FLC HAS INTERRUPTIONS IN COCKPIT DURING APCH CAUSED BY CREW STARTING CONVERSATION WITH NON FLYING CREW MEMBER DURING FINAL APCH. FLC INITIATES GAR WHICH RESULTS IN A NMAC.

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AFTER BREAKING OUT VFR FROM AN IFR APCH AT 4500 FT AGL WE CANCELED OUR IFR CLRNC AT SDL. WE DEPARTED FLG WITH A PATIENT ON BOARD ; ONE FAMILY MEMBER AND 2 MEDICAL STAFF. SDL WAS OUR FLT PLANNED DEST AND THE MEDICAL STAFF WITHOUT INFORMING EITHER PLT THE DEST WAS CHANGED TO PHX INTL. ON SHORT BASE TO FINAL (1000 FT AGL) WITH THE GEAR AND FLAPS DOWN; I HAD TO INITIATE A R 360 DEG TURN TO MAKE ROOM FOR SEPARATION. AT THAT TIME THE TWR MADE THE ACFT ON APCH GAR FOR LIFEGUARD TFC. HALF WAY THROUGH MY FIRST R 360 DEG TURN; ONE OF THE FLT NURSES CAME INTO THE PLT'S COMPARTMENT AND STARTED TALKING TO THE PNF IN THE R SEAT ABOUT THIS BEING THE WRONG ARPT. AT THAT TIME THE TWR WAS TRYING TO FIND OUT OUR INTENTION AND I WAS LISTENING TO 3 CONVERSATIONS AT ONE TIME. BY THIS TIME I WAS HALF WAY THROUGH A SECOND R 360 DEG TURN. DUE TO THE CONFUSION I INITIATED A GAR AFTER ROLLING OUT ON RWY HDG AND STARTED A CLB. BY THE TIME I INITIATED A CLB WE SAW AN ACFT 1/4 OF A MI AT 12 O'CLOCK DIVING 500 FT BELOW US. THE TWR THEN HANDED US OFF TO PHX CLASS B APCH CTL. THIS WAS A CLASSIC VIOLATION OF FAR 135.100 ALL PARTS. WE HAVE INITIATED AND WILL FOLLOW THROUGH WITH A SERIOUS EDUCATION PROCESS FOR OUR MEDICAL STAFF ABOUT ACFT OPS.