in the Company or RCG title to such modification, enhancement or
alteration.


<PAGE>

                                    ARTICLE V
                                    INSURANCE

         5.1 Practice Insurance Coverage. The Practice shall purchase and
maintain at its expense for itself and each of the Practice Physicians
professional and general liability insurance, with an insurance company
reasonably acceptable to the Company, with policy limits of at least $1,000,000
per occurrence and $3,000,000 in the aggregate, including coverage for acts and
omissions in rendering medical services to patients of the Practice, including
patients being treated at the Facility.

         5.2 Company Insurance Coverage. The Company shall procure and maintain
throughout the term of this Agreement professional and general liability
insurance (through self-insurance or an insurance carrier) with policy limits of
at least $1,000,000 per occurrence and $3,000,000 in the aggregate, which
coverage shall include coverage of the Practice for acts and omissions in
connection with the performance of duties as medical director under this
Agreement.

         5.3 Evidence of Coverage. Upon the execution of this Agreement and
annually thereafter or on reasonable request, the Company and the Practice shall
each provide the other with certificates of insurance or other reasonably
satisfactory evidence of the insurance required to be maintained under Sections
5.1 and 5.2. Each party shall notify the other at least 60 days prior to the
voluntary cancellation or termination of any such coverage and immediately upon
receipt of any notice of involuntary cancellation or termination of any such
coverage.

                                   ARTICLE VI
                     PRACTICE REPRESENTATIONS AND COVENANTS

         6.1 Representations and Covenants. The Practice represents, covenants
and warrants as follows:

               (a) The Practice is, and shall at all times during the term of
this Agreement be, licensed to conduct its business in the State of Texas and
shall engage as Practice Physicians only physicians who are licensed without
restriction to Practice medicine in such state and who never have had any such
license in this or any other state limited, withdrawn, suspended, subject to
reprimand, curtailed, placed on probation or revoked;

               (b) The Practice shall engage as Practice Physicians under this
Agreement only physicians who are board eligible or board certified in the
specialty of nephrology as recognized by the American Board of Medical
Specialists;

               (c) The Practice shall at all times engage at least one Practice
Physician who is a member of the active medical staff of a local hospital; the
Practice shall engage as Practice Physicians only physicians who have at least
one year experience or training in the care of patients at an end stage renal
disease treatment facility, and who have been granted privileges to practice at
the Facility;

               (d) Except as may be approved in writing by the Company, which
approval will not be unreasonably withheld, the Practice shall engage as
Practice Physicians only physicians who have never been denied membership or
reappointment to membership on the medical staff of any health care facility,
and who have never had medical staff membership or clinical privileges limited,
suspended, curtailed, revoked, placed on probation or withdrawn, and who have
never been subject to reprimand whether


<PAGE>
voluntarily or as a result of action (either formal or informal) initiated by
any health care facility or its medical staff;

               (e) The Practice shall require the Practice Physicians to use
their commercially reasonable best efforts and professional skills and judgment
in rendering services under this Agreement;

               (f) The Practice shall require the Practice Physicians to perform
professional services and render care to patients in accordance with, and in a
manner consistent with, appropriate standards and the ethics of the medical
profession and as necessary for the Facility to maintain compliance with
applicable governmental laws and regulations;

               (g) The Practice shall require the Practice Physicians promptly
to notify the Company of any actual or threatened denial, suspension, revocation
or curtailment of licensure or certification status, medical staff membership or
clinical privileges held by such physician(s) with any state, with any facility
operated by the Company (including the Facility), or with any payor or other
health care facility;

               (h) The Practice has notified the Company of each action or claim
alleging professional negligence filed or asserted against the Practice or any
Practice Physician within the previous five years and a current status and/or
ultimate resolution of such claim and will promptly notify the Company in
writing of its receipt of any action, claim or lawsuit alleging professional
negligence lodged against the Practice or any Practice Physician individually or
any partnership, professional corporation or association with which any Practice
Physician is affiliated;

               (i) The Practice shall, for itself, and for each Practice
Physician, promptly notify the Company of any sanction, threatened sanction,
investigation or proceeding by any governmental agency or any entity regarding
the participation by the Practice or any Practice Physician in the Medicare,
Medicaid program or any third party payor program in which the Facility
participates; and

               (j) This Agreement covers all of the services being provided to
the Company by the Practice and the Practice Physicians as medical directors of
the Facility, and the Practice acknowledges and agrees that the aggregate amount
of services to be provided under this Agreement will not exceed an amount that
is reasonable and necessary for the legitimate medical and business purposes of
this arrangement.

