<PAGE>   1
                                                                    EXHIBIT 4.17


                  SUBSCRIPTION AGREEMENT dated as of October 26, 1998 (this
"Agreement") between RAMSAY HEALTH CARE, INC., a Delaware corporation (the
"Corporation"), and MOISES HERNANDEZ, M.D. (the "Subscriber").

                              W I T N E S S E T H :

                  WHEREAS, subject to the terms and conditions hereof, the
Subscriber desires to have the right to subscribe for and purchase from the
Corporation the aggregate dollar value (determined at the Purchase Price per
Purchased Share as determined herein) of shares of Common Stock set forth
opposite its name on the signature page hereof (the "Purchased Shares");

                  NOW, THEREFORE, in consideration of the mutual benefits to be
derived and the representations and warranties, conditions and promises herein
contained, and intending to be legally bound hereby, the Corporation and the
Subscriber hereby agree as follows:

         1. PURCHASE OF PURCHASED SHARES. (a) Subject to the terms and
provisions of this Agreement, the Corporation hereby grants the Subscriber the
right (the "Right") to purchase from the Corporation the Purchased Shares. The
Right shall be exercised, if at all, on or before the close of business (New
York City time) on October 30, 1998 (the "Closing Date") by written notice by
the Subscriber to the Corporation stating that the Subscriber is exercising the
Right to purchase the Purchased Shares pursuant to this Section 1(a) (which
notice may be given by fax as set forth in Section 6(b) hereto) and by delivery
of the aggregate Purchase Price for the Purchased Shares as set forth in Section
1(b) below. In the event that the Right is not exercised as aforesaid, the Right
shall automatically terminate and shall be of no further force or effect and
neither party hereto shall have any rights, entitlements or obligations
hereunder.

                  (b) The purchase price per share for the Purchased Shares to
be purchased by the Subscriber shall be the closing bid price per share of
Common Stock reported on the Nasdaq Stock Market on the date hereof (the
"Purchase Price") and the aggregate Purchase Price for the Purchased Shares
shall be payable by the Subscriber by bank wire transfer to an escrow account
established by the Corporation with Haythe & Curley, Esqs. (Citibank, N.A., 111
Wall Street, New York, New York, ABA No. 021000089, Client Escrow Account No.
37399318) or by certified or bank cashiers check payable to the Corporation and
delivered to the Corporation c/o Haythe & Curley, 237 Park Avenue, New York, New
York 10017, Attention: Bradley P. Cost, Esq., in any case on or before the close
of business on the Closing Date.

                  (c) Upon the payment by the Subscriber to the Corporation of
the aggregate Purchase Price for the Purchased Shares, the Corporation shall
cause its transfer agent to deliver to the Subscriber a stock certificate
representing ownership by it of the shares of Common Stock purchased hereunder.







<PAGE>   2
                                                                               2

         2.       REGISTRATION REQUIREMENTS.

                         (a) As promptly as practicable following the Closing
Date, but in any event within a period of 90 days following the Closing Date,
the Corporation shall prepare and file with the Securities and Exchange
Commission a Registration Statement on Form S-3 for the purpose of registering
the resale by the Subscriber (or the Subscriber's affiliates) of the Purchased
Shares under the Securities Act.

                         (b) The Corporation shall pay all Registration Expenses
(as defined below) in connection with any registration, qualification or
compliance hereunder. Registration Expenses shall mean all expenses incurred by
the Corporation in complying with the registration provisions herein described,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Corporation, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration.

