Note: Certain portions of this exhibit have been omitted and filed separately
with the Securities and Exchange Commission pursuant to a Request for
Confidential Treatment.

                          MEMORANDUM OF UNDERSTANDING

    NYLCare Health Plans of the Mid-Atlantic, Inc. ("NYLCare Mid-Atlantic")
                                      and

                    Doctors Health, Inc. ("Doctors Health")

                            CREATION OF RELATIONSHIP

1. OVERALL SCOPE. Doctors Health and NYLCare Mid-Atlantic have been discussing
   ways to work more closely together in Medicare risk contracting, and have
   agreed to create a relationship in which NYLCare Mid-Atlantic would shift the
   financial risks of managing certain of its Medicare HMO enrollees to Doctors
   Health and Doctors Health would become both clinically and financially
   responsible for all or most of NYLCare Mid-Atlantic's Medicare HMO enrollees
   in Maryland, Virginia and the District of Columbia. In pursuing such
   discussions, the parties acknowledge that NYLCare Mid-Atlantic will retain
   exclusively the role of the licensed HMO authorized to market the NYLCare
   Mid-Atlantic Medicare risk product known as NYLCare 65. As such, NYLCare
   Mid-Atlantic will retain responsibility for services set forth in Section 7
   and will remain in a supervisory position over responsibilities delegated to
   Doctors Health hereunder to the extent necessary for NYLCare Mid-Atlantic to
   fulfill its regulatory obligations. NYLCare Mid-Atlantic retains the right to
   determine whether and how the Medicare risk product is to be marketed.

2. NYLCare 65 NETWORK MANAGER. NYLCare Mid-Atlantic and Doctors Health would on
   October 1, 1997 enter into a three (3) year Network Management Agreement,
   under which NYLCare Mid-Atlantic would for the duration of the term appoint
   Doctors Health as its Medicare HMO Network Manager for an area as designated
   hereinafter as the "DOCTORS HEALTH SERVICE AREA," and "DOCTORS HEALTH
   PHYSICIANS" and "NETWORK MANAGEMENT PHYSICIANS." "Doctors Health Physicians"
   shall mean those primary care specialist physicians who have entered into a
   participation agreement with Doctors Health and who are managed by Doctors
   Health to provide health care services to Medicare enrollees. "Network
   Management Physicians" shall mean those primary care and specialist
   physicians who have entered into a participation agreement with NYLCare
   Mid-Atlantic, except those in the District of Columbia and Prince George's
   County, to provide health care services to NYLCare 65 enrollees and who will
   be managed by Doctors Health under the Network Management Agreement. At the
   end of the three (3) year initial term, the Network Management Agreement
   would be renewed for additional one (1) year terms unless terminated earlier
   as permitted under the Network Management Agreement. The Network Management
   Agreement would include a ninety (90) day with cause termination provision;
   provided, however, each party retains the option to terminate the Network
   Management Agreement immediately in the event of one of the following:

                                                                               1

<PAGE>

   a. in the event of a liquidating distribution to the other party's
      shareholders (or similar event); a combination, consolidation or merger
      where the other party is not the survivor; any sale or issuance of the
      other party's securities that places a majority of the voting power of
      shares in the control of persons or entities not having such control on
      September 30, 1997; any sale, exchange or other disposition of all or
      substantially all of the other party's assets; or any significant change
      in the management of the other party;

   b. in the event that the other party proposes to act as a provider sponsored
      network or conducts itself in such a manner as to compete with the
      non-breaching party; and

   c. in the event that the other party conducts itself in such a way as to
      reflect negatively on the reputation of the non-breaching party.

   NYLCare Mid-Atlantic retains the option to terminate the Network Management
   Agreement immediately in the event that Doctors Health seeks to obtain in its
   own right or through an affiliate an HMO license.

   Additional with cause conditions will be defined in the Network Management
   Agreement.