                                   ARTICLE VII
                         CONFIDENTIALITY, NONCOMPETITION
                          AND NONSOLICITATION COVENANT

         7.1 Additional Covenants.

               (a) During the term of this Agreement and for a period of two
years after the termination or expiration of this Agreement, the Practice and
each Practice Physician agrees that it, he or she will not in any manner,
directly or indirectly, by itself, himself or herself or in conjunction with any
other person, (i) conduct any of the activities or perform any of the
responsibilities delineated in Article I and EXHIBIT A ("Services") of this
Agreement for any business entity that is competitive with the business of the
Company or (ii) establish or own any financial, beneficial or other interest in
(other than an interest consisting of less than one percent (1%) of a class of a
publicly traded security), make any loan to or for the benefit of, or render any
managerial, marketing or other business advice, to any entity that is then
conducting activities that are competitive with those of the business of the
Company, in either case within a 25-mile radius around the Facility. For
purposes of this Article, the "business of the Company" means owning or
operating a renal



<PAGE>

dialysis center, unit or facility or providing dialysis supplies or services to
any other such center, unit or facility to any home dialysis program, including
the provision of pharmaceuticals or laboratory services related to renal
dialysis.

               By executing a counterpart of this Agreement and in consideration
of the compensation paid to the Practice hereunder, each Practice Physician
agrees to be bound by the terms of this Article VII. With respect to the
Practice Physicians, the two-year time periods applicable to this Article VII
shall begin on the earlier of (i) the termination or expiration of this
Agreement, or (ii) the termination of the employment, independent contractor or
other relationship or affiliation of the Practice Physician with the Practice,
such that such Practice Physician ceases to fall within the definition of a
Practice Physician hereunder and generally ceases to treat patients of the
Practice.

               (b) During the term of this Agreement and for a period of two
years after the termination or expiration of this Agreement, the Practice and
each Practice Physician will use all reasonable efforts to keep confidential and
not to divulge, or allow to be divulged to anyone, or use or otherwise
appropriate for its, his or her own benefit or for the benefit of others, any
knowledge or information of a confidential nature with respect to the business
of the Company, the Company itself, or any of its affiliates, including all
trade secrets, pricing information, marketing information or technical
information (hereinafter referred to as the "Confidential Data"), except for (i)
information that is generally available to the public other than as a result of
a breach of a confidentiality agreement, (ii) information available on a
non-confidential basis from a source other than the Company or its affiliates or
agents, which source itself is not bound by a confidentiality agreement, (iii)
information required to be disclosed by law or pursuant to court order, but only
to the extent such disclosure is necessary to respond to such law or court
order, or (iv) disclosure necessary in order for the Practice to perform its
obligations under this Agreement, but only to the extent such disclosure is
necessary for such performance. Each of the Practice and the Practice Physician
acknowledges and agrees that the prohibitions against disclosure of Confidential
Data recited herein are in addition to, and not in lieu of, any rights or
remedies that the Company may have available pursuant to the laws of any
jurisdiction or at common law to prevent the disclosure of confidential
information or trade secrets, and the enforcement by the Company of its rights
and remedies under to this Agreement shall not be construed as a waiver of any
other rights or available remedies that the Company may possess in law or
equity.

               (c) During the term of this Agreement and for a period of two
years after the termination or expiration of this Agreement, neither the
Practice nor any of the Practice Physicians will, for its, his or her own
benefit or the benefit of others, solicit any person or entity that has or has
had, or disrupt or attempt to disrupt, any relationship, contractual or
otherwise, with the Company (including any patient, payor, physician, provider,
managed care organization or supplier) at any time during the term of this
Agreement for the purpose of assisting or creating such a relationship for any
business entity that is competitive with the business of the Company.

               (d) During the term of this Agreement and for a period of two
years after the termination of this Agreement, neither the Practice nor any of
the Practice Physicians will induce, or attempt to induce, any employee of the
Company or any of its affiliates to terminate his or her association with the
Company or any of its affiliates. If any employee of the Company responds to a
general solicitation and seeks employment with the Practice or a Practice
Physician and the Practice or such Practice Physician desires to hire such
employee, then the Practice or such Practice Physician shall give notice of its,
his or her desire to hire such employee and will not offer to hire such employee
until the earlier of seven days after such notice is received by the Company or
the date on which the Company approves such hiring. If the Practice or a
Practice Physician hires an employee of the Company after following the
procedures outlined above, the



<PAGE>

Company may request that the employee continue to provide services to the
Company for up to 30 days to provide for an orderly transition.

