QualityFIRST(R)

                                LICENSE AGREEMENT

     This License Agreement (the "Agreement") is effective as of the 11th day of
July, 1996, by and between the Institute for Healthcare Quality, Inc. ("IHQ"), a
Minnesota  corporation and a wholly-owned  subsidiary of Health Risk Management,
Inc. ("HRM"),  a Minnesota  corporation  having a place of business at 8000 West
78th  Street,  Minneapolis,  Minnesota  55439 and  Keystone  Mercy  Health  Plan
("Licensee"),  a Pennsylvania  general  partnership  with its principal place of
business at 200 Stevens Drive, Philadelphia, Pennsylvania 19113.


     WHEREAS,  IHQ has  developed a software  program  described in the attached
Exhibit  A, which  incorporates  a  guideline  system  useful in the  healthcare
industry for utilization review,  confirmation of diagnoses of certain illnesses
and  diseases,   therapeutic  selection,   resource  selection  and  acute  care
management; and

     WHEREAS,  Licensee desires to obtain a license to use such software program
and its accompanying user documentation  pursuant to the terms and conditions of
this Agreement.

     NOW THEREFORE, in consideration of the premises and the covenants contained
herein, and other good and valuable  consideration,  the receipt and adequacy of
which is hereby acknowledged, the parties agree as follows:


<PAGE>

                                LICENSE AGREEMENT

                                   Definitions

1.1 "Authorized  User" shall mean any agent,  employee or consultant of Licensee
who has  received  the  training  described  in  Schedule  2 of this  Agreement,
including those trained by trainers.

1.2  "Documentation"  shall mean any IHQ user manuals or written  specifications
for the installation, operation or maintenance of the Software.

1.3 "Effective Date" shall mean the date first written above.

1.4 "Key  Person"  shall  mean a person  employed  by  Licensee,  designated  by
Licensee in Schedule 3 of this  Agreement,  and  authorized  by Licensee  (i) to
receive,  retain  custody  of, and to make  backup  copies of the  Software  and
updates for the  Software;  (ii) to procure any  technical  assistance  from IHQ
needed in connection with the use of the Software;  (iii) make  arrangements for
any training services and consulting  services to be provided by IHQ pursuant to
Schedule 3 of this Agreement,  and (iv) to receive  bulletins and  announcements
concerning updates and supplements for the Software.

1.5  "Royalty  Period"  shall mean each  calendar  month during the term of this
Agreement.

1.6 "Software" shall mean the  QualityFIRST(R)  software program as described in
Exhibit A, and any modifications,  enhancements, revisions, additions or updates
to this program.

1.7  "Terminated"  or  "Termination"  shall mean the  expiration,  cancellation,
revocation or rescission of this Agreement.
<PAGE>
                               License of Software

2.1 Grant.  IHQ hereby grants to Licensee  pursuant to the  following  terms and
conditions,   and  Licensee   hereby   accepts,   a  terminable,   nonexclusive,
nontransferable  right and  license to use the  Software  solely in  nonprinted,
machine  readable form on the  computers and at the locations  identified on the
attached  Exhibit B, as amended  from time to time,  and solely for the purposes
defined herein.  The license granted  pursuant to this section shall not entitle
Licensee to grant sublicenses for the Software.

2.2 Licensed Use.  Licensee's  right to use the Software shall be limited to the
stand alone and local area network  computers  at  Licensee's  own  installation
sites  identified  in  Exhibit B, as amended  from time to time,  provided  such
computers  are supported by a single file server per site.  Licensee  shall not,
without the prior approval of IHQ, install or use the Software on any additional
computers  or file  servers  whether  remote or on site,  except as  provided in
Schedule 1 of this Agreement.  Licensee shall only permit  Authorized  Users and
Key Persons to have access to the Software.

2.3 Scope of  Licensed  Use.  The  parties  agree that  Licensee  shall have the
limited right to use the Software in accordance with the terms of this Agreement
solely by Authorized Users for Licensee's own internal  business purposes within
the United  States,  and that Licensee shall not, and shall not permit others to
(i) copy the Software or any information  contained therein (the  "Information")
except as provided in Section 6.3, (ii) use the Software in any public  computer
based information  system,  (iii) allow any third party to use or have access to
the  Software or any portion  thereof,  or (iv) create  derivative  works of the
Software.  This Section  shall not prohibit  Licensee  from making copies of the
Position  Papers  contained in the Software for  distribution  to its physicians
during the term of this Agreement.
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2.4 Additional Uses  Prohibited.  Except as provided in Section 2, any other use
of  the  Software  or  Information   contained  in  the  Software  is  expressly
prohibited,  including,  by way of  illustration  and not by way of  limitation,
using  the  Software  in  connection  with a public  computer-based  information
system; disassembling, translating, decompiling, reverse engineering or creating
derivative  works based on the Information  contained in the Software;  selling,
assigning,  leasing, sublicensing or otherwise transferring the right to use the
Software  or any  portion of it; or  permitting  access to the  Software  by any
unauthorized party. Licensee agrees that its obligations under the terms of this
section shall survive the Termination of this Agreement.

2.5  Unauthorized  Access to the Software.  Licensee  agrees to take  reasonable
steps,  by contract,  instruction  or  otherwise,  to ensure that anyone  having
authorized  access  to the  Software  agrees  to  comply  with the terms of this
Agreement.

