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					                   PARACELSUS HEALTHCARE CORPORATION
  					                    	515 W. Greens Road, Suite 800
                                  Houston, Texas 77067

July 7, 1997



Mr. James A. Conroy
Olympus Private Placement Fund
Metro Center, One Station Place
Stamford, CT  06902

Dear Jim:

On  behalf  of  the  Board, let me express my regret at your decision to
resign as a director.   Unfortunately,  your  resignation letter creates
several misleading impressions.

FIRST,  as  you  know, the Special Committee's investigation  sought  to
uncover all facts  relevant  to  the  responsibility of the directors of
premerger Paracelsus for the reporting and accounting failures reflected
in  the  Company's restatement of its financial  statements.   Based  on
these facts,  a  majority  of  the  Committee,  including  a  completely
disinterested nonmanagement director, concluded over your objection that
it  was  not  in  the  Company's  best interests to make recommendations
concerning those directors at that time.  The Company's Special Counsel,
Wilmer, Cutler & Pickering, fully concurred  in that judgment.  When you
recently raised the same issue again, the only other remaining member of
the Committee, maintained his original position.   Once  again,  Wilmer,
Cutler & Pickering strongly concurred.

SECOND,  as  you will recall, your motion at the last Board Meeting  was
that the Company  should  waive  its  attorney-client  and  work product
privileges so as to permit disclosure of the detailed facts uncovered in
the Special Committee's investigation to the SEC.  During the discussion
of  your motion, Wilmer, Cutler & Pickering expressed the strongly  held
view  that,  given  the  pendency  of  the  shareholder  and  derivative
litigation  and other factors, waiver of the privileges was not  in  the
best interests  of  the  Company.   Wilmer,  Cutler  & Pickering further
reassured  the  Board that, in its considered view based  on  the  facts
available to it,  all legally required public disclosures concerning the
results of the Special Committee's investigation have already been made.
Based on this advice, there was no second to your motion.






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FINALLY, the Board  is  concerned  that  the positions you have recently
taken may reflect your particular interests as a member of a large group
of  former  Champion  shareholders, rather than  the  interests  of  the
Company, its shareholders,  and  all  of  its  other constituent groups.
Your   difficulty   in  distinguishing  these  potentially   conflicting
interests is understandable, but unfortunate.

The Company will, of  course,  comply  with  your  request  to file your
resignation letter with the SEC on a Form 8-K within the required  time.
As  permitted  by  SEC  rules, the Company will also file a copy of this
response.

Sincerely,


/S/ Charles R. Miller

Charles R. Miller
President