               (e) These covenants are considered by the parties hereto to be
fair, reasonable and integral for the protection of the Company. The parties
agree that if a violation of any of these covenants occurs, then (i) such
violation and any threatened violation will cause irreparable injury to the
Company, (ii) the remedy at law for any such violation or threatened violation
will be inadequate, and (iii) the Company will be entitled to injunctive relief
to prevent such violation. The parties acknowledge that these covenants will
survive, and remain in effect and enforceable after, termination of this
Agreement.

               (f) Nothing in this Article VII shall be deemed to prohibit any
Practice Physician from exercising his or her medical judgment concerning the
medical treatment of a patient in any manner whatsoever in any location
whatsoever, and shall not be deemed to require the referral of any such patient
to any facility of the Company or any of its affiliates. The parties acknowledge
and agree that this Agreement shall in no way be deemed to restrict the right or
ability of the Practice and the Practice Physicians to admit and provide
professional service to patients at facilities and institutions other than
facilities of the Company or RCG, including without limitation facilities
operated by business entities that are competitive with the business of the
Company. The Practice and the Practice Physicians acknowledge that enforcement
of this covenant will not prevent any physician of the Practice from earning a
living by practicing medicine or nephrology.

                                  ARTICLE VIII
                                  MISCELLANEOUS

         8.1 Notices. Any notice sent in accordance with the provisions of this
Section 8.1 shall be deemed to have been received (even if delivery is refused
or unclaimed) on the date that is: (i) the date of proper posting, if sent by
certified U.S. mail or by express U.S. mail or private overnight courier, or
(ii) the date on which sent, if sent by facsimile transmission, with
confirmation and with the original sent by certified U.S. mail, addressed as
follows:

         Practice:                  TYLER NEPHROLOGY ASSOCIATES, P.A.
                                    1133 Medical Drive
                                    Tyler, Texas 75701
                                    Telecopy Number: (903) 595-0206

         Company:                   Renal Care Group Texas, Inc.
                                    c/o Renal Care Group, Inc.
                                    2100 West End, Suite 800
                                    Nashville, Tennessee 37203
                                    Telecopy Number:(615) 345-5503
                                    Attn: Chief Financial Officer
                                      and General Counsel

         Copy to:                   Renal Care Group Texas, Inc.
                                    5215 North O'Connor Boulevard, #490
                                    Irving, Texas 75039
                                    Telecopy Number: (941) 506-8388
                                    Attn: Regional Chief Operating Officer


<PAGE>

         Any party hereto may change its address specified for notices herein by
designating a new address by notice in accordance with this Section 8.1.

         8.2 Amendments. Subject to Section 8.4, this Agreement may be amended
at any time by mutual agreement of the Practice and the Company hereto, but any
such amendment shall not be operative or valid unless the same is reduced to
writing and approved by the parties hereto.

         8.3 Assignability. This Agreement shall not be assignable by the
Practice, and the Practice shall not assign any of its rights or obligations
under this Agreement without the written consent of the Company. This Agreement
shall not be assignable by the Company, and the Company shall not assign any of
its rights or obligations under this Agreement without the written consent of
the Practice; provided that, without the consent of Practice, the Company may
assign or transfer this Agreement to an affiliate of the Company or RCG or in
connection with a sale of all or substantially all of the assets or business of
the Company; provided that such assets and business are not composed
predominantly of assets of facilities in Tyler, Texas or within 25 miles of
Tyler, Texas.