2.6 Third Party  License.  CPT data as  contained in the Software is licensed to
HRM and IHQ by a third party.  Incorporation  of the most current version of CPT
in the Software by IHQ is subject to continuation of such third party license.

2.7 No Other Rights Granted.  It is mutually understood and agreed that Licensee
receives no licenses or rights,  whatsoever, by implication or otherwise,  under
any other patents,  patent  applications,  trade secrets,  copyrights,  or other
property or rights owned or controlled by IHQ, except those specifically granted
to Licensee pursuant to the terms of this Agreement.

2.8 Fees.  Fees for the license of rights  granted to Licensee  pursuant to this
Agreement shall be as set forth in Schedule 1 to this Agreement.
<PAGE>

                               Records and Reports
3.1  Reports.  For  each  Royalty  Period,  Licensee  shall be  responsible  for
determining and providing written or electronic  eligibility  information to IHQ
on a monthly basis in a form mutually  acceptable to both parties.  IHQ may rely
in good faith on such  eligibility  information in calculating its  Subscription
Fee pursuant to Schedule 1 of this  Agreement.  Following  each Royalty  Period,
Licensee shall provide to IHQ a written  report  setting forth the  Subscription
Fee due for the Royalty Period.  Licensee's  written report shall be accompanied
by a check for all fees due  pursuant  to Schedule 1 and shall be  forwarded  to
IHQ, or its designee,  HRM, by first class mail, postage prepaid,  within thirty
(30) days after the end of each Royalty Period.

3.2  Inspection of Records.  Licensee  shall,  from time to time,  permit IHQ to
conduct  inspections  at its  locations  and  installation  sites  identified in
Exhibit B, as amended from time to time, to verify  Licensee's  compliance  with
this Agreement and to verify any fee due pursuant to this  Agreement,  provided,
however,  (i) such inspection shall take place at Licensee's  principal place of
business,  during normal business hours and only to the extent necessary for IHQ
to verify the reports and payments  made pursuant to Section 3.1, (ii) IHQ shall
give Licensee  three (3) days written notice prior to any such  inspection,  and
(iii) IHQ shall  bear all costs of any such  inspection  unless  the  inspection
reveals that any fees paid by Licensee have been  understated by an amount equal
to or  greater  than  five  percent  (5%)  of the  actual  fees  due,  in  which
circumstances,  Licensee shall  promptly pay to IHQ (i) all of IHQ's  reasonable
costs of such inspection, and (ii) all fees past due including any interest that
has accrued as provided in Section 3.1.

3.3 Data Collection.  Licensee shall, during the term of this Agreement,  keep a
record of (i) diagnosis  and clinical  decisions,  and (ii)  resource  needs and
variations,  generated by its use of the Software.  Licensee  shall from time to
time at the request of IHQ forward a copy of such  records to IHQ on diskette or
electronically  as agreed to by both parties.  Records so provided  shall remain
strictly  confidential  between IHQ and Licensee and their  affiliates  provided
that IHQ may  integrate  the  information  in such  records  into its  aggregate
reports so long as Licensee is not identified.


<PAGE>
                                    Delivery

4.1  Generally.  On or before July 1, 1996,  IHQ shall deliver to Licensee's Key
Person (or other designated  agent at HRM's facility in Minneapolis,  Minnesota)
one (1) copy of the Software for the KMHP dedicated care  management unit at HRM
in Minneapolis,  Minnesota, and one (1) copy of the Software for Licensee's site
located  in  Philadelphia,   Pennsylvania.  The  Software  shall  be  considered
delivered,  and Licensee  shall be deemed to have  accepted the  Software,  upon
installation of the Software.  Licensee shall have sole  responsibility  for the
installation of the Software.


                        Modifications and Updates to the
                                    Software

5.1  Restrictions  on  Modifications.  IHQ shall  have the sole right to modify,
maintain,  enhance or  otherwise  alter the  Software.  The  parties  agree that
Licensee shall not develop or create,  or assist in the  development or creation
of any modifications, enhancements or alterations to the Software.

5.2 Updates for the Software.  IHQ anticipates  that it will update the Software
at least once every calendar year. IHQ shall provide  Licensee at no charge with
one (1) copy of the updated Software,  including any user documentation thereof.
If requested,  Licensee  shall within thirty (30) days of receipt of the updated
Software,  either return the original  Software and all copies thereof to IHQ by
registered  mail,  return  receipt  requested  or certify  in  writing  that the
Software  has been  destroyed  and  cannot  be  returned.  Unless  certified  as
destroyed, the failure to return the original Software as specified herein shall
render  all  warranties  made by IHQ null and  void,  and shall  entitle  IHQ to
terminate this Agreement as provided in Section 9.3.