                         (c) In the case of the registration effected by the
Corporation pursuant to these registration provisions, the Corporation will use
its best efforts to: (i) cause the Registration Statement to become effective
within one hundred fifty (150) days of the Closing Date, (ii) keep such
registration effective until the earlier of (a) the second anniversary of the
Closing Date, (b) such date as all of the Purchased Shares have been resold by
the Subscriber thereof, or (c) such time as all of the Purchased Shares held by
the Subscriber can be sold within a given three-month period without compliance
with the registration requirements of the Securities Act pursuant to Rule 144
under the Securities Act; (iii) prepare and file with the Securities and
Exchange Commission such amendments and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by the Registration
Statement; (iv) furnish such number of prospectuses and other documents incident
thereto, including any amendment of or supplement to the prospectus, as the
Subscriber from time to time may reasonably request; (v) cause all Purchased
Shares registered as described herein to be listed on each securities exchange
and quoted on each quotation service on which similar securities issued by the
Corporation are then listed or quoted; (vi) provide a transfer agent and
registrar for all Purchased Shares registered pursuant to the Registration
Statement and a CUSIP number for all such Purchased Shares; (vii) otherwise use
its best efforts to comply with all applicable rules and regulations of the
Securities and Exchange Commission; and (viii) file the documents required of
the Corporation and otherwise use its best efforts to maintain requisite blue
sky clearance in (A) all jurisdictions in which any of the Purchased Shares are
originally sold and (B) all other states reasonably specified in writing by the
Subscriber, provided as to clause (B), however, that in no event shall the
Corporation be required to qualify to do business or consent to service of
process in any state in which it is not now so qualified or has not so
consented.

                         (d) The Corporation shall furnish to the Subscriber
upon request a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary in order to facilitate the public sale or
other disposition of all or any of the Purchased Shares held by the Subscriber.

                         (e) With a view to making available to the Subscriber
the benefits of Rule 144 promulgated under the Securities Act ("Rule 144") and
any other rule or regulation of the 










<PAGE>   3
                                                                               3

Securities and Exchange Commission that may at any time permit the Subscriber to
sell Purchased Shares to the public without registration or pursuant to a
registration on Form S-3, the Corporation covenants and agrees to: (i) make and
keep public information available, as those terms are understood and defined in
Rule 144 under the Securities Act, until the earlier of (A) the second
anniversary of the Closing Date or (B) such date as all of the Purchased Shares
shall have been resold by the Subscriber thereof; (ii) file with the SEC in a
timely manner all reports and other documents required of the Corporation under
the Securities Act and the Exchange Act; and (iii) furnish to the Subscriber
upon request, as long as the Subscriber owns any Purchased Shares, (A) a written
statement by the Corporation that it has complied with the reporting
requirements of the Securities Act and the Exchange Act, (B) a copy of the most
recent annual or quarterly report of the Corporation, and (C) such other
information as may be reasonably requested in order to avail the Subscriber of
any rule or regulation of the SEC that permits the selling of any such Purchased
Shares without registration or pursuant to such Form S-3.

                         (f) Indemnification and Contribution.

                                    (i) The Corporation agrees to indemnify and
hold harmless Subscriber from and against any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) to which such
Subscriber may become subject (under the Securities Act or otherwise) insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon, any untrue statement of a
material fact contained in the Registration Statement, on the effective date
thereof, or arise out of any failure by the Corporation to fulfill any
undertaking included in the Registration Statement, and the Corporation will, as
incurred, reimburse Subscriber for any legal or other expenses reasonably
incurred in investigating, defending or preparing to defend any such action,
proceeding or claim; provided, however, that the Corporation shall not be liable
in any such case to the extent that such loss, claim, damage or liability arises
out of or is based upon (a) an untrue statement made in such Registration
Statement in reliance upon and in conformity with written information furnished
to the Corporation by or on behalf of Subscriber specifically for use in
preparation of the Registration Statement, (b) the failure of Subscriber to
comply with the covenants and agreements contained in this Agreement, or (c) any
untrue statement in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Subscriber prior to the pertinent sale or
sales by the Subscriber.

                                    (ii) Subscriber agrees to indemnify and hold
harmless the Corporation from and against any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) to which the
Corporation may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (a) an untrue statement made in
such Registration Statement in reliance upon and in conformity with written
information furnished to the Corporation by or on behalf of Subscriber
specifically for use in preparation of the Registration Statement, provided,
however, that Subscriber shall not be liable in any such case for any untrue
statement included in any Prospectus which statement has been corrected, in
writing, by Subscriber and delivered to the Corporation before the sale from
which such loss occurred, (b) the failure of Subscriber to comply with the
covenants and agreements contained in this Agreement, or (c) any untrue
statement in any prospectus that is corrected in any subsequent Prospectus that
was delivered to the Subscriber prior to the pertinent sale or sales by the









<PAGE>   4

                                                                               4

Subscriber. Notwithstanding the foregoing, in no event shall the Subscriber to
liable to the Corporation under this Section 2 for any amounts in excess of the
net proceeds received by the Subscriber from the sale of the Purchased Shares
pursuant to the Registration Statement.