         8.4 Contract Modifications; Severability.

               (a) This Agreement shall be construed to the fullest extent
possible to be in compliance with and permitted by all Federal (including
Medicare and Medicaid) and state statutes, rules and regulations. If a
Triggering Event (as defined below) occurs, either the Company or the Practice
may by written notice to the other propose an amendment to this Agreement as
necessary to comply with the item giving rise to the Trigger Event. To the
fullest extent possible, any such amendment shall preserve the responsibilities
and duties of the parties and the underlying economic and financial arrangements
between the Company and the Practice with the least changes to the parties'
expectations hereunder. If the Practice and the Company fail to agree to the
form of an amendment within thirty days after the date of such notice, then
either of such party may submit the matter to arbitration as provided in Section
8.9 and any arbitration award shall comply with the second sentence of this
Section, provided that if any resulting change to this Agreement includes a
change to the compensation under Section 3.1(a), then the amount of compensation
shall be determined under the procedures in Section 3.1(b). For purposes of this
Section 8.4, "Triggering Event" means the effectiveness of any statute, rule or
regulation (i) prohibiting the Practice or any of the Practice Physicians from
referring patients (whether Medicare, Medicaid or otherwise) for renal dialysis
either directly or indirectly to the Facilities; (ii) prohibiting the Company,
the Practice or any Practice Physician from submitting claims or receiving
payment under the Medicare, Medicaid or any other third party payment programs
for services rendered to patients at the Facilities; (iii) determining that the
amount or method for determining compensation paid to the Practice hereunder
does not reflect fair market value for the services provided by the Practice
under this Agreement without taking into account the volume or value of
referrals made by the Practice Physicians; or (iv) otherwise rendering illegal
the relationship hereunder between the Company, the Practice and the Practice
Physicians.

               (b) Subject to the provisions of subsection (a) of this Section
8.4, if any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws in effect during the term of this
Agreement, the legality, validity or enforceability of the remaining provisions
of this Agreement shall not be affected thereby.

         8.5 Headings. The headings of this Agreement are inserted for
convenience only and are not to be considered in construction of its provisions.


<PAGE>

         8.6 Entire Agreement. This Agreement constitutes the full contract and
agreement of the parties with respect to its subject matter, superseding all
prior or contemporaneous agreements, either oral or written.

         8.7 Construction of the Agreement and Binding Effect. Notwithstanding
the place where this Agreement may be executed by any of the parties hereto, the
parties expressly agree that all terms and conditions of this Agreement shall be
construed under and governed by the laws of the State of Texas.

         8.8 Non-Waiver. The failure of either party to exercise any of its
rights under this Agreement for a breach thereof shall not be deemed to be a
waiver of such rights or a waiver of any subsequent breach.

         8.9 Disputes. (a) The parties agree that any dispute arising in
connection with, or relating to, this Agreement or the termination of this
Agreement (other than a dispute related to Sections 3.1(b) or 8.4) shall be
subject to resolution through informal methods. If the parties are unable to
resolve such dispute after thirty days of efforts, then such dispute shall be
submitted to mediation with a singe mediator selected by the parties or, failing
the parties' agreement on a mediator, by JAMS/Endispute. The mediation shall be
conducted in accordance with the rules of JAMS/Endispute. If the parties are
unable to resolve the dispute through mediation, they shall retain all rights
and remedied at applicable law, subject to paragraph (b) below.

         (b) Following the procedures outlined in paragraph (a) above, the
parties agree that any dispute arising in connection with, or relating to, this
Agreement or the termination of this Agreement (other than a dispute related to
Section 3.1(b) and, unless the Company so agrees, a dispute under Article VII),
to the maximum extent allowed by applicable law, shall be subject to arbitration
in accordance with the terms of the Commercial Arbitration Rules for Expedited
Procedures of the American Arbitration Association. A single arbitrator shall be
chosen mutually by the parties from among the Commercial Panel of the American
Arbitration Association. Notwithstanding the foregoing, any party hereto may
seek all available preliminary injunctive or other temporary relief pending the
issuance of an arbitration award. The award of the arbitrator shall contain
findings of fact and conclusions of law and shall be binding and conclusive upon
the parties.

         (c) Any mediation or arbitration under this Agreement shall be held in
Smith County, Texas.

         8.10 Third Party Beneficiaries. The Practice and the Practice
Physicians agree that RCG and its affiliates are express and intended third
party beneficiaries of this Agreement.



<PAGE>


         IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written to be effective as provided hereinabove.

                                            Company:
                                            -------

                                            RENAL CARE GROUP TEXAS, INC.

                                            By: /s/ R. Dirk Allison
                                                --------------------------------
                                            Title: Vice President
                                                   -----------------------------


                                            Practice:
                                            --------

                                            TYLER NEPHROLOGY ASSOCIATES, P.A.

                                            By: Roy D. Gerard, Jr., M.D.
                                                --------------------------------
                                            Title: President
                                                   -----------------------------



<PAGE>


                                PHYSICIAN JOINDER

         Each Practice Physician executing below acknowledges that he or she has
read and understood the terms of the Medical Director Services Agreement, dated
May 1, 2002 and effective as of May 1, 2000, to which this Physician Joinder is
attached and as same may be amended or revised as provided therein (the
"Agreement"). By signing this Physician Joinder, each Practice Physician agrees
in his or her individual capacity, to (i) the nature and scope of medical
director duties set forth in Article I of the Agreement, including as described
in detail on EXHIBIT A, (ii) the restrictive covenants contained in Article VII
of the Agreement, and (iii) the third party beneficiary designated in Section
8.10 of this Agreement, in each case as may be amended by agreement of the
Practice.