                     Software Ownership and Confidentiality

6.1 Ownership of Software.  The parties  agree that the Software,  including all
source code and  documentation  for the Software is  proprietary to IHQ or third
party licensors and is protected by patent  applications and/or copyright and/or
trade  secret  interests  of IHQ and third  party  licensors,  that title to the
Software shall at all times remain with IHQ or third party  licensors,  and that
nothing in this Agreement shall be construed to release,  transfer or assign any
such rights to Licensee as a result of this  license,  or to give  Licensee  any
ownership  rights  in  the  Software,  or  any  modifications,  enhancements  or
alterations that IHQ may subsequently  make to the Software,  but rather,  gives
Licensee  the  right  to use the  Software  in  accordance  with the  terms  and
conditions of this Agreement.
<PAGE>

6.2 Confidential Nature of the Software. Licensee acknowledges that the Software
and Information,  including all source code and  documentation for the Software,
is  confidential to IHQ. Due to the  confidential  nature of the source code for
the Software, Licensee,  including its employees,  consultants and agents, shall
(i) limit access to the Software to its  Authorized  Users who require access to
the Software in order to use it as permitted under this Agreement; (ii) maintain
the Software in strict  confidence  by not making  available or  disclosing  the
Software  in whole or in part,  to any third  party  without  the prior  written
permission of a Vice President of IHQ,  except for any  disclosure  which may be
required by  applicable  law or court order (iii) not use the  Software  for any
purpose  other than to perform a term or condition of this  Agreement;  and (iv)
take all reasonable  precautions to maintain the confidentiality of the Software
and employ at least those  precautions  as  Licensee  employs to protect its own
confidential   or  proprietary   information.   Licensee   agrees  to  treat  as
confidential,  to the full extent permitted by applicable law, and shall not, at
any time, directly or indirectly,  use or disclose  Confidential  Information of
IHQ received by Licensee,  or with  respect to which  Licensee is given  access,
without  the  prior  written   consent  of  IHQ.  As  used  in  this  Agreement,
"Confidential Information" is defined as: (i) all information,  written or oral,
not  generally  known outside IHQ or  proprietary  to it, about its products and
services, product and service design, marketing,  accounting,  computer programs
and information  gathering  techniques and methods,  and all  accumulated  data,
listings,  or similar  recorded matters used or useful in the business of health
care cost containment through group benefit design, utilization review, employee
rehabilitation, health care provider negotiations and medical claims management,
including,  but not limited to,  customer  information  files,  business  forms,
computer  software,  advertisements and marketing aids; and (ii) all information
disclosed to Licensee,  or to which Licensee has access,  from whatever  source,
during the term of this Agreement, which Licensee knows or has reason to know is
Confidential Information. Notwithstanding the foregoing:

         (01)     nothing in this Agreement shall limit in any way:

              (a) disclosure of information
                  required by a public
                  authority; or

              (b) disclosure of information
                  that is necessary to prevent
                  imminent danger to the
                  public.
<PAGE>

         (02)  information  received  from IHQ shall not be deemed  Confidential
Information,  and  Licensee  shall  have  no  obligation  with  respect  to such
information:


              (a) which, as of the Effective
                  Date of this Agreement, is
                  part of the public domain;

              (b) which subsequently be-
                  comes part of the public
                  domain through no fault of
                  Licensee;

              (c) which  Licensee  can show  was in  Licensee's  possession,  as
                  evidenced by written  records  kept in the ordinary  course of
                  business  or by  the  proof  of  actual  use at  the  time  of
                  executing this Agreement,  and which  information had not been
                  wrongfully acquired, directly or indirectly, from IHQ; or

              (d) which is  subsequently  disclosed to Licensee by a third party
                  not in violation of any right of, or obligation to, IHQ.

This Section shall survive the Termination of this Agreement.

6.3 Copies of Software. Licensee may make one (1) copy of the Software solely to
be used as a back-up copy and one (1) additional  copy for  installation on each
stand alone computer or file server designated in Exhibit B; provided,  however,
that  Licensee  reproduces  the  Software in its entirety  including  all of the
titles,  trademarks,  copyright notices and other proprietary markings including
those of any third party licensor  which appear on the Software.  Licensee shall
not remove or obscure any such notices.

6.4 Reverse Engineering of Software.  Licensee acknowledges that the object code
and source code for the Software,  including all updates for the Software, which
are embodied on the magnetic storage media contain confidential and trade secret
material  which is not readily  susceptible  to reverse  compilation  or reverse
assembly.  Licensee or any of its  employees,  agents or  consultants  shall not
attempt to decompile or disassemble  the object code of the Software in whole or
in part.  Licensee  further  agrees that it will use its best efforts to prevent
decompilation  and  disassembly of the object code of the Software by any person
or entity by securing and protecting  each copy of the Software or update,  in a
manner consistent with the maintenance of Licensee's  proprietary  rights and by
taking  appropriate  action  by  instruction  or  agreement.  Violation  of  any
provision in this section  shall be the basis for the immediate  Termination  of
this Agreement.
<PAGE>

6.5 Guideline  System.  During the term of this Agreement and continuing for six
(6)  months  after  Termination,  Licensee  shall  not  use  the  Software,  its
algorithms, position papers, user interfaces, reports or printouts as a basis or
model to create, directly or indirectly,  its own guideline system useful in the
healthcare industry for utilization review, confirmation of diagnoses of certain
illnesses and diseases,  therapeutic selection, resource selection or acute care
management  nor shall  Licensee  approach any employee of IHQ for the purpose of
extending an offer of employment.

                                    Remedies

7.1 Irreparable Harm Caused by Breach.  Licensee recognizes the confidential and
proprietary nature of the Software and, in such connection,  acknowledges that a
breach by Licensee of any of its covenants,  agreements or  undertakings in this
Agreement will cause IHQ irreparable damage, which cannot be readily remedied in
damages in an action at law and may constitute an infringement of IHQ copyrights
entitling IHQ to equitable remedies, costs and reasonable attorneys' fees.