                                    (iii) Promptly after receipt by any
indemnified person of a notice of a claim or the beginning of any action in
respect of which indemnity is to be sought against an indemnifying person
pursuant to this Section 2, such indemnified person shall notify the
indemnifying person in writing of such claim or of the commencement of such
action, and, subject to the provisions hereinafter stated, in case any such
action shall be brought against an indemnified person and the indemnifying
person shall have been notified thereof, the indemnifying person shall be
entitled to participate therein, and, to the extent that it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to the
indemnified person. After notice from the indemnifying person to such
indemnified person of the indemnifying person's election to assume the defense
thereof, the indemnifying person shall not be liable to such indemnified person
for any legal expenses subsequently incurred by such indemnified person in
connection with the defense thereof, provided, however, that if there exists or
shall exist a conflict of interest that would make it inappropriate in the
reasonable judgment of the indemnified person for the same counsel to represent
both the indemnified person and such indemnifying person or any affiliate or
associate thereof, the indemnified person shall be entitled to retain its own
counsel at the expense of such indemnifying person.

                                    (iv) If the indemnification provided for in
this Section 2 is unavailable to or insufficient to hold harmless an indemnified
party under subsection (i) or (ii) above in respect of any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) referred
to therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Corporation on the one hand and the
Subscriber on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Corporation on the one hand or the Subscriber on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Corporation and the Subscriber agree
that it would not be just and equitable if contribution pursuant to this
subsection (iv) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (iv). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, or liabilities (or actions in
respect thereof) referred to above in this subsection (iv) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (iv), Subscriber shall not be
required to contribute any amount in excess of the amount by which the net
amount received by the Subscriber from the sale of the Purchased Shares to which
such loss relates exceeds the amount of any damages which Subscriber has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)







<PAGE>   5
                                                                               5


shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

                                    (v) The obligations of the Corporation and
the Subscriber under this Section 2 shall be in addition to any liability which
the Corporation and the Subscriber may otherwise have.

         3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The Corporation
hereby represents and warrants to the Subscriber, as of the date hereof and as
of the Closing Date, as follows:

                  (a) CORPORATE EXISTENCE. Each of the Corporation and its
Subsidiaries: (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization; (ii) has all
requisite corporate power and corporate authority, and all material governmental
licenses, authorizations, consents and approvals necessary to own its assets and
carry on its business as now being conducted; and (iii) is qualified to do
business and is in good standing in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary and where failure so
to qualify would (either individually or in the aggregate) have a Material
Adverse Effect.

                  (b) NO BREACH. None of the execution and delivery of this
Agreement by the Corporation, the consummation by the Corporation of the
transactions herein contemplated or compliance by the Corporation with the terms
and provisions hereof will conflict with or result in a breach of, or require
any consent under, or result in the creation or imposition of any lien pursuant
to the terms of, the certificate of incorporation or by-laws of the Corporation,
or any law, regulation, order, writ, injunction or decree of any court or
governmental authority or agency, in each case which is binding on the
Corporation or any of its Subsidiaries, or any agreement or instrument to which
the Corporation or any of its Subsidiaries is a party or by which any of them or
any of their property is bound or to which any of them is subject, or constitute
a default under any such agreement or instrument. The foregoing representation,
insofar as relating to the Securities Act, is made in reliance upon the
representations and warranties of the Subscriber and the Other Investors set
forth in Section 3(e) hereof and Section 3(e) of the Other Investors respective
subscription agreements.