   If the Network Management Agreement is terminated, the parties would extend
   the terms of the Network Management Agreement for a period of ninety (90)
   days until the enrollees can be transferred to other NYLCare Mid-Atlantic
   participating providers. The Doctors Health Service Area would initially
   consist of all Maryland counties other than Prince George's County, and all
   Virginia counties in which NYLCare Mid-Atlantic is authorized to offer the
   NYLCare 65 product, and could be expanded by NYLCare Mid-Atlantic and Doctors
   Health during the term. Within the Doctors Health Service Area in Virginia,
   any NYLCare 65 enrollees who select a primary care physician who has entered
   into a participation agreement with Inova Integrated Services, Inova Health
   System, or an affiliated LLC (described on EXHIBIT A) would be excluded from
   the exclusive appointment for so long as such physician's contractual
   obligation to Inova Integrated Services continues.

3. DOCTORS HEALTH PHYSICIANS. All physicians who are or who at any time become
   affiliated with Doctors Health or one of its affiliated medical groups or
   IPAs (i.e., those physicians with respect to whom Doctors Health has Medicare
   risk contracting rights) would always be included as part of the Doctors
   Health Physicians, including primary care physicians whose practices are or
   become owned or affiliated with the Avanti Group (regardless of ownership of
   the Avanti Group, as long as the Avanti Group is a participating NYLCare
   Mid-Atlantic provider), through NYLCare Mid-Atlantic or directly with Doctors
   Health, at the Avanti Group's election. This occurs regardless of whether the
   Avanti Group becomes

                                                                               2

<PAGE>

   controlled by or under common control with Georgetown University Hospital or
   the Georgetown Faculty Practice and regardless of whether they are in Prince
   George's County or the District of Columbia, etc.). It is expected that by
   December 31, 1997 that all such Doctors Health Physicians will become NYLCare
   65 participating physicians.

4. PHYSICIAN RECRUITMENT. Doctors Health would be responsible for the clinical
   care and would bear the full financial risk of utilization of services (as
   described below) for all NYLCare 65 enrollees who as of September 30, 1997
   have selected a Network Management Physician as their primary care physician
   within the Doctors Health Service Area. It is recognized that Doctors Health
   may recruit physicians in Prince George's County or the District of Columbia,
   or physicians previously associated with one of the Inova practices. NYLCare
   Mid-Atlantic will transfer a Network Management Physician who becomes a
   Doctors Health Physician effective within thirty (30) days of notification
   from Doctors Health or the physician.

5. EXISTING NYLCare MID-ATLANTIC PARTICIPATING PHYSICIANS. Subject to the HMO
   role retained by NYLCare Mid-Atlantic in Section 1 and certain contractual
   limitations in Section 6, Doctors Health will have full financial
   responsibility and full clinical network management oversight for all NYLCare
   65 enrollees within the Doctors Health Service Area. The Network Management
   Agreement will provide that each of these physicians will be informed by
   NYLCare Mid-Atlantic of Doctors Health's role as Network Manager and the
   duties associated therewith. Doctors Health and NYLCare Mid-Atlantic each
   agree that it is their intention to maintain and expand the Network
   Management Physician and Doctors Health Physician primary care panel, and
   that every reasonable effort will be made to keep all participating NYLCare
   65 physicians in the panel and to avoid transfers of patients whenever
   possible. It is understood by both parties that the intent of the Network
   Management Agreement is to retain the Network Management Physician panel as
   currently configured and that no currently participating provider will be
   terminated from the Network Management Physician panel except for cause or at
   the request of the provider.

6. DELEGATION OF MEDICAL MANAGEMENT. As Medicare HMO Network Manager, Doctors
   Health will under the Network Management Agreement receive from NYLCare
   Mid-Atlantic a full delegation of all medical management and related care
   management decisions related to any of Doctors Health's NYLCare 65 enrollees
   in accordance with NCQA standards. Such delegation of responsibility will be
   subject to regulatory restrictions and contractual limitations regarding
   exclusivity and utilization programs set forth in particular current
   contracts with NYLCare Mid-Atlantic specialty providers. Doctors Health will,
   at least until the termination of the current service year in effect and/or
   any NYLCare Mid-Atlantic contracts in effect, agree to use NYLCare
   Mid-Atlantic's existing provider agreements (at NYLCare Mid-Atlantic's prices
   and rates) where Doctors Health has no provider agreement in place. Where
   both NYLCare Mid-Atlantic and Doctors Health each have a provider agreement
   in place (including an agreement with a hospital or other

                                                                               3

<PAGE>


   institution), Doctors Health may, subject to contractual and regulatory
   limitations, if any, contained in the provider agreements, recruit such
   provider in its network under the terms of either arrangement. Doctors Health
   will in all events retain the right to make selective and/or focused
   referrals within the network and to precertify referrals within the network,
   in its discretion. NYLCare Mid-Atlantic will cooperate with Doctors Health in
   its attempts to enforce physician compliance with Doctors Health programs and
   procedures implemented under the Network Management Agreement.