                         Warranties and Indemnification

8.1 Warranty by Licensee.  Licensee warrants and represents to IHQ that it shall
use the Software in accordance with all applicable  laws,  rules and regulations
and that it will use the Software  solely as a guidance or research  tool in the
review of diagnosis, therapeutic selection, and resource utilization of patients
and not as a  substitute  for health care  practice  activities  by an examining
physician or other authorized professional.

8.2  Warranty  of  Title.  IHQ  warrants  that it has the right to  license  the
Software to Licensee  and that IHQ shall,  at its own expense,  defend  Licensee
against any claim and indemnify  Licensee  against and hold it harmless from any
damages, liabilities,  costs and expenses (including reasonable attorneys' fees)
arising out of or related to any claim that the unmodified  Software  (except as
modified or updated by IHQ)  infringes any U.S.  patent or  copyright;  provided
that (i) Licensee  notifies IHQ in writing within ten (10) days of notice of any
such claim made against it; (ii) IHQ shall have sole  control of the  settlement
or defense of any action against Licensee to which this indemnity  relates;  and
(iii) Licensee  cooperates  with IHQ in every  reasonable way to facilitate such
defense.

8.3 Indemnification for Misuse of Software.  Licensee shall, at its own expense,
defend  IHQ  against  any claim  and shall  indemnify  IHQ  against  and hold it
harmless from any damages, liabilities, costs and expenses (including attorneys'
fees) arising out of  Licensee's  or any of its agents' or employees'  misuse of
the Software, provided that (i) IHQ promptly notifies Licensee in writing of any
such claim made  against  it, and (ii) IHQ  cooperates  with  Licensee  in every
reasonable way to facilitate such defense.
<PAGE>

8.4  Warranty.  IHQ  warrants to Licensee  that during the Initial  Term and any
Renewal Term of this Agreement (i) the media on which the original  Software and
the  Documentation  are  recorded  will be free from  defects  in  material  and
workmanship  under  normal  use,  and  (ii) the  Software  will  conform  to the
specifications set forth in the Documentation. This warranty and any obligations
on the part of IHQ shall be null and void if defects result from  Licensee's use
of the  Software or the media on which the  Software is recorded in a manner not
contemplated by this Agreement. In addition, any support provided to Licensee by
IHQ for defects  resulting  from  Licensee's  use of the Software  other than as
contemplated   in   this   Agreement   will  be   billed   to   Licensee   on  a
time-and-materials basis, at the rates set forth in Schedule 3 hereto.

Licensee's  exclusive remedy under this warranty  pursuant to this section shall
be as follows:

         a.  IHQ  will  provide  Licensee  with  access  to a  customer  support
telephone  line between the hours of 9:00 a.m. and 5:00 p.m.,  Central  Time, on
business days and any other times that may be agreed upon.  Licensee may use the
customer support line to report suspected  defects to IHQ. Based upon Licensee's
verbal reports,  IHQ will attempt to resolve  Licensee's  technical problems and
issues using the customer support telephone line.

         b. In the event  that IHQ is not able to resolve  Licensee's  suspected
defects using the customer support telephone line, Licensee shall provide prompt
written  notification to IHQ, including all documentation  necessary to identify
the suspected defect or cause.

         c. If the technical  problem or suspected defect is a non-critical one,
(i.e., it does not materially affect  Licensee's use of the Software),  IHQ will
use its best efforts to identify the suspected  defect,  provide Licensee with a
suitable  replacement  or a temporary  work-around  or other  alternative in the
interim and correct the defect in the earliest possible update release.

         d. If the problem or suspected  defect is critical (i.e., it materially
affects  Licensee's use of the Software as contemplated in this Agreement),  IHQ
will,  within five (5)  business  days after its receipt of  Licensee's  written
notification and documentation of the suspected defect,  provide Licensee with a
plan designed to correct the suspected  defect within the following  thirty (30)
days.  In the event IHQ is not able to correct a critical  defect  within thirty
(30)  days  of its  receipt  of  written  notification  and  documentation  from
Licensee,  Licensee shall be entitled to credit against future Subscription Fees
payable by Licensee under this  Agreement,  those  Subscription  Fees paid by it
during  the  period  commencing  on the  thirtieth  day  following  its  written
notification to IHQ of the critical  defect,  to the date of the delivery of the
critical defect correction.  Notwithstanding the preceding sentence, at any time
after thirty (30) days after IHQ's receipt of notification, if IHQ has failed to
deliver the critical defect correction,  then Licensee shall also have the right
to terminate this Agreement in accordance  with Section 9 hereof,  and return to
IHQ the Software and Documentation, including all copies thereof.
<PAGE>

If this  Agreement is terminated by Licensee  pursuant to Section  8.4(d) during
the  Initial  Term or any  Renewal  Term,  IHQ  shall pay to  Licensee  within a
reasonable time following the termination  date, a refund of those  Subscription
Fees paid by Licensee from the time of Licensee's written report of the critical
defect to the termination date.