                  (c) AUTHORIZATION AND ENFORCEABILITY. The Corporation has all
necessary corporate power, authority and legal right to execute, deliver and
perform its obligations under this Agreement; the execution, delivery and
performance by the Corporation of this Agreement has been duly authorized by all
necessary corporate action on its part (including, without limitation, any
required stockholder approvals); and this Agreement has been duly authorized,
executed and delivered by the Corporation and this Agreement constitutes the
legal, valid and binding obligation of the Corporation, enforceable against the
Corporation in accordance with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors' rights and
(ii) the application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

                  (d) APPROVALS. Other than as contemplated under Section 2
hereof or pursuant to any filing with the Nasdaq Stock Market following the
Closing Date, no authorizations, 









<PAGE>   6

                                                                               6


approvals or consents of, and no filings or registrations with, any governmental
or regulatory authority or agency, or any securities exchange, are necessary for
the execution, delivery or performance by the Corporation of this Agreement. The
foregoing representation, insofar as relating to the Securities Act, is made in
reliance upon the representations and warranties of the Subscriber and the Other
Investors set forth in Section 3(e) hereof and Section 3(e) of the Other
Investors respective subscription agreements.

                  (e) INVESTMENT COMPANY ACT. Neither the Corporation nor any of
its Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.

                  (f) PUBLIC UTILITY HOLDING COMPANY ACT. Neither the
Corporation nor any of its Subsidiaries is a "holding company", or an
"affiliate" of a "holding company" or a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company Act of 1935,
as amended.

                  (g) CAPITALIZATION. As of the date hereof (and without giving
effect to the sale of the Purchased Shares hereunder or the other matters
referred to in Section 4(e)(vii) hereof), the authorized capital stock of the
Corporation consists of 30,000,000 shares of Common Stock, of which 10,877,982
shares of Common Stock are duly and validly issued and outstanding; 800,000
shares of Class A Preferred Stock, no shares of which are issued or outstanding;
and 2,000,000 shares of Class B Preferred Stock, of which the following are
authorized, and duly and validly issued and outstanding: 100,000 shares of Class
B Convertible Redeemable Preferred Stock, Series 1997 authorized, no shares of
which are issued and outstanding, 4,000 shares of Class B Redeemable Preferred
Stock, Series 1997-A authorized, of which 4,000 shares are duly and validly
issued and outstanding (the "Preferred Stock 1997-A"), 152,321 shares of Class B
Convertible Preferred Stock, Series C authorized, of which 142,486 shares are
duly and validly issued and outstanding, and 100,000 shares of Class B
Convertible Preferred Stock, Series 1996 authorized, of which 100,000 shares are
duly and validly issued and outstanding, and all such shares are fully paid and
nonassessable. All outstanding shares of the Corporation's capital stock have
been issued in compliance with all federal and state securities laws, and were
not issued in violation of or subject to any pre-emptive rights or other rights
to subscribe for or purchase securities of the Corporation. When issued in
accordance with this Agreement, the Purchased Shares will be duly and validly
issued, fully paid and non-assessable. The issuance and sale of the Purchased
Shares is not subject to the pre-emptive or other similar rights of the
stockholders of the Corporation or any liens or encumbrances.

                  (h) DISCLOSURE. Each of the reports filed by the Corporation
with the Securities and Exchange Commission under the Exchange Act, and the
Corporation's October 1998 Confidential Memorandum (together with all Appendices
and Exhibits thereto and all Appendices and Exhibits which are incorporated by
reference, the "Confidential Memorandum") did not, at the time each such report
was filed or, in the case of the Confidential Memorandum, as of the date
thereof, contain any untrue statement of material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

                  (i) In connection with the private placement of shares of
Common Stock contemplated by the Confidential Memorandum, including, without
limitation, the shares of












<PAGE>   7
                                                                               7


Common Stock being offered to the Subscriber and the Other Investors, no more
than 25 investors (each of which is an accredited investor) have been offered
shares of Common Stock by the Corporation and/or any representative, advisor,
agent or other person acting on behalf of the Corporation. Assuming the accuracy
of the representations and warranties of the Subscriber and the Other Investors
set forth in this Agreement and in the subscription agreements of the Other
Investors, the offer, sale and issuance of the Purchased Shares are exempt from
the registration requirements of Section 5 of the Securities Act.