7. ADDITIONAL RESPONSIBILITIES. NYLCare Mid-Atlantic will under the Network
   Management Agreement remain responsible for defining the Medicare risk
   product, serving as the direct resource to enrollees including but not
   limited to administering NYLCare Mid-Atlantic's standard Medicare appeals and
   grievances process, generating provider directories, defining standards for
   professional liability insurance and credentialing and approving
   credentialing of all Network Management Physicians in accordance with NCQA
   standards (by means of a delegated credentialing agreement with Doctors
   Health), and performing all TPA functions, including all claims payments to
   providers, claims adjudication, member and provider services, and network
   contracting. Where permissible by contract and regulation, NYLCare
   Mid-Atlantic will agree to pay all claims, including, specifically, all
   hospital claims, at the lowest of the NYLCare Mid-Atlanic fee schedule, the
   Doctors Health fee schedule, or the maximum allowable Medicare payment, as
   applicable. In the event more innovative and creative payments mechanisms are
   arranged by Doctors Health, NYLCare Mid-Atlantic and Doctors Health will work
   together to ensure that proper administration and payment of claims is made
   by NYLCare Mid-Atlantic (at no additional cost to Doctors Health). NYLCare
   Mid-Atlantic and Doctors Health will cooperate in customizing all systems,
   processes and communications with providers and enrollees, to accommodate the
   integration of Doctor Health's medical management and care management
   functions with NYLCare Mid-Atlantic's retained administrative and payment
   functions. The Network Management Agreement will clearly define the scope and
   roles of each of NYLCare Mid-Atlantic and of Doctors Health.

8. PAYMENT AND RESERVE REQUIREMENT. Doctors Health will until October 1, 2000 be
   paid by NYLCare Mid-Atlantic an amount each month equal to     % of premium
   (i.e., the applicable AAPCC adjusted annually by HCFA for each enrollee, plus
   any subscriber or employer premiums) then in effect. Doctors Health will be
   responsible for funding any necessary stop-loss arrangements in order to
   comply with Physician Incentive Plan regulations. All payments will be made
   by NYLCare Mid-Atlantic by the 10th day of each month during the term,
   beginning on October 10, 1997. Claims payments to providers will be made by
   charging such amounts against the capitation payment due to Doctors Health.
   With respect to Virginia enrollees residing in the counties attached on
   EXHIBIT B, NYLCare Mid-Atlantic will through June 30, 1998 pay Doctors Health
   ** ***** $*** PMPM, regardless of the AAPCC and/or premium then in effect.
   With respect to Virginia enrollees

                                                                               4

<PAGE>


   elsewhere in Virginia, NYLCare Mid-Atlantic will through December 31, 1997
   pay Doctors Health ** ***** $*** PMPM, regardless of the AAPCC and/or premium
   then in effect. "PMPM" will be applied as the monthly total of eligible
   NYLCare 65 enrollees who have selected a primary care Network Management
   Physician within the Doctors Health Service Area.

   Doctors Health will, within thirty (30) days of the effective date of the
   Network Management Agreement, provide NYLCare Mid-Atlantic with an
   Irrevocable Standby Letter of Credit at a financial institution acceptable to
   NYLCare Mid-Atlantic in the initial notional amount of $*** ******* dollars,
   such terms of the Letter of Credit to be agreed upon in the Network
   Management Agreement. The notional amount of the Letter of Credit will be
   increased: i) in the sixtieth (60th) day following the effective date of the
   Network Management Agreement, to $*** ******* dollars; and ii) on each
   anniversary of the effective date of the Network Management Agreement, to an
   amount equal to sixty (60) days of average claims for the immediately
   preceding twelve (12) month period, based on the beginning of the contract
   year in question; provided, however, that in the event of any termination of
   the Network Management Agreement by NYLCare Mid-Atlantic for cause, or a
   termination of the Network Management Agreement at the end of the term, the
   Letter of Credit will remain in effect for at least one hundred eighty (180)
   days following termination. The Network Management Agreement will require
   that Doctors Health maintain a Letter of Credit conforming to the above terms
   at all times during the term of the Network Management Agreement.