8.5 Liability  Limitation.  The Software and help screens  incorporated  therein
consist of a series of research-based  works prepared and distributed by IHQ for
the health care  professionals  who use the  Software.  The Software is based on
clinical  experience  and  a  review  of  the  relevant  scientific   literature
reflecting  the  state of  knowledge  current  at the time of  publication.  The
Software  defines  the  diagnostic  and  treatment  principles  upon  which each
guideline is based,  but should not be considered  inclusive of all relevant and
proper  methods  of  diagnosis  and  treatment  interventions  or  all  possible
indications,  outcomes,  contraindications,  and adverse  effects for the listed
diagnostic  procedures and treatment  interventions.  Nor should the Software be
considered  to be  exclusive  of other  methods of care  reasonably  directed at
obtaining the appropriate results. Adherence to the information contained in the
Software  and  help  screens  is  strictly  voluntary.  The  ultimate  judgement
regarding the appropriateness of any specific diagnostic  procedure or treatment
intervention  must  be  made  by  the  physician  in  light  of  the  individual
circumstances presented by the patient.

In no event  shall  IHQ or third  party  licensor  be liable  for any  indirect,
incidental,  consequential or special damages of any kind (including damages for
lost profits, loss of business,  loss of data or use of data, personal injury or
the like)  resulting  from any  diagnosis,  therapeutic  selection,  or resource
selection,  regardless of whether such diagnosis or selection was a result of an
error in the Software or on the help  screens,  from a breach of warranty or any
other type of claim  arising  from the use or  inability  to use the Software or
help screens,  including without limitation,  liability arising out of contract,
negligence,  and strict liability in tort or warranty,  even if IHQ and/or third
party  licensors  have been advised of the  possibility  of such damages.  Third
party licensors disclaim any and all liability to Licensee  including  liability
for the  sequence,  accuracy  or  completeness  of  information  provided in the
Software.

8.6 Warranty  Limitation.  IHQ and third party  licensor do not warrant that the
Software  will  meet  Licensee's  requirements  or that  its  operation  will be
uninterrupted or without error.  Licensee acknowledges that the Software has not
been  developed   according  to  Licensee's   specifications   or  is  otherwise
custom-made.  The remedies stated in this Section constitute Licensee's sole and
exclusive  remedies with respect to the  warranties  made  hereunder.  Except as
expressly  set forth in this  Section,  THE SOFTWARE IS PROVIDED "AS IS" WITHOUT
WARRANTY OF ANY KIND OTHER THAN AS STATED  ABOVE.  IHQ AND THIRD PARTY  LICENSOR
MAKE NO EXPRESS OR IMPLIED  WARRANTIES  RELATING  TO THE  SOFTWARE OR ITS USE OR
FUNCTIONALITY,  AND  SPECIFICALLY  DISCLAIM ALL  WARRANTIES,  EITHER  EXPRESS OR
IMPLIED,  INCLUDING  BUT NOT  LIMITED TO, THE IMPLIED  WARRANTIES  OF  MERCHANT-
ABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

Licensee  understands and agrees that the limitation of IHQ's  liability  stated
above  represents a deliberate  allocation of risk that effects the price of the
program.  Without this  exculpation  of liability the License Fee charged by IHQ
would  necessarily  be  much  greater.  By the use of  this  Software,  Licensee
expressly accepts the above disclaimer of liability.

<PAGE>
                              Term and Termination

9.1  Term.  Unless  terminated  earlier  as  provided  in this  Agreement,  this
Agreement  shall  commence as of the date the  Software is delivered to Licensee
and shall  continue in force  through  December 31, 2001 (the  "Initial  Term").
Thereafter,  this Agreement will be automatically  renewed for successive twelve
(12) month terms (a "Renewal Term") unless terminated as provided below.

9.2 Termination  Without Cause. Either party may terminate this Agreement at the
end of the Initial Term or any Renewal Term hereof by giving  written  notice of
intent to  terminate  to the other party at least one hundred  twenty (120) days
prior to the end of the Initial Term or any Renewal Term.

9.3  Termination  for Breach.  If at any time during the term of this  Agreement
either party fails to perform any material covenant, condition, duty, obligation
or limitation  herein,  provided the breaching party shall not have remedied (or
taken  reasonable  steps to remedy)  its failure  within  thirty (30) days after
receipt of written notice of such failure,  the  non-breaching  party shall have
the right,  in  addition  to any other  rights it may have,  to  terminate  this
Agreement.

9.4 Termination for Insolvency. This Agreement shall be terminated automatically
in any one or more of the following circumstances:  (i) in the event that either
party is insolvent or is placed in the hands of a receiver,  or otherwise enters
into a composition agreement with any of its creditors or makes any unauthorized
assignment  for the benefit of  creditors;  or (ii) in the event that any of the
assets of either party are seized or attached,  in  conjunction  with any action
against  it by any third  party,  and such  attachment  materially  affects  the
ability of that party to perform this Agreement.

9.5 Effect of  Termination.  Upon  Termination of this Agreement for any reason,
Licensee shall  immediately cease all use of the Software and deliver all copies
of the Software and accompanying  Documentation to IHQ by certified mail, return
receipt requested.  Licensee shall have no right of any kind with respect to the
Software  after the date of  Termination.  In the event that  Licensee  fails to
comply  with this  provision,  IHQ shall  have the right,  at any time,  to take
immediate  possession of the Software and all copies wherever  located,  without
demand or notice.

