EXHIBIT 10.26



August 24, 2000


Stanley Liang
Director Risk Services
SIERRA HEALTH and LIFE INSURANCE CO., INC.
2720 Tenaya Way
Las Vegas,  Nevada  89128

         RE:      Binding Terms of Agreement for  Radiological  Carve  Out/Texas
                  Health Choice and Other Matters.

Dear Mr. Liang:

Pursuant to our various meetings and conversations, this letter shall constitute
evidence  of our intent to enter into more  formal  written  agreement  for each
portion of our relationship  and our Interim  Agreement on the binding terms and
conditions of the respective  arrangements  between PHYMED  Contracted  Services
Corporation  and  its  affiliated  physician  groups  (hereafter   collectively,
"PHYMED"),  and Texas Health  Choice,  L.C.  (hereafter,  "Plan");  Sierra Texas
System,  Inc.  (hereafter  "Sierra")  and,  The  Medical  Group of  Texas,  P.A.
(hereafter,  "TMGT")  for the  provision  by  PHYMED of  radiological  and other
specialty  services,  as defined  below,  for  members of the Plan in the Dallas
Forth Worth Area.

This  Interim  Agreement  shall be effective  September 5, 2000 (the  "Effective
Date") and shall  continue  in effect  until  such time or our  formal  separate
written agreements are in place for each portion of the arrangement described in
this Interim Agreement.

Because of the short time frame,  the parties  recognize  that certain terms and
conditions  of this  Agreement  will  not be  resolved  by  September  5,  2000.
Accordingly it is the intention of the parties that  subsequent to the Effective
Date, the parties will negotiate in good faith the specific open issues.  In the
event the  parties are unable to resolve  these  issues,  the  parties  agree to
submit such issues, with the exception of lease rates and capitation, to binding
arbitration in accordance with paragraph 13 below.

I. Business

         1. Upon execution hereof and effective as of September 5, 2000,  PHYMED
will become,  where Plan's contracts permit, the exclusive provider of Radiology
Services  and  Nuclear  Medical  Procedures  for  members  of the Plan and shall
therefore  enter  into a  Provider  Service  Agreement  with the  Plan.  For the
purposes of this letter of intent,  the term  "Radiology  Services" and "Nuclear
Medical  Procedures"  shall include the specific  covered CPT codes set forth on
Exhibit A attached  hereto and made a part  hereof for all  purposes.  The terms
Radiology Services and Nuclear Medical  Procedures are collectively  referred to
herein as the "Contracted Services".

         2. The "per member per month"  payment for the Radiology  Services (the
"Cap Payment") under the Services Agreement shall in no event be less than:

              a.   $3.33 per member per month - commercial
              b.   $5.75 per member per month - senior
              c.   $2.74 per member per month - POS

<PAGE>

         The above rates are subject to review either upon the completion of the
         first six months of operation or if membership falls below 50,000.

                      Any  authorized  services  rendered to Plan  members,  for
              which PHYMED  receives Cap  Payment,  by a radiology  provider not
              associated  with PHYMED will be reimbursed  by Plan.  Such payment
              will be adjusted from the Cap Payment to PHYMED.

         The Cap  Payment  will be made each  month on or around the 15th day of
each month the Services Agreement is in effect.

         3.  PHYMED will do or perform or have done or  performed  on its behalf
the following:

         a.       centralized  scheduling  for  all  locations  (attachment  #1)
                  implemented  in  such  manner  as to  provide  efficiency  and
                  convenience for members of the Plan;

         a.       in-house   radiology   reads  and  exam   interpretations   or
                  subcontracted  services (with IRG or others,  pre-approved and
                  credentialed by Plan) to ensure standard  turn-around time not
                  to exceed 24 hours for such reads and  interpretations  (STATS
                  will be handled as appropriate or required);

         a.       input results of operations into TMGT's  "Practice  Management
                  System"  and to  otherwise  assist TMGT in the  collection  of
                  service data for inclusion in such Practice Management System;

         4. The Plan shall,  prior to September 10, 2000 and monthly  during the
term  of the  Services  Agreement,  provide  to  PHYMED  a  current  list of the
membership  under the Plan and the Plan Physicians  participating  therein.  The
Plan will  provide  examples  of all  reports  with  respect to  membership  and
physicians currently available.  The Plan will further provide a detailed policy
relating to required data, pre-certification,  authorizations,  co-payments, and
Utilization  Management along with associated protocols.  Representatives of the
parties will work  together to review and modify such  policies and protocols as
may be necessary to harmonize and conform  policies and  procedures of PHYMED to
those of the Plan. The Plan will further make available to PHYMED  credentialing
requirements for radiologists performing services under the Services Agreement.

         5. TMGT and the Plan will  provide to PHYMED a list of all  outsourcing
contracts  pertaining to outpatient  radiology and identify those  contracts and
agreements,  which have an  expiration  date  subsequent to September 5, 2000 or
which, for whatever reason,  cannot be unilaterally  terminated by TMGT upon the
giving of notice.  It is the intention of the parties that all such  outsourcing
contracts will be terminated  with the exception of those specific  contracts or
agreements the termination of which has been waived by PHYMED in writing.

<PAGE>

II. Equipment/Records

         6. Sierra agrees to and does hereby bargain,  sell, transfer and convey
and assign to PHYMED and PHYMED  agrees to and does hereby  acquire and purchase
effective  September 5, 2000,  the  Equipment  identified  on Exhibit B attached
hereto and made a part  hereof.  The  purchase  price and terms and  conditions,
warranties  and  representations  regarding the sale or otherwise  applicable to
such  Equipment  will be  negotiated  in good faith by and  between  the parties
subsequent to the date hereof but in no event later than December 31, 2000.  The
parties will work  together to  determine  the fair market value of all personal
property to be transferred to PHYMED as a result of this transaction  including,
if necessary, the appointment of one or more appraisers to determine such value.
The costs  associated with the appraisals  shall be borne by the party incurring
same. Sierra reserves the right to retain specific equipment if desired.