                          TIME FRAME FOR DOCUMENTATION

1. PREPARATION OF NETWORK MANAGEMENT AGREEMENT. Doctors Health and NYLCare
   Mid-Atlantic agree that time is of the essence in completing the
   documentation necessary to implement the foregoing relationship. To this end,
   each agrees to use its good faith best efforts to CONSUMMATE A FINAL
   AGREEMENT(S) ON OR BEFORE TUESDAY, SEPTEMBER 30, 1997, such final agreement
   to include all of the terms contained herein, and to commit such appropriate
   time and resources to the completion and negotiation of the Network
   Management Agreement and other related schedules and documents as may be
   necessary to conduct a formal signing on or before Tuesday, September 30,
   1997. Such process required to consummate a final agreement shall include
   successful completion of a due diligence evaluation as described on EXHIBIT
   C, which evaluation constitutes each party's determination as to the other
   party's ability to assume the responsibilities established hereunder. Doctors
   Health will use its best efforts to prepare and distribute to NYLCare
   Mid-Atlantic an initial draft of a Network Management Agreement (and any
   other related documents) on or before Monday, September 22, 1997.
   Representatives of each of NYLCare Mid-Atlantic and Doctors Health will meet
   on Thursday, September 25, 1997 to receive comments and use their respective
   best efforts to finalize the

                                                                               5

<PAGE>

   agreement(s) in time for a signing on September 30, 1997. The parties agree
   that any controversy, dispute or claim arising out of or relating to the
   Network Management Agreement will be subject to binding arbitration.

2. NO CONSENTS. NYLCare Mid-Atlantic and Doctors Health both confirm to the
   other that, to the best of their knowledge, no consents or approvals, other
   than Board of Director approvals and regulatory approval as required, is
   necessary to enter into the arrangements described above and/or to execute
   the Network Management Agreement. Provided, however, if an amendment to the
   Network Management Agreement is required based on regulatory mandate and such
   amendment involves a modification which is substantially burdensome on either
   party and which was not contemplated by the burdened party as of the Network
   Management Agreement's date of execution, such burdened party may terminate
   the Network Management Agreement upon ninety (90) days written notice to the
   other party without penalty.

                           EXCLUSIVITY AND PUBLICITY

1. NON-SOLICITATION. NYLCare Mid-Atlantic understands that Doctors Health will
   be expending considerable time, effort and capital in preparing to assume the
   obligations to NYLCare Mid-Atlantic set forth herein, including, possibly,
   the leasing of additional space, hiring of addition personnel, and the
   engagement of attorneys and other advisors. NYLCare Mid-Atlantic therefor
   agrees, until October 30, 1997, to use its best efforts to complete the
   arrangements with Doctors Health set forth herein as soon as practicable and
   agrees that it will not solicit nor enter into any discussions with other
   provider groups, IPA management groups or any other person or entity to
   provide any of the Network Services that are the subject of this Memorandum
   of Understanding. With respect to marketing the NYLCare 65 product in the
   District of Columbia and Prince George's County, Maryland, NYLCare
   Mid-Atlantic shall have the right to enter into a similar network management
   arrangement with a third party after first determining whether Doctors Health
   is willing or able to assume such responsibilities in these areas upon terms
   acceptable to NYLCare Mid-Atlantic.

2. JOINT PRESS RELEASE. NYLCare Mid-Atlantic and Doctors Health each agree that,
   except as may be required by applicable law or regulation, no disclosure of
   the financial arrangements described in this Memorandum of Understanding
   shall be made by either without the consent of the other. Notwithstanding the
   foregoing, it is the intent of NYLCare Mid-Atlantic and Doctors Health to
   issue a joint press release promptly upon execution of this Memorandum of
   Understanding and prior to execution of formal documents on September 30,
   1997.