                                   Bankruptcy

10.1  Agreement  to Assume or Reject.  In the event a voluntary  or  involuntary
petition  in  bankruptcy  is filed by or against  Licensee,  Licensee  agrees to
either  assume or reject this  Agreement  within sixty (60) days of the date the
petition was filed.
<PAGE>

10.2 Assumption of Agreement.  If it assumes this Agreement,  Licensee agrees to
cure, or provide  adequate  assurance  that it will promptly  cure,  any default
under the  Agreement;  compensate,  or provide  adequate  assurance that it will
promptly  compensate,  IHQ for any actual  pecuniary  loss to IHQ resulting from
Licensee's  default;  and provide adequate  assurance of its future  performance
under the Agreement.

10.3  Rejection of Agreement.  If Licensee  fails to assume this  Agreement,  or
rejects the same,  within sixty (60) days of the filing  date,  then the parties
agree that this Agreement is terminated  without further actions or proceedings.
Licensee  then  agrees  it is  obligated  to  surrender,  and  shall  surrender,
immediate  possession of the Software and  accompanying  Documentation,  and all
copies thereof  wherever  located to IHQ without  demand or notice.  If Licensee
fails to voluntarily  return the Software and all copies thereof,  then Licensee
agrees and  consents  that IHQ is entitled to an order from a court of competent
jurisdiction  lifting the automatic  stay and entitling it to exercise its state
law remedies to immediately recover the Software and accompanying Documentation,
and all copies thereof, wherever located.

10.4  Enforceability.  The covenants and agreements set forth in this Section 10
are  deemed by the  parties  to follow  the  Software  and shall be  enforceable
against Licensee's successor,  trustee or debtor in possession.  This Section 10
shall be enforceable pursuant to the provisions of 11 U.S.C., Section 365.


                                     General

11.1 Notice. Any notice or other  communication  required or allowed to be given
under this  Agreement  shall be deemed  delivered when in writing and personally
delivered or sent by registered or certified U.S. mail, postage prepaid,  return
receipt  requested,  and  addressed to the  appropriate  party at the  following
addresses:

KMHP:

         Chief Financial Officer
         Keystone Mercy Health Plan
         1700 Market Street
         Philadelphia, PA  19103
<PAGE>

IHQ:

         Chief Financial Officer
         Institute for Healthcare Quality, Inc.
         8000 West 78th Street
         Minneapolis, MN  55439

Addresses  may be changed by written  notice  given  pursuant  to this  Section;
however, any such notice shall not be effective, if mailed, until three (3) days
after depositing in the mail or when actually received, whichever occurs first.

11.2 Entire  Agreement.  This Agreement,  including the attached  Schedule 1 and
Exhibits A and B, constitutes the entire understanding and agreement between the
parties and  supersedes any prior written or oral  understandings  or agreements
relating to its subject  matter.  This  Agreement may not be modified or amended
except by a writing signed by both parties.

This  Agreement is  contemplated  by the parties to be executed and performed in
conjunction  with,  and as part of, a managed care services  agreement (the "MCS
Agreement")  between  Licensee and HRM intended to be negotiated and executed by
the parties  hereto.  In the event either party make a good faith  determination
that it will not be able to reach  agreement with the other and finalize the MCS
Agreement,  then such party may terminate  this  Agreement  upon sixty (60) days
prior written  notice.  In the event the MCS Agreement is executed and delivered
by the parties  thereto,  the  provisions  of the MCS Agreement  will  supersede
Sections 9.1 and 9.2 and  paragraphs  1, 2 and 3 of Schedule 1 and  paragraphs 1
and 2 of  Schedule  3 hereof.  In the event any  inconsistency  between  the MCS
Agreement and this Agreement, the MCS Agreement shall govern.

11.3 Assignment.  The rights and obligations of the parties  hereunder shall not
be assigned  without the prior  written  consent of the other  party;  provided,
however, that IHQ may assign this Agreement to a parent, wholly-owned subsidiary
or other  affiliated  company or  purchaser of all or  substantially  all of the
assets or capital  stock of IHQ without the written  consent of  Licensee.  This
Agreement  shall be binding upon and inure to the benefit of the parties  hereto
and their respective successors and assigns.

11.4  Headings.  The headings of the various  sections of this Agreement are for
convenience  purposes  only and  shall not  control  or affect  the  meaning  or
construction of any provision of this Agreement.

11.5  Severability.  If any  provision  of this  Agreement  is held  invalid  or
unenforceable  by a court of competent  jurisdiction,  such  provision  shall be
considered  stricken from the Agreement and the remainder of the Agreement shall
continue in full force and effect.
<PAGE>

11.6  Relationship  of Parties.  Nothing  contained in this  Agreement  shall be
construed  to make  either  party the agent for the other for any  purpose,  and
neither party hereto shall have any right whatsoever to incur any liabilities or
obligations on behalf of or binding upon the other party.  This Agreement is not
intended, and shall not be construed, to create a joint-venture,  a partnership,
an agency or a franchise between the parties.

11.7  Applicable  Law.  This  Agreement  shall be governed by and  construed  in
accordance with the laws of the State of Minnesota  applicable to contracts made
and performed therein.

11.8 Force  Majeure.  Any  failure of either  party to perform  the  obligations
hereunder shall not constitute  default under this  Agreement,  nor give rise to
any claim for  damage if and to the  extent  such  delay or failure is caused by
occurrences beyond the control of the party affected, including, but not limited
to,  acts  of God,  acts of war,  public  disorders,  sabotage,  floods,  riots,
strikes,  or other causes which,  by the exercise of reasonable  diligence,  the
affected party is unable to prevent, mitigate or remove.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth above.