                                  /s/ Robert C. Dobrowolski, M.D.        (seal)
                                  ---------------------------------------
                                  Name: Robert C. Dobrowolski, M.D.
                                        ---------------------------------


                                  /s/ Thomas A. Lowery, M.D.              (seal)
                                  ---------------------------------------
                                  Name: Thomas A. Lowery, M.D.
                                        ---------------------------------



                                  /s/ James R. Cotton, Jr., M.D.          (seal)
                                  ---------------------------------------
                                  Name: James R. Cotton, Jr., M.D.
                                        ---------------------------------


                                  /s/ Roy D. Gerard, M.D.                 (seal)
                                  ---------------------------------------
                                  Name: Roy D. Gerard, Jr., M.D.
                                        ---------------------------------


                                  /s/ Diane S. Demick, M.D.               (seal)
                                  ---------------------------------------
                                  Name: Diane S. Demick, M.D.
                                        ---------------------------------


                                  /s/ Alpesh Jethva, M.D.                 (seal)
                                  ---------------------------------------
                                  Name: Alpesh Jethva, M.D.
                                        ---------------------------------


                                  /s/ Nabeel Ahmed, M.D.                  (seal)
                                  ---------------------------------------
                                  Name: Nabeel Ahmed, M.D.
                                        ---------------------------------


                                  /s/ Stephanie Diaz, M.D.                (seal)
                                  ---------------------------------------
                                  Name: Stephanie Diaz, M.D.
                                        ---------------------------------


<PAGE>


                                    EXHIBIT A

                  MEDICAL DIRECTOR DUTIES AND RESPONSIBILITIES


                                  (Rev. 2/4/99)

         Qualifications: The Practice, through the Practice Physicians, shall be
the "Medical Director" contemplated by these duties and responsibilities. The
Medical Director shall be a licensed physician in the State of Texas, who meets
the criteria of and ESRD "qualified physician director" as well as the
requirements for Professional Staff membership as enumerated in the Professional
Staff Bylaws.

         Duties and Responsibilities: As required by Title 42 of the Code of
Federal Regulations, the Medical Director has responsibility for the execution
of patient-care policies at the Facility. The Medical Director exercises that
responsibility through working with the Facility's head nurse or manager to
direct the professional services of the Facility and conscientiously applying
its policies and procedures. The Medical Director is a member of the governing
body of the Facility and serves as the official channel of communications
between the Medical Staff and the Executive Board. Specific responsibilities of
the Medical Director include the administrative, medical and technical services
outlined below. The duties and responsibilities of the Medical Director are
separate and distinct from any Practice Physician's role as an attending
nephrologist.

         Specific responsibilities of the Medical Director include:

Administrative

         A.     The Medical Director will provide advice and assistance to the
Company in the implementation and maintenance of written policies and guidelines
including:

                1.       Communicable disease control within the unit.
                2.       The RCG Professional Staff Bylaws.
                3.       Maintenance of patient medical records.
                4.       Patient and staff education programs.
                5.       Physical environment, fire and safety, and emergency
                         preparedness of the dialysis facility.
                6.       Responsibilities and functions of each category of
                         personnel employed by the facility.

Such policies and guidelines will be developed by Company personnel, including
the Facility's head nurse or manager and the area administrator, and the
policies and guidelines will be subject to the review and comment of the Medical
Director. The Company will, with the advice and assistance of the Medical
Director, oversee the implementation and maintenance of such policies and
procedures and the training of personnel in the same, and the Medical Director
will provide advice in such training as needed to the Company. Training for
nurses and dialysis technicians will be provided by the Company through the
supervising nurse or another instructor qualified under 25 TAC ss. 117.62(g)(2).

        B.      The Medical Director will actively participate in facility
                Quality Improvement Programs (CQI) and in multi-disciplinary
                quality assurance programs that monitor the performance of
                co-morbid conditions.