                                                                               6

<PAGE>

                                 MISCELLANEOUS

1. CONTRACTUAL OBLIGATIONS. Doctors Health and NYLCare Mid-Atlantic agree that
   the provisions of paragraphs 1 and 2 of the Section entitled "TIME FRAME FOR
   NEGOTIATION" and paragraphs 1 and 2 of the Section entitled "EXCLUSIVITY AND
   PUBLICITY" are meant to create contractual obligations for each of NYLCare
   Mid-Atlantic and Doctors Health. The balance of the provisions contained in
   this Memorandum of Understanding are meant to express understandings reached
   to date, and, other than each party's agreement to use its good faith best
   efforts to consummate a transaction along the line described herein on or
   before September 30, 1997, are not meant to create contractually binding
   obligations. Neither party may assign or delegate any responsibilities
   hereunder without the prior written consent of the other party.

2. CHOICE OF LAW. Where necessary, this Memorandum of Understanding shall be
   subject to the provisions of Maryland law.

                                     *****

ACCEPTED AND AGREED:

Doctors Health, Inc.

By:  /s/ Stewart B. Gold   Date: September 26, 1997
     -------------------         ------------------
       Stewart B. Gold
       Chief Executive Officer

NYLCare Health Plans of the Mid-Atlantic, Inc.

By:  /s/ Jeff D. Emerson   Date:  September 10, 1997
     -------------------          -----------------
     Jeff D. Emerson
     President and Chief Executive Officer


                                                                               7

<PAGE>

                                   Exhibit A

Limited Liability Corporations affiliated with Inova Integrated Services and/or
                              Inova Health System:

                          Premier Health Services, LLC
                          United Health Services, LLC


                                                                               8


<PAGE>

                                   Exhibit B

For the period January 1, 1998 through June 30, 1998, NYLCare Mid-Atlantic will
 pay Doctors Health ** ***** $*** PMPM for NYLCare 65 enrollees residing in the
                   following counties and cities in Virginia:

                                    ********
                                  ***********
                                   *********
                                    *******
                                    *******
                                  **** ******
                                  **** *******
                                     ******
                                    *** ****
                                    ********
                                 ****** ******
                                  ************
                                    ********
                                  ************
                                ******** *******
                                 **************
                                    ********
                                   **********
                                    ********

                                                                               9


<PAGE>


                                   Exhibit C



                                                                              10

<PAGE>


                            NYLCARE VIRTUAL NETWORK
                               PRELIMINARY LEGAL
                            DUE DILIGENCE CHECKLIST
                                   FOR ENTITY

Corporate
---------

1.  Entity organizational chart.

2.  Copies of current organizational documents for Entity and all affiliates
    (including medical groups, PHOs, etc.)

3.  Copy of certificates of good standing, if applicable.

4.  List of incumbent shareholders, directors, officers, or trustees.

5.  Copy of most recent Annual Report filed with the Secretary of
    State/Corporation Division, if applicable.

6.  Copies of business or strategic plans (as relevant).

7.  Disclosure of any related entity, owned, controlled by or under common
    ownership or control with the Entity or any provider associated with the
    Network.

Financial
---------

8.  Most recent audited financial statements.

9.  Current year to date budgets and financial statements, if any.

10. Any investment interest in or financial arrangement with any health care
    provider or supplier (other than stock in a publicly traded company).

Provider
--------

11. List of all physicians and other providers who are employees of Entity and
    those who are participating providers with Entity, but who are not employees
    (jointly, the "Network").

12. Evidence of Board certification/eligibility for Network providers.

13. Sample Employment Agreements with physicians and other providers.

14. Participating Provider Agreements with non-employed physicians and other
    providers.

15. Copies of all provider subcontracts so that NYLCare can review complete
    contract chain from Entity to individual provider.

16. Billing and collection agreements, if applicable.

17. List of all agreements between Entity and third party payors.

18. Description of Entity's experience with global or full risk-sharing
    arrangements.

19. Description of Entity's internal risk-sharing arrangements, including
    whether physicians at substantial financial risk.

20. Copies of any disclosure statements prepared pursuant to physician incentive
    plan rules.

21. Description of Entity's plans to qualify as a PSO or PSN or similar
    organization.

22. Description of any noncompetition provisions in any agreements.


<PAGE>


23. Description of service area in which Network operates or intends to operate
    (MD, DC, VA).

24. Disclosure of any arrangement with any IPA, physician-hospital organization,
    management services organizations, third party payor, or health benefit plan
    and of any joint venture arrangement for the provision of health services.

25. Marketing agreements and marketing materials used in connection with
    Network.

26. Copy of all governmental approvals obtained in connection with the Network
    (not individual physicians), including but not limited to:

    o professional licenses and registrations

    o DEA registrations

    o State controlled substances registrations

    o Clinical laboratory licensure

    o Pharmacy license

    o Health facility license

    o Certificate of need

    o HSCRC filings or waivers

27. Evidence of all insurance related to the Network, including liability,
    stop-loss, and reinsurance.

28. Disclosure of:

    i)   any malpractice suit, claim (whether or not filed in court),
         settlement, settlement allocation, judgment, verdict or decree against
         Entity (or any practitioner associated with Entity);

    ii)  any disciplinary, peer review or professional review investigation,
         proceeding or action instituted against Entity (or any practitioner
         associated with Entity) by any licensure board, hospital, medical
         school, health care facility or entity, professional society or
         association, third party payor, peer review or professional review
         committee or body, or governmental agency;

    iii) any criminal complaint, indictment or criminal proceeding in which
         Entity (or any practitioner associated with Entity) is or has been
         named as a defendant;

     iv) any investigation or proceeding, whether administrative, civil or
         criminal, relating to an allegation against Entity (or any practitioner
         associated with Entity) or filing false health care claims, violating
         anti-kickback laws, or engaging in other billing improprieties;

      v) any allegation, termination, suspension or restriction of any
         agreement, right or privilege, or any investigation or proceeding based
         on any allegation, against Entity (or any practitioner associated with
         Entity) or violating professional ethics or standards, or engaging in
         illegal, immoral or other professional misconduct (of any nature or
         degree); and

     vi) any denial or withdrawal or an application in any state for licensure,
         for medical staff privileges at any hospital or other health care
         entity, for board certification or recertification, for participation
         in any third party payment program, for state or federal controlled
         substances registration, or for malpractice insurance.


<PAGE>

Management Services
-------------------

29. Copies of any management or delegation agreements to provide quality
    assurance/quality improvement/risk management/credentialling (the "Delegated
    Functions").

30. Copies of any regulatory review or correspondence regarding Delegated
    Functions, including from NCQA.

31. Copies of all protocols, programs, policies, etc. used to managed Delegated
    Functions.

32. Description of experience managing non-Network providers.

33. Name of MIS and other vendors, including any proposed subcontractors, to be
    used in accomplishing Delegated Functions.

Other
-----

34. Disclosure of other material agreements, obligations, liabilities and
    contingent liabilities, and of other material transactions under
    consideration.

35. Willingness to have NYLCare in control of document preparation.


<PAGE>


                                 DOCTORS HEALTH
                             DUE DILIGENCE REQUEST
                         RE: NYLCARE MEDICARE AGREEMENT

o Provider Agreement (form) for
     Specialist Provider
     Carve-out (Exclusive) Provider
     Hospital Provider
o Actual enrollment by zip code as of 9/1/97 (by county if zip code not
  available)
o Utilization / cost information for prior year (9/97-9/98)
     Inpatient Admissions:
            # Admits/hospital, by DRG if available;
            Avg. cost per case,
            ALOS,
            # Admits per thousand members
     Outpatient Surgery:
            #'s by DRG, locations
     Pharmacy
            Benefit language
            Utilization and cost, (per region as available)
            Data (type, format) provided by PBM
     Home Health
            Cost detail, regionally adjusted as available
o Provider Directory on disk
o Data dictionaries (hard copy and disk) for NYLCare's:
     provider database
     referral database
     eligibility database
     fee schedule database
o NYLCare fee schedule, incl. NYLC contracted rates w/hospitals, home health
  providers, subacute facilities, ASCs, ancillary providers
o Benefit plans / table
o Health Risk Assessment data / status
o Provider Policy and Procedure Manual, and any other pertinent policy and
  procedure manuals