         4. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER. The Subscriber
hereby represents and warrants to the Corporation, as of the date hereof, as
follows:

                  (a) ENFORCEABILITY. This Agreement constitutes the legal,
valid and binding obligation of the Subscriber, enforceable against the
Subscriber in accordance with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors' rights and
(ii) the application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

                  (b) NO BREACH. None of the execution and delivery of this
Agreement by the Subscriber, the consummation by the Subscriber of the
transactions herein contemplated or compliance by the Subscriber with the terms
and provisions hereof will conflict with or result in a breach of, or require
any consent under any law, regulation, order, writ, injunction or decree of any
court or governmental authority or agency, in each case which is binding on the
Subscriber or any agreement or instrument to which the Subscriber is a party or
by which he or any of his Property is bound or to which any of them is subject,
constitute a default under any such agreement or instrument.

                  (c) INVESTMENT REPRESENTATIONS. (i) In evaluating the
suitability of an investment in the Corporation, the Subscriber has not relied
upon any representation or warranty (oral or written) (except those expressly
set forth in Section 3 hereof) of any Person. The Subscriber agrees that except
for the representations and warranties made by the Corporation expressly set
forth in Section 3 of this Agreement (as such representations and warranties are
modified by the Schedules hereto), neither the Corporation nor any affiliate
thereof has made and shall not be construed as having made to the Subscriber or
to any representative or affiliate thereof any representation or warranty of any
kind. Without limiting the generality of the foregoing, the Subscriber agrees
that neither the Corporation nor any affiliate thereof makes or has made any
representation or warranty to the Subscriber or to any representative or
affiliate thereof with respect to:

                           (A) any projections, estimates or budgets heretofore
                  delivered to or made available to the Subscriber or its
                  counsel, accountants, advisors, lenders, representatives or
                  affiliates of future revenues, expenses or expenditures,
                  future or pro forma results of operations (or any component
                  thereof), future or pro forma cash flows (or any component
                  thereof) or future or pro forma financial condition (or any
                  component thereof) of the Corporation and its Subsidiaries (or
                  any of them) or the future or pro forma business, operations
                  or affairs of the Corporation and its Subsidiaries (or any of
                  them);







<PAGE>   8
                                                                               8


                           (B) any future or pro forma rates of return in
                  respect of the Subscriber's investment in the Purchased Shares
                  or the future or pro forma value of such Purchased Shares; and

                           (C) any other information, statement or documents
                  heretofore delivered to or made available to the Subscriber or
                  its counsel, accountants, advisors, lenders, representatives
                  or affiliates with respect to the Corporation and its
                  Subsidiaries (or any of them) or the business, operations or
                  affairs of the Corporation and its Subsidiaries (or any of
                  them), except to the extent and as expressly covered by a
                  representation and warranty contained in Section 3 hereof.

                           (ii) The Subscriber understands that the Corporation
proposes to issue to it the Purchased Shares in a private placement transaction
exempt from the registration requirements of the Securities Act; that, as a
result, the Purchased Shares will be restricted securities for purposes of the
Federal securities laws; that for such purpose the Corporation will rely upon
the representations, warranties, covenants and agreements made by the Subscriber
and contained herein; and that such exemption from registration is not available
unless such representations and warranties are correct, and such covenants and
agreements are performed in accordance with this Agreement.

                           (iii) The Subscriber is familiar with the provisions
of Rule 144 of the Securities Act and the limitations upon the availability and
applicability of such Rule, including with respect to the Purchased Shares.

                           (iv) The Subscriber is a sophisticated investor
familiar with the type of risks inherent in the acquisition of restricted
securities such as the Purchased Shares and the Subscriber's financial position
is such that it can afford to retain such shares for an indefinite period of
time without realizing any direct or indirect cash return on its investment. The
Subscriber is an "accredited investor" as such term is defined in Rule 501 under
the Securities Act.

                           (v) The Subscriber has such knowledge and experience
in financial, tax and business matters as to enable it to utilize the
information made available to it in connection with the issuance of the
Purchased Shares and to evaluate the merits and risks of an investment in such
shares and to make an informed investment decision with respect thereto.

                           (vi) The Subscriber is acquiring the Purchased Shares
solely for its own account for investment and not with a present view to, or for
sale in connection with, the distribution thereof within the meaning of the
Securities Act.