         7.  TMGT and  Sierra  will  cooperate  with  PHYMED  in  obtaining  all
necessary  certificates  of  registration  termination,  signed by the Radiation
Safety Officer,  to be sent to the Texas Department of Health,  US Food and Drug
Administration  and the American College of Radiology.  TMGT will further notify
film badge vendors and cause proper records to be transferred.

         8.  PHYMED  will,  on the  Effective  Date,  assume  responsibility  as
custodian of all mammography  films and shall covenant to make same available to
patients of TMGT as required.  PHYMED will further retain onsite, records of all
examinations  conducted  for the two year  period  prior to the  Closing.  Those
records of patients who have been  examined  over two years prior to the Closing
will be retained by or delivered  to TMGT for storage as required by  applicable
law or the internal policies and procedures of TMGT.

III.  Facilities/Leases

         9.  Effective  on  September  5,  2000,  PHYMED  will  assume  and take
possession of Leased Space at the  following  locations:  Fort Worth,  Southwest
Dallas and Dallas Specialty Center ("Lease Space").  The terms and conditions of
such lease,  including  the square  footage and rent  payable  there for will be
negotiated in good faith by and between the parties  subsequent to the effective
date of this Interim Agreement. At a minimum, the terms of each such lease shall
include terms and  conditions  normal and  customary for such lease  agreements.
Special  provision  will be made in the  lease  agreement  or in the  definitive
agreement, as required, for medical record storage areas.

         10. It is the  intention  of PHYMED to offer  radiological  services to
persons other than members of the Plan. Notwithstanding the foregoing,  however,
PHYMED will  covenant that members of the Plan will have the same access to such
services as non-member patients.

<PAGE>

IV.  Employees

         11. PHYMED,  in its sole  discretion,  will make  employment  offers to
certain of Sierra's technical, clerical and administrative staff effective as of
the date  responsibility for radiological  services is assumed by PHYMED.  Those
employees  accepting  such offers shall  thereafter  become  employees of PHYMED
subject to PHYMED's internal  policies and procedures.  In this regard and as to
each  employee  considered  for a position  with PHYMED,  Sierra will provide to
PHYMED information  regarding the length of service,  job title and pay rate for
such employees.

         12. Sierra will settle accrued vacation, sick time and bonuses with any
employee who terminates his or her employment with Sierra prior to the hiring of
such  employee  by PHYMED  and save and hold  PHYMED  harmless  from any and all
claims for such accrued and unpaid employee benefits.  At a minimum,  the Sierra
employees will retain current base salaries,  seniority,  and accrual rates when
employed by PHYMED.  Notwithstanding  the  foregoing,  Sierra will  maintain any
former Sierra  employee  employed by PHYMED on Sierra's  employee  benefit plans
until  September  30, 2000 at which time PHYMED will assume sole  responsibility
therefore.

V.  General

         13. The parties  recognize that it is to their  respective  benefit for
PHYMED to assume the  responsibility  of providing  the  Contracted  Services on
September 5, 2000. As part of the assumption of such services, the Equipment and
the Lease Space must be available to PHYMED. However, the parties recognize that
not all issues with respect to the provision of such services  including,  among
other matters, the service agreement, the purchase price of the Equipment or the
terms and  conditions  of the Lease  Agreements,  will be resolved by that time.
With the exception of the Cap Payment, which will be resolved prior to September
5, 2000, the parties agree that they will use their utmost good faith to resolve
the  outstanding  issues.  To the extent that such issues  cannot be resolved in
good faith by and between the  parties,  the parties  agree to submit the issues
remaining,  excluding  issues  related to lease rate, to binding  arbitration in
Dallas,  Texas.  Such Arbitration will be conducted by the American  Arbitration
Association under the rules and regulations that govern such procedures.

         14. With respect to information  concerning or relevant to the Plan and
its business and the proposed  transaction  contemplated  herein,  PHYMED agrees
that it will hold such  information  in strict  confidence and will not disclose
any such information other than to its directors,  officers,  employees,  agents
and  representatives  who  need to know  such  information  for the  purpose  of
evaluating the proposed  transaction  for the purpose of evaluating the proposed
transaction,  who shall be informed by PHYMED of the confidential nature of such
information.

         15.  The parties further agree that:

         a.  PHYMED  and the Plan  each has or will by  September  5,  2000 have
         received  all  authorizations  and third party  consents,  necessary or
         advisable  in  the  opinion  of  their   respective   counsel  for  the
         consummation  of the proposed  transaction,  and all  applicable  legal
         requirements shall have been satisfied;

<PAGE>

         b. The board of  directors  or  managers,  as the case may be, shall or
         will by  September  5, 2000  approved  the  Agreement  and the proposed
         transaction;

         c. The person  signing this  Agreement is  authorized to do so and that
         such  Agreement  when  executed  will  be  binding  on  the  respective
         parties.;

         16.  This  Agreement  will be  governed  under the laws of the State of
Texas with venue stipulated as being in Dallas County, Texas.

         17.  This Agreement may be executed in counterparts.



                                             PHYMED Contracted Services
                                             Corporation

                                               /s/ George C. Barker
                                             ----------------------------------
                                             BY George C. Barker, President


                                             Texas Health Choice, L.C.



                                               /s/ David Marlon
                                             ----------------------------------
                                             BY David Marlon, C.O.O.