<PAGE>

        C.      As required by 42 CFR 405.2136, the Company, with the advice and
                assistance of the Medical Director, is responsible for
                maintaining and implementing written personnel policies and
                procedures including:

                1.      Qualifications and responsibilities of all staff
                        employed by the facility.
                2.      Provision of a safe and sanitary environment, and
                        procedures for reporting, preventing, and testing for
                        health and safety hazards.
                3.      Supervision of trainees.
                4.      Maintenance of complete personnel records.
                5.      Personnel policies available to all personnel of the
                        facility, including effective grievance procedures.
                6.      Personnel participation in regular educational programs.
                7.      Maintaining and updating manuals.


        D.      The Medical Director will participate in an active dialogue with
                the RCG Medical Advisory Board (or its representative) in
                pursuit of the common goal of delivering the best patient care
                practical. This participation requires implementation of MAB
                mandated directives and consideration of its recommendations.

        E.      The Medical Director will review as requested by the Company the
                RCG Quality Indicator and patient satisfaction data for the
                facility with the manager of the facility and will consult with
                attending nephrologists regarding achievement of Quality
                Indicator targets.

        F.      The Medical Director will recommend an appropriate physician to
                serve as a representative on the governing body of the Facility.

        G.      The Medical Director will exert reasonable efforts to assist
                facility in complying with applicable ESRD network, State,
                Federal and RCG mandates. The Medical Director will exert
                reasonable efforts to encourage all attending physicians to
                comply with applicable ESRD network, State, Federal and RCG
                mandates.

        H.      The Medical Director will review incident reports, patient
                complaints and any disciplinary action of medical staff or
                patient care personnel monthly.

        I.      The Medical Director will serve as facility liaison with
                affiliated medical institutions for services such as renal
                transplantation, hospitalizations and emergency medical
                services.

        J.      The Medical Director will participate in the facility survey
                process by groups such as the State Board of Health, CMS, NCQA
                and JCAHO, and will then communicate to the Governing Body the
                results of such surveys to the Executive Board (and the medical
                staff).

        K.      The Medical Director will collaborate with the Chief Medical
                Officer and the MAB in obtaining data from regulatory agencies
                as a part of the RCG strategy to work continuously to improve
                patient care.

        L.      The Medical Director will participate as reasonably practicable
                given the time and circumstances of Medical Director in national
                RCG Medical Director educational conferences.


<PAGE>

        M.      The Medical Director will collaborate with the laboratory that
                tests the facility's samples to implement ESRD Network, State,
                Federal and RCG mandates.

Medical

        A.      The Medical Director will be a member of the renal health care
                team to ensure quality of care, including the establishment and
                implementation of policies regarding patient care. Among these
                quality of care criteria are:

                -       The suitability of patients admitted to the outpatient
                        dialysis facility.
                -       The appropriateness of dialysis prescriptions in the
                        facility.
                -       Administration of dialysis-related medications.
                -       Administration of recommended vaccines for ESRD patients
                        and staff.
                -       Existing patient care policies and procedures.

        B.      The Medical Director will serve on the professional team in the
                development of long-term patient care plans and the review and
                revision of long-term patient care plans and will participate in
                the selection of an appropriate ESRD modality for all patients
                of the facility.

        C.      The Medical Director will advise the Company regarding the
                development and implementation of written policies outlining
                patients' options for various treatment modalities, including
                in-center, home and peritoneal dialysis.

        D.      When self-dialysis training or home dialysis training is
                offered, the Medical Director will advise the Company in
                developing and implementing a program that assures that patient
                teaching materials are available for the use of all trainees
                during training and at times other than during the dialysis
                procedure;

        E.      The Medical Director will work to assure that the ESRD patient
                has appropriate consultation with a renal dietician, social
                worker, financial counselor and other individuals, as needed.

        F.      The Medical Director will oversee the appropriate performance of
                the dialysis orders and day-to-day patient care policy by the
                nursing and technical staff.

        G.      The Medical Director will use reasonable efforts to encourage
                attending physicians to comply with the facility's policies on
                patient care and will work with the Company to address instances
                of attending physicians' failure to comply with such policies.

        H.      The Medical Director will review patient satisfaction surveys
                and data, clinical outcomes data, and the Medical Director will
                consult with attending physicians and staff as appropriate to
                implement appropriate action to address issues identified and to
                improve patient care at the facility.


<PAGE>

Technical

        A.      The Medical Director will participate in the selection of
                treatment modalities and dialysis supplies to be offered by the
                facility and advise attending physicians regarding the
                compatibility of their dialysis prescriptions with the options
                available at the facility.

        B.      The Company will provide to the Medical Director, for review and
                approval, policies and procedures regarding the adequate
                training of nurses and technicians in dialysis science
                techniques.

        C.      The Medical Director will provide continuous availability for
                medical and technical questions to the patient care staff,
                including coverage when the Medical Director is not available.

        D.      The Medical Director will advise the Company regarding the
                implementation of a dialysis water standards policy including
                monitoring and enforcement.

        E.      The Medical Director will advise the Company regarding the
                implementation of a policy regarding dialyzer reuse including
                monitoring and enforcement.

        F.      The Medical Director will advise the Company regarding the
                implementation of a policy on the administration of
                intradialytic medications.






<PAGE>


                                    EXHIBIT C

                       MEDICAL DIRECTOR PERFORMANCE REVIEW

         There has been general agreement regarding the need for a clear set of
guidelines and expectations of an RCG Medical Director. Objectivity in the
annual performance evaluation has been prerequisite, leading to the development
of this document. Our mission is "to improve the quality of life and to care for
those patients with chronic and acute renal disease." This requires that the
dialysis facility and its staff function collaboratively at the highest possible
level, under the leadership of the Medical Director. The Practice's performance
relative to the criteria set forth in this EXHIBIT C will be evaluated as part
of the quality assurance process of RCG's South Central Region. These
performance review criteria are designed to foster continuous improvements in
patient care.

         The Interpretive Guidelines for ESRD Facilities states in V-420
"Treatment is under the general supervision of a Director who is a physician.
The Medical Director is responsible for planning, organizing, conducting and
directing the professional ESRD services and must devote sufficient time to
carrying out these responsibilities." The Nephrologist has the medical skills
and must develop leadership and collaborative management skills to fulfill this
mandate as Medical Director. Teamwork and collegiality are highly valued as the
leader of the ESRD team.

         The measure of performance will be based on a point system as
authorized by the Medical Advisory Board (MAB). The specific criteria and weight
may be changed in the future at the discretion of the MAB. The elements to be
measured and their weight are as follows:

        - 50% based on Clinical Indicators of the Facility
        - 30% based on Medical Director administrative duties
        - 20% based on patient satisfaction with the Facility

CLINICAL PERFORMANCE MEASURES (50%)

                          HEMODIALYSIS MEDICAL DIRECTOR
           (evaluation based on annual rolling average of prior year)

-    URR (% of patients with URRs >=70%)                 >75% = 10 points
         RCG AVERAGE 65%                                70-75% = 8 points
         Best Region 72.8%                            65-69.9% = 6 points
                                                      60-64.9% = 4 points
                                                          <60% = 0 points

-    HEMATOCRIT (% of Hcts >=33%)                        >75% = 10 points
         RCG AVERAGE 63.7%                              70-75% = 8 points
         Best Region 70.2                             65-69.9% = 6 points
                                                      60-64.9% = 4 points
                                                      55-59.9% = 2 points
                                                          <55% = 0 points


<PAGE>

-    MISSED TREATMENTS (91+ days, based on days per patient year at risk)
         RCG AVERAGE ___ TREATMENTS                         < =  8 points
         Best Region ___ treatments                           =  6 points
                                                              =  2 points
                                                            > =  0 points

-    MORTALITY (91+ days, based on deaths per 100 patient years at risk)
         RCG AVERAGE 20.7                                 <20 =  8 points
         Best Region 15.5                             20-23.9 =  6 points
                                                      24-29.9 =  4 points
                                                        30-35 =  2 points
                                                          >35 =  0 points

-    VASCULAR ACCESS:
         % OF TEMPORARY CATHETERS                        <10% =  8 points
         RCG average 19.8%                           10-14.9% =  6 points
         Best Region 10.7%                           15-19.9% =  4 points
                                                       20-25% =  2 points
                                                         >25% =  0 points

         -   % native AV fistulas                        >35% = 15 points
             RCG average 22%                         30-34.9% = 12 points
             Best Region 33.6%                       25-29.9% =  9 points
                                                       20-24% =  6 points
                                                     15-19.9% =  3 points
                                                         <15% =  0 points

         -   PTFE clotting events/patient year           <0.3 = 10 points
             RCG average 0.9                         0.3-0.59 =  8 points
             Best Region 0.6                         0.6-0.99 =  9 points
                                                      1.0-1.2 =  4 points
                                                         >1.2 =  0 points

                      PERITONEAL DIALYSIS MEDICAL DIRECTOR
            (VALUATION BASED ON ANNUAL ROLLING AVERAGE OF PRIOR YEAR)

-    KT/V  (>=2.1)
         RCG AVERAGE 63.5% CAPD                           >65 = 15 points
         RCG average 70.6% CCPD                        60-65% = 12 points
                                                     55-59.9% = 10 points
                                                     50-54.9% =  8 points
                                                     45-49.9% =  5 points


<PAGE>

-    CREATININE CLEARANCE  (>=60L CAPD or >=60 L CCPD)


         RCG AVERAGE 67.1% CAPD                           >70 = 15 points
         RCG average 70.6% CCPD                        65-70% = 12 points
                                                     60-64.9% = 10 points
                                                     55-59.9% =  8 points
                                                     50-54.9% =  5 points

-    HEMATOCRIT  (% of Hcts 33-36%)                      >75% = 10 points
         RCG AVERAGE 63.7%                             70-75% =  8 points
         Best Region 70.2                            65-69.9% =  6 points
                                                     60-64.9% =  4 points
                                                     55-59.9% =  2 points
                                                         <55% =  0 points

-    HOSPITALIZATION (91 + days, based on days per patient year at risk)
         RCG AVERAGE 12.0 DAYS                       <10 days =  8 points
         Best Region 8.6 days                    10-14.9 days =  6 points
                                                   15-20 days =  2 points
                                                     >20 days =  0 points


-    MORTALITY (91 + days, based on deaths per 100 patient years at risk)
         RCG AVERAGE 20.7                                 <20 =  8 points
         Best Region 15.5                             20-24.9 =  6 points
                                                      24-29.9 =  4 points
                                                        30-35 =  2 points
                                                          >35 =  0 points

-    PERITONITIS (new cases + relapse)
         RCG AVERAGE 14.9 MONTHS BETWEEN CASES
         Best Region 16.9 months between cases

         >25 months between cases             15 points
         20-25 months between cases           12 points
         15-19.9 months between cases          9 points
         10-14.9 months between cases          6 points
         >10 months between cases              0 points


<PAGE>



             COMBINATION HEMODIALYSIS & PERITONEAL MEDICAL DIRECTOR

For those physicians who oversee both modalities, each is evaluated using the
above criteria. The overall Clinical Quality is then a composite of these,
weighted to reflect the numbers of patients in each modality.

MEDICAL DIRECTOR TASKS (30%)
----------------------

-       PARTICIPATION IN MONTHLY REVIEW: (one point / month with 12 points
        possible)
        -       Review staffing & training issues impacting patient outcomes
                with Manager
        -       Review water quality
        -       Review dialyzer reuse @ the Facility
        -       Review monthly lab of patients below quality goals & develop
                plan
        -       Review trend in hospitalizations, infections
        -       Review temporary catheter usage & trend
        -       Review patient incident reports & trends
        -       Monitor staff physician patient rounding process
        -       Adequacy of staff physician medical documentation

-       PARTICIPATION IN CQI PROCESS: (one point/hourly meeting with 12 points
        possible)

-       PARTICIPATION IN PROFESSIONAL STAFF PROCESS:
        -       Quarterly Professional Staff meetings (one point/quarter - 4
                points possible)
        -       Quarterly Quality conference calls (one point/quarter - 4
                points possible)

-       ANNUAL CHECKLIST: (2 points for each item - 8 points possible)
        -       Review and approve facility Policy and Procedures and make
                necessary modifications; review and approve clinical protocols.
        -       Review patient satisfaction data annually and in concert with
                the Facility Manager make recommendations for improvement.
        -       Participate with the Manager in the Budget process for the
                Facility.
        -       Participate in Facility surveys by BOH, HCFA, etc.

PATIENT SATISFACTION SCORES (PSS) (20 %)

         CAREGIVER:
         RCG average 1.26
                             PSS>1.5         =    8 points
                             PSS 1.25-1.5    =    6 points
                             PSS 1.0-1.249   =    4 points
                             PSS 0.5-0.99    =    2 points
                             PSS <0.5        =    0 points



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         PHYSICIAN:
         RCG average 1.11
                             PSS>1.5         =   10 points
                             PSS 1.25-1.5    =    8 points
                             PSS 1.0-1.249   =    6 points
                             PSS 0.5-0.99    =    2 points
                             PSS <0.5        =    0 points


         DIETICIAN, SOCIAL WORKER, OTHER
         RCG average 1.47, 1.33, 1.08

                             PSS>1.5         =    4 points each
                             PSS 1.25-1.5    =    3 points each
                             PSS 1.0-1.249   =    2 points each
                             PSS 0.5-0.99    =    1 point each
                             PSS <0.5        =    0 points