INSTITUTE FOR HEALTHCARE
QUALITY, INC.

By:

Title:

Print Name:


KEYSTONE MERCY HEALTH PLAN

By:

Title:

Print Name:

<PAGE>

                                   SCHEDULE 1


1.   License Fees.  Upon delivery of the Software to Licensee's  dedicated  care
     management  units  at  HRM  in  Minneapolis,  Minnesota  and  Philadelphia,
     Pennsylvania,  pursuant  to the  Managed  Care  Service  Agreement  between
     Licensee  and HRM,  Licensee  shall pay to IHQ a  one-time  License  Fee of
     Seventy-five  Thousand Dollars ($75,000)  ("License Fee"). This License Fee
     covers the single file server and/or computers  ("Workstations") located at
     the two (2) locations described in Exhibit B.

     If Licensee  desires to use the Software on  additional  file servers or at
     additional  locations,  Licensee  must inform IHQ in writing of this intent
     and pay IHQ an  additional  one-time  License Fee  upgrade of Two  Thousand
     Dollars ($2,000) for each additional file server or location.

2.   Subscription Fees. Commencing on August 1, 1996, a monthly  QualityFIRST(R)
     Subscription  Fee,  to be paid on the  first  day of  each  month,  will be
     charged for all licensed file server sites.  This monthly  Subscription Fee
     will be the greater of the following:


     (01) Thirty Three Thousand Seven Hundred Fifty Dollars ($33,750) per month;
      
                                       OR

     (02) The total number of Members,  multiplied  by $.27 per Member per month
          ("PMPM").

     For  purposes of this  Agreement,  "Member"  shall be defined as any person
     enrolled  as a  subscriber  or  dependent  in  Licensee's  health care plan
     designated by Licensee to be served utilizing the Software.  This Agreement
     anticipates that Licensee will,  initially,  estimate the number of Members
     for the  purpose  of  determining  Subscription  Fees  due  hereunder,  and
     following the initial  estimate,  a reconciliation of the number of Members
     shall be prepared within ninety (90) days following each Royalty Period.

3.   Subscription Fee Increases.  IHQ guarantees that the Subscription  Fees set
     forth  above  will  remain  in  effect  during  the  Initial  Term  of this
     Agreement.  After the Initial Term of this  Agreement,  based on experience
     and market conditions,  IHQ may raise its Subscription Fee upon one hundred
     eighty  (180) days  written  notice to Licensee  prior to each  anniversary
     date.  Any price  increase will not be effective if such notice is received
     less than one hundred eighty (180) days prior to that date.

4.   Taxes.  Licensee shall be  responsible  for all sales tax due hereunder and
     IHQ shall be responsible  for all taxes imposed on IHQ's income.  All other
     state,  local and federal taxes applicable to any of the services  provided
     pursuant to the Agreement,  whether  imposed now or later by the applicable
     taxing  authorities,  shall be paid by the party responsible under such law
     for such payment.

<PAGE>

5.   Billing Contact.  Licensee designates its Chief Financial Officer to be its
     billing  contact  for  receiving  invoices  and  handling  billing  related
     questions.  This  contact  can be  reached  at the  following  address  and
     telephone number:

                           Keystone Mercy Health Plan
                           1700 Market Street
                           Philadelphia, Pennsylvania  19103
                           (215) 937-8870


<PAGE>

                                   SCHEDULE 2



TRAINING FEES BELOW ARE  APPLICABLE  ONLY FOR ADDITIONAL  TRAINING  REQUESTED BY
LICENSEE AFTER BOTH (1) LICENSEE'S RECEIPT OF THE SOFTWARE FOR USE BY LICENSEE'S
STAFF AT ITS  PENNSYLVANIA  FACILITIES AND (2) THE TRANSITION  DATE SPECIFIED IN
THE MCS AGREEMENT.

1.   Overview.  IHQ is committed to providing training to support the successful
     integration  of  QualityFIRST(R)into  a  care  management  program.  IHQ is
     available to provide implementation planning at the customer site to assist
     with implementation  strategy  development.  This includes an assessment of
     the  Licensee's  implementation  and training  needs.  On the basis of this
     assessment, IHQ will recommend an individualized implementation schedule to
     the Licensee.  Although additional  consulting services may be provided, in
     all cases the  Licensee  is required to  participate  in the User  Training
     Program described below.

2.   User  Training  Program.  IHQ will  provide  a User  Training  Program  for
     Licensee's care managers and physician  consultants at Licensee's  place of
     business.  The training  program provided by IHQ pursuant to this paragraph
     will cover  care  management  process,  guideline  application,  specialist
     referral procedures,  system usage documentation requirements,  and reports
     management.  Licensee agrees to provide adequate training  facilities and a
     separate Workstation for each attendee. A working knowledge of Microsoft(R)
     Windows(TM) is a prerequisite for this program.

3.   User  Training  Program  Fee. The User  Training  Program will consist of a
     training  session for up to five care  managers and a one (1) day follow-up
     training  session,  which  will  occur  within  ninety  (90) days after the
     initial  training  session.  The fee for this User Training  Program is Six
     Thousand  Dollars  ($6,000) (the "User Training  Program  Fee");  provided,
     however that Licensee shall pay all reasonable  travel and other associated
     expenses incurred by IHQ in conducting such training.