                           (vii) The Subscriber understands that (a) the
Corporation proposes to effect an exchange (the "Exchange") in which it will
issue Common Stock, at the Purchase Price per Purchased Share, in exchange for
(1) all of the issued and outstanding shares of its Preferred Stock 1997-A, with
an aggregate liquidation preference of $4 million (and all accrued and unpaid
dividends thereon on the date of the exchange) and (2) the retirement of $1
million in principal amount of certain subordinated debt, all held by corporate
affiliates of Paul J. Ramsay, 









<PAGE>   9
                                                                               9


the Chairman of the Corporation (the "Affiliates"), (b) the Corporation proposes
to effect one or more additional private placements of its Common Stock to
investors other than the Subscriber, the Affiliates and other than Luis E.
Lamela, the Chief Executive Officer of the Corporation (collectively, the "Other
Investors"), (c) in connection with the Exchange and the private placements
contemplated above, the Corporation intends to amend its Rights Agreement as set
forth in Exhibit A hereto and (d) the Corporation has received commitments from
one of the Affiliates and from Mr. Lamela, to purchase an aggregate of $2.5
million and $1.0 million of shares of Common Stock (valued at the Purchase
Price), respectively, and that such Affiliate commitment (but not Mr. Lamela's)
shall be automatically reduced (but not below $0) by an amount equal to the
aggregate dollar value of shares of Common Stock (valued at the Purchase Price)
actually purchased by the Subscriber hereunder and by the Other Investors.

         5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; CERTAIN LIMITATIONS ON
DAMAGES. (a) The representations and warranties of the Corporation contained in
Section 3 hereof and the representations and warranties of the Subscriber
contained in Section 4 hereof shall survive indefinitely.

                  (b) The aggregate liability of the Corporation for any and all
damage, loss, liability, cost and expense (collectively, "Damages") arising out
of any and all breaches by the Corporation of the representations and warranties
set forth in Section 3 under this Agreement is, and shall be, limited to an
aggregate amount (the "Liability Amount") equal to the Purchase Price, and the
Subscriber agrees not to seek any Damages in excess of the Liability Amount for
any and all Damages sustained or incurred by the Subscriber arising out of any
and all breaches by the Corporation of any representation or warranty set forth
in Section 3 under this Agreement. The aggregate liability of the Subscriber for
any and all Damages arising out of any and all breaches by the Subscriber of the
representations and warranties set forth in Section 4 under this Agreement is ,
and shall be, limited to the Liability Amount, and the Corporation agrees not to
seek any Damages in excess of the Liability Amount for any and all Damages
sustained or incurred by the Corporation arising out of any and all breaches by
the Subscriber of any representation or warranty set forth in Section 4 under
this Agreement. This Section 5(b) shall not apply to Section 2(f) hereof.

         6. MISCELLANEOUS. (a) This Agreement contains the entire agreement
between the Corporation and the Subscriber with respect to the transactions
contemplated by this Agreement and supersede all prior arrangements or
understandings with respect thereto.

                  (b) All notices or other communications hereunder shall be in
writing and sufficient if delivered personally or sent by registered or
certified mail, postage prepaid, addressed to the Corporation at One Alhambra
Plaza, Suite 750, Coral Gables, Florida 38134, Fax: 305-567-1169, Attention:
Chief Executive Officer (with a copy to Haythe & Curley, 237 Park Avenue, New
York, New York 10017, Fax: 212-682-0200, Attention: Bradley P. Cost, Esq.) and
to the Subscriber at the address or facsimile set forth under its name on the
signature page to this Agreement. All such notices and communications shall be
deemed to have been duly given at the time delivered by hand, if personally
delivered, at the time received by fax, at the time received from a recognized
overnight carrier service, or three (3) business days after being deposited in
the mail, if sent by registered or certified mail, return receipt requested. Any






<PAGE>   10
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party hereto may by notice change the address to which notices or other
communications to such party are to be delivered or mailed.

                  (c) This Agreement may be executed in counterparts, including
by fax, each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.

                  (d) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (without regard to the
conflicts of law rules thereof).

                  (e) This Agreement shall not be assignable without the prior
written consent of the other party hereto, and any purported assignment by any
party without the prior written consent of the other party hereto shall be void.

