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                                                                   EXHIBIT 10.38

                          LOAN MODIFICATION AGREEMENT

     This Loan Modification Agreement is entered into as of June 28, 1999, by
and between InnerDyne, Inc. ("Borrower") and Silicon Valley Bank ("Bank").

1.   DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may
be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among
other documents, an Amended and Restated Loan and Security Agreement, dated
June 19, 1997, as may be amended from time to time, (the "Loan Agreement"). The
Loan Agreement provided for, among other things, an Committed Equipment Line #3
in the original principal amount of Seven Hundred Fifty Thousand Dollars
($750,000) (the "Equipment Facility #3"). Defined terms used but not otherwise
defined herein shall have the same meanings as in the Loan Agreement.

Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness."

2.   DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the Indebtedness is
secured by the Collateral as described in the Loan Agreement and by a
Collateral Assignment, Patent Mortgage and Security Agreement, dated February
23, 1995, as amended.

Hereinafter, the above-described security documents and guaranties, together
with all other documents securing repayment of the Indebtedness shall be
referred to as the "Security Documents". Hereinafter, the Security Documents,
together with all other documents evidencing or securing the Indebtedness shall
be referred to as the "Existing Loan Documents".

3.   DESCRIPTION OF CHANGE IN TERMS.

     A.   Modification(s) to Loan Agreement

          1.   Notwithstanding the terms and conditions contained in Section
               2.1.4 entitled "Equipment Facility #3", the Initial Equipment
               Advance #3 may be used to purchase or refinance Equipment
               purchased on or after January 1, 1999.

4.   CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
whenever necessary to reflect the changes described above.

5.   NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor signing
below) agrees that, as of the date hereof, it has no defenses against the
obligations to pay any amounts under the Indebtedness.

6.   CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing
below) understands and agrees that in modifying the existing Indebtedness, Bank
is relying upon Borrower's representations, warranties, and agreements, as set
forth in the Existing Loan Documents. Except as expressly modified pursuant to
this Loan Modification Agreement, the terms of the Existing Loan Documents
remain unchanged and in full force and effect. Bank's agreement to
modifications to the existing Indebtedness pursuant to this Loan Modification
Agreement in no way shall obligate Bank to make any future modifications to the
Indebtedness. Nothing in this Loan Modification Agreement shall constitute a
satisfaction of the Indebtedness. It is the intention of Bank and Borrower to
retain as liable parties all makers and endorsers of Existing Loan Documents,
unless the party is expressly released by Bank in writing. No maker, endorser,
or guarantor will be released by virtue of this Loan Modification Agreement.
The terms of this paragraph apply not only to this Loan Modification Agreement,
but also to all subsequent loan modification agreements.
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     This Loan Modification Agreement is executed as of the date first written
above.


BORROWER:                                    BANK:

INNERDYNE, INC.                              SILICON VALLEY BANK


By: /s/  ROBERT A. STERN                     By: /s/  [Signature Illegible]
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Name: Robert A. Stern                        Name:  [Illegible]
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Title: VP & CFO                              Title: Vice President
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