     In the  event the  Licensee  desires  to have  more than (5) care  managers
     attend future IHQ training  courses,  Licensee  shall pay IHQ an additional
     Training Fee of One Thousand Dollars ($1,000) per attendee.

4.   Train-the-Trainer  Program.  In the event that Licensee desires to have its
     employees  train other  employees  or  consultants  of  Licensee,  IHQ will
     provide  an  optional  Train-the-Trainer  Program  for  the  sum of  Twelve
     Thousand Dollars ($12,000) (the "Train-the-Trainer Program Fee"); provided,
     however that Licensee shall pay all reasonable  travel and other associated
     expenses   incurred   by   IHQ   in   conducting   such   training.    This
     Train-the-Trainer Program will consist of:

     o    Session 1 will  consist of a sixteen  (16) hour User  Training  course
          that  may  include  up to seven  (7)  attendees.  (Two (2)  designated
          trainers and five (5) Authorized Users). The User Training course will
          be followed by an eight (8) hour briefing session specifically for the
          designated  trainers;  this session will focus on training techniques,
          training preparation, use of case scenarios and role playing.
<PAGE>

     o    Session 2 will be a User  Training  course  scheduled  by  Licensee no
          later  than 3-4 weeks  following  Session 1. This  session  includes a
          team-teaching approach in which Licensee's new trainers assist the IHQ
          trainer in the training  preparation  and  delivery of  training.  The
          optimal  trainer/trainee  ratio  is two (2)  trainers  to five (5) new
          Authorized User trainers.

     o    Session 3 will be a User  Training  course  scheduled  by  Licensee no
          later than six to eight  weeks  following  Session 2.  Licensee's  new
          trainers  will be  responsible  for  conducting  Session 3,  including
          training  preparation  (logistics and agenda) and  presentation of the
          rationale  for selecting  QualityFIRST(R)  guidelines  for  Licensee's
          environment  and how the guidelines  will be used. The role of the IHQ
          trainer at Session 3 will be to observe and assist in the  delivery of
          training.

          Following  Session 3,  additional  training  sessions may be scheduled
          based on Licensee's needs and IHQ trainer  evaluation.  Any subsequent
          training  sessions  will be  provided  upon the terms and  conditions,
          including fees, as set forth in Schedule 3 of this Agreement.

5.   Physician  Training  Program.  If Licensee so desires,  IHQ will provide an
     optional half-day  Physician  Training Program for up to five (5) physician
     managers for the sum of Two Thousand Dollars ($2,000);  provided,  however,
     that Licensee shall pay all reasonable travel and other associated expenses
     incurred by IHQ in conducting such training.

6.   Fees and expenses due  pursuant to this  schedule  shall be invoiced by IHQ
     and shall be due within thirty (30) days from the date of such invoice.


<PAGE>
                                   SCHEDULE 3

TECHNICAL/CUSTOMER SUPPORT AND CONSULTING SERVICES.

1.   Technical/Customer Support Following Licensee's Receipt of the Software for
     Use by  Licensee's  Staff at its  Facilities in  Pennslyvania.  In order to
     assist Licensee in the effective use of the Software,  IHQ shall during the
     initial  term  of this  Agreement,  at the  request  of  Licensee,  provide
     Licensee  with up to  forty  (40)  hours  of  telephone  technical/customer
     support for questions related to use of the Software and to assist with the
     implementation  plan and  definition of the care  management  process.  All
     requests for technical/customer support services must be made by Licensee's
     Key Person or Key Person  Alternate.  In  addition,  Licensee's  Key Person
     shall  inform  IHQ when  there is a  configuration  change in the number of
     Workstations using the Software. This requires that the Key Person maintain
     Exhibit B and  communicate  changes  thereon to IHQ as they occur.  For the
     purposes of this Agreement, Licensee designates  _______________________ to
     be  its  Key  Person  and  _______________________  to be  its  Key  Person
     Alternate.  Licensee's Key Person can be reached at the following telephone
     number during regular business hours ( ) . Licensee may change the identity
     of its Key Person or Key  Person  Alternate  provided  it  notifies  IHQ in
     writing of such a change within fifteen (15) days thereafter.

2.   Consulting Services. In addition to the technical/customer support services
     provided as described  above,  IHQ is available  to provide  Licensee  with
     consultation services upon the oral or written request of Licensee.  During
     the Initial Term of this Agreement,  Licensee shall pay a consulting fee to
     IHQ for consulting services provided by IHQ at the following hourly rates:

     Vice President Level                                 $250 per hour
     Physician Consultant Level                           $175 per hour
     Director Level                                       $150 per hour
     Programming Consultant Level                         $  75 per hour

     provided,  however,  that Licensee  shall  reimburse IHQ for all travel and
     other  associated  expenses  incurred by IHQ in rendering  such  consulting
     services.  Fees due pursuant to this paragraph shall be invoiced by IHQ and
     shall be due within thirty (30) days from the date of such invoice.

<PAGE>
                                    EXHIBIT B

                    Identification of Computers and Location




Site                     Computer Description            Date of Installation

Health Risk              KMHP Dedicated Care
Management, Inc.         Management Unit
Minneapolis, MN


KMHP                     KMHP Medical Affairs Unit
Philadelphia, PA