                  (f) This Agreement shall not create benefits on behalf of any
third party, and this Agreement shall be effective only as among the parties
hereto, their respective successors and permitted assigns.

                  (g) Any term or provision of this Agreement may be waived at
any time by the party which is entitled to the benefits thereof, and any term or
provision of this Agreement may be amended or supplemented at any time by the
consent of the Corporation and the Subscriber, except that any waiver of any
term or condition, or any amendment or supplementation, of this Agreement shall
be effective only if in writing.

                  (h) The parties hereto agree that this Agreement is the
product of negotiations between sophisticated parties, each of whom was
represented by counsel, and each of whom had an opportunity to participate in,
and did participate in, the drafting of each provision hereof. Accordingly,
ambiguities in this Agreement, if any, shall not be construed strictly or in
favor of or against any party hereto but rather shall be given a fair and
reasonable construction without regard to the rule of contra proferentum.

                  (i) The parties hereto agree that each party shall bear such
party's own expenses in connection with this Agreement and the transactions
contemplated hereby.

                  (j) In the event that the Subscriber exercises its Right to
purchase from the Corporation the Purchased Shares in accordance with Section
1(a) hereof, the Corporation shall cause the Subscriber to receive an opinion of
Haythe & Curley, counsel for the Corporation, in the form attached hereto as
EXHIBIT B, within two (2) business days following the Closing Date, such opinion
to be dated as of the Closing Date.

         7. DEFINITIONS. As used herein, the following terms shall have the
following meanings (all terms defined in this Section 7 or in other provisions
of this Agreement in the singular to have the same meanings when used in the
plural and VICE VERSA):

                  "Agreement" shall have the meaning set forth in the recitals
hereto.

                  "Class B Convertible Redeemable Preferred Stock, Series 1997"
shall mean the class B convertible redeemable preferred stock, par value $1.00
per share, of the Corporation.


<PAGE>   11
                                                                              11


                  "Class B Redeemable Preferred Stock, Series 1997-A" shall mean
the class B redeemable preferred stock, par value $1.00 per share, of the
Corporation.

                  "Class B Convertible Preferred Stock, Series C" shall mean the
class B convertible preferred stock, par value $1.00 per share, of the
Corporation.

                  "Class B Convertible Preferred Stock, Series 1996" shall mean
the class B convertible preferred stock, par value $1.00 per share, of the
Corporation.

                  "Common Stock" shall mean the Common Stock, par value $.01 per
share, of the Corporation.

                  "Corporation" shall have the meaning set forth in the recitals
hereto.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.

                  "Liability Amount" shall have the meaning set forth in
Section 5(b) hereof.

                  "Material Adverse Effect" shall mean a material adverse effect
on the Properties, results of operation or condition (financial or otherwise) of
the Corporation and its Subsidiaries, taken as a whole.

                  "Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust, unincorporated
organization or government (or any agency, instrumentality or political
subdivision thereof).

                  "Preferred Stock" shall mean the Class B Convertible
Redeemable Preferred Stock, Series 1997, the Class B Redeemable Preferred Stock,
Series 1997-A, the Class B Convertible Preferred Stock, Series C, and the Class
B convertible Preferred Stock, Series 1996.

                  "Property" shall mean any right or interest in or to property
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.

                  "Purchase Price" shall have the meaning set forth in Section
1(b) hereto.

                  "Purchased Shares" shall have the meaning set forth in the
recitals hereto.

                  "Securities Act" shall mean the Securities Act of 1933, as
amended.

                  "Subscriber" shall have the meaning set forth in the recitals
hereto.

                  "Subsidiary" shall mean, with respect to any Person, any
corporation, partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person.

                                  *     *     *


<PAGE>   12
                                                                              12



                  IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement on the date first above written.

                                            RAMSAY HEALTH CARE, INC.

                                            By
                                              ------------------------------
                                              Name:
                                              Title:

                                            --------------------------------
                                            Moises Hernandez, M.D.

Aggregate
Purchase Price:    $200,000

                                            Address: 118 Malva Court
                                                     Coral Gables, FL 33143-6548
                                            Fax: