SECOND SUPPLEMENT DATED FEBRUARY 20, 2001 TO THE

                      CONFIDENTIAL ASSIGNMENT SUMMARY DATED

                                DECEMBER 7, 2000

                 TEXAS LITHOTRIPSY LIMITED PARTNERSHIP VII, L.P.

                  Lithotripters,  Inc., a North Carolina corporation  ("Litho"),
by this  Second  Supplement  hereby  amends  and  supplements  its  Confidential
Assignment  Summary dated December 7, 2000, as amended (the "Summary").  Persons
who have  subscribed  for or are  considering  an investment in the  Partnership
Interests offered by the Summary should carefully review this Second Supplement.
Capitalized  terms  used  herein and not  otherwise  defined  have the  meanings
provided in the Summary.

Extension of the Offering

                  Pursuant to the authority given to Litho in the Summary, Litho
hereby  elects to extend the  offering  termination  date to March 20,  2001 (or
earlier in the discretion of Litho,  upon the sale of all Partnership  Interests
as provided in the Summary).

Stark II Final Regulations

                  As set forth in the Memorandum, on January 9, 1998, the Health
Care Financing  Administration  ("HCFA") published proposed regulations designed
to interpret  and clarify the  application  of certain  legislation  prohibiting
physician  self-referral  of Medicare  and Medicaid  patients  for  specifically
enumerated  designated  health  services,  including  inpatient  and  outpatient
hospital  services  ("Stark II"). As these  regulations were simply proposed and
subject to future  modification or repeal, the Partnership  awaited the issuance
of final Stark II  regulations.  On January 4, 2001 HCFA issued the first of two
rules  intended  to  implement  the  final  Stark  II  regulations  (the  "Final
Regulations").  The first rule  ("Phase  I")  implements  the Final  Regulations
pertaining   to  (i)  Stark   II's   general   prohibition   against   physician
self-referrals to entities in which they have a financial relationship, (ii) the
general exceptions applicable to both the ownership and compensation arrangement
prohibitions,  (iii) certain new regulatory exceptions, and (iv) the definitions
that are used  throughout  Stark II. HCFA intends to publish a second final rule
("Phase  II") shortly  which will address the  remainder of the Stark II statute
and its application to the Medicaid  program,  as well as certain  proposals for
new exceptions not included in the proposed Stark II regulations,  but suggested
in the public  comments  thereto.  Phase I will become  effective  on January 4,
2002.  HCFA has delayed the effective date of Phase I to allow  individuals  and
entities  engaged  in  business   arrangements  impacted  by  Phase  I  time  to
restructure  those  arrangements  to  comply  with  the  provisions  in Phase I.
Consequently,  as discussed  below,  the Partnership  will have time to take the
steps required to ensure Stark II compliance.

                  Currently,   Medicare  and   Medicaid   only   reimburse   for
lithotripsy  if the service is  provided  through a  hospital.  The  lithotripsy
services provided by the Partnership to  Medicare/Medicaid  hospital outpatients
are provided  "under  arrangements"  with  hospitals,  with the treatment  being
billed under the hospital's  provider  billing  number.  Prior to the release of
Phase I, the existence of ambiguities  and the lack of  definitions  for certain
terms in the Stark II statute,  as well as the uncertainty as to the contents of
the Final Regulations,  gave rise to alternative interpretations of the Stark II
statute.  One  alternative  interpretation  led to a reasonable  conclusion that
Stark  II  did  not   apply  to  the   operations   of  the   Partnership.   See
"Regulation-Federal Regulation-Self-Referral Restrictions" in the Memorandum.

                  As  related  in  the  Memorandum,  HCFA  acknowledged  in  its
commentary to the proposed Stark II regulations  that physician  overutilization
of lithotripsy is unlikely and specifically  solicited comments on whether there
should  be a  regulatory  exception  to Stark II  specifically  for  lithotripsy
services. See "Regulation-Federal  Regulation Self-Referral Restrictions" in the
Memorandum.  Upon  consideration  of numerous  public  comments  received on the
proposed regulations and upon review of the Stark II legislative  history,  HCFA
concludes in its  commentary to the Final  Regulations  that it did not have the
authority to exclude  lithotripsy as an inpatient or outpatient hospital service
covered by Stark II.  Consequently,  the  Partnership's  practice  of  providing
lithotripsy services "under arrangements" to hospitals for treatment of Medicare
and Medicaid patients must comply with the provisions of the Final Regulations.

                  Although the General  Partner is  disappointed  that the Final
Regulations  do not  provide  a  specific  Stark II  exception  for  lithotripsy
services, it is pleased that the regulations provided needed clarity and certain
opportunities  for the  Partnership to operate in compliance with Stark II. HCFA
asserts  in Phase I that its  express  purpose  in the Final  Regulations  is to
interpret  the  prohibitions  of  Stark  II  narrowly  while   interpreting  its
exceptions  broadly.  HCFA  also  notes its  desire  to  permit  physician-owned
lithotripsy  ventures to continue if such ventures are  structured  such that no
direct or indirect compensation  arrangement is created, or the arrangement fits
within a compensation  arrangement  exception to the Stark II statute. The Final
Regulations  accomplish HCFA's stated purpose and desire by: (i) clarifying that
physician-owned lithotripsy vendors providing services "under arrangements" with
hospitals   are  either   structured   such  that  they  are  not   compensation
arrangements,  as  defined  in the  Final  Regulations,  or that  they need only
qualify under a compensation exception,  and not an ownership interest exception
as well;  (ii)  broadening  certain  existing  Stark II statutory  exceptions by
redefining certain standards to allow "per use" lithotripsy payments, as long as
such  payments  are at fair  market  value;  and (iii)  adding  two new Stark II
regulatory exceptions that are potentially available for Partnership operations.

                  In  order  for the  Partnership  to  comply  with  Stark II as
modified by the Final  Regulations,  the Partnership's  financial  relationships
with its Independent  Contract Hospitals must either fall outside the definition
of  a  compensation  arrangement,   or  comply  with  a  Stark  II  compensation
arrangement  exception.  The General Partner, along with the Partnership's legal
counsel, have worked to establish a compliance program that is in the process of
implementation.  As noted above, due to the Final Regulations  delayed effective
date,  the  Partnership  has until January 4, 2002 to take  reasonable  steps to
review the Partnership's  operations under the Final Regulations.  Specifically,
the Partnership  intends to work with all its Independent  Contract Hospitals to
review and modify, if necessary,  its lithotripsy service contracts so that they
satisfy  the  standards  set forth in the new Final  Regulations.  To the extent
financial  arrangements with Independent  Contract Hospitals meet the definition
of "indirect  compensation  arrangements" under the Final Regulations,  then the
Partnership  intends to see that such  agreements  fit  within the new  indirect
compensation  arrangement  exception.  Indirect  compensation  arrangements have
several  important  elements,  including the presence of an intervening  entity,
such as the Partnership, that directly links referring physician owners with the
entity providing the designated  health service (e.g., the Independent  Contract
Hospital).  In order to comply with the  indirect  compensation  exception,  the
Partnership's Hospital Contracts must meet each of the following standards:

o             The  compensation  received  directly by the Partnership  from the
              Independent  Contract  Hospitals must be fair market value for the
              items or services provided under the arrangement and must not take
              into account the value or volume of  referrals  or other  business
              generated by the referring physician for the Independent  Contract
              Hospital;

o             The  compensation  arrangement  between  the  Partnership  and the
              Independent Contract Hospitals must be set out in writing,  signed
              by  the  parties,   and  specify  the  services   covered  by  the
              arrangement; and

o             The compensation  arrangement  must not violate the  Anti-kickback
              Statute  or any laws or  regulations  governing  billing or claims
              submission.

                  In  regard  to  the  Partnership's  operations,  the  indirect
compensation  arrangement  exception  may be  used  with  respect  to any or all
payments made by Independent  Contract  Hospitals to the Partnership,  including
payments for the use of the lithotripter,  as well as the personal services of a
technician  and/or  nurse.  It is important  to note that the Final  Regulations
allow per use payments for  lithotripsy  services,  as long as they reflect fair
market  value.  The General  Partner  believes  that the  Partnership's  current
Hospital  Contracts  can be  modified  to the extent  necessary  to satisfy  the
requirements  of the  indirect  compensation  arrangement  exception,  and  that
accordingly,  the  Partnership  will be able to operate in compliance with Stark
II. To succeed with its  compliance  plan,  the General  Partner must obtain the
Independent Contract Hospitals' cooperation in making any necessary revisions to
their lithotripsy service agreements  consistent with the indirect  compensation
arrangement  exception.  Whereas the  Partnership  believes  that its  financial
relationships  with  Independent  Contract  Hospitals  have  always met the fair
market value standard,  the Final  Regulations  clearly shifts the burden to the
contracting  parties that rely on the indirect  compensation  exception to prove
the standard is met. The Partnership intends to engage an independent  valuation
expert or pursue other  commercially  reasonable  methodologies  to assist it in
meeting that burden of proof.

                  The General Partner  believes it will  successfully  implement
its above described  compliance  plan,  however,  there can be no assurance that
such will be the case. Independent Contract Hospitals may not cooperate with the
Partnership.   Further,   reliable  fair  market  value  assessments   regarding
Independent  Contract  Hospital  payments to the Partnership may be difficult to
obtain.  If the  Partnership  is unable to  successfully  implement  its plan to
comply with the indirect  compensation  arrangement  exception  (to the extent a
Stark II exception is needed),  then the General  Partner intends to explore and
implement any other available options that would allow the Partnership to comply
with  Stark  II,  as  well  as all  other  material  health  care  statutes  and
regulations.  Such alternative  options may include  contracting with ambulatory
surgery centers ("ASCs") rather than hospitals,  since  lithotripsy  services at
ASCs are not covered by Stark II. The Medicare and Medicaid  programs,  however,
do  not  reimburse  for  lithotripsy  services  at  ASCs  at  this  time.  It is
anticipated that ASCs will receive  reimbursement  for treatment of Medicare and
Medicaid  patients in the near future,  but there can be no assurance  that such
will be the case.  It  should be noted  that  there  can be no  assurances  that
compliance action taken by the Partnership  under any potential  alternative can
be carried out in a manner that does not have a material  adverse  effect on the
Partnership.

The General Partner

     Pursuant to his recent retirement,  effective December 31, 2000, Dr. Joseph
Jenkins  resigned as Director,  and as President and Chief Executive  Officer of
the General  Partner.  Dr.  Jenkins'  position on the Board of Directors will be
assumed by Brad Hummel.  Mr.  Hummel will also succeed Dr.  Jenkins as President
and Chief Executive  Officer of the General Partner.  Set forth below is a brief
description of Mr. Hummel's background.

                  Brad Hummel was elected  President and Chief Executive Officer
of Prime in May 2000, and previously  served as Chief Operating Officer of Prime
from  October 1999 until May 2000.  Effective  January 1, 2001,  Mr.  Hummel was
appointed  a Director of the General  Partner and was elected as  President  and
Chief Executive  Officer of the General  Partner.  From 1984 to 1999, Mr. Hummel
served in various operating capacities at Diagnostic Health Services, and served
as its Chief Executive Officer from February 1999 until October 1999.

Bank Commitment

                  Litho has obtained the approved and executed  Bank  Commitment
providing financing under the Limited Partner Note. The terms and conditions for
financing a portion of the  purchase  price of a  Partnership  Interest  are set
forth in the Bank  Commitment  which is  attached  hereto as Appendix A, and are
discussed in the section  entitled "The Offering - Limited Partner Loans" in the
Summary.  The  necessary  documents  for  prospective  assignees  to  apply  for
financing under the Bank Commitment are included in the Assignment Packet.