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                                                                   Exhibit 10.12

                                  AMENDMENT TO
                          RESTATED MANAGEMENT AGREEMENT


         This Amendment to Restated Management Agreement ("Amendment") is made
effective as of July 15, 1998 ("Effective Date"), between Scripps Health, a
California non-profit public benefit corporation, ("Hospital") with an address
of 9888 Genesee Avenue, Post Office Box 28, La Jolla, California 92038, and PMR
Corporation, a Delaware Corporation, with an office at 501 Washington Street,
5th Floor, San Diego, California 92103 ("PMR"). This Amendment shall be
incorporated into the Agreement (as defined hereunder) by reference and shall
amend and supplement the terms and conditions of the Agreement. In the event any
of the terms and conditions of this Amendment contradict the terms of the
Agreement or render any provisions ambiguous, the terms and conditions of this
Amendment shall supersede and be controlling.

                                    RECITALS

         1. Hospital and PMR entered into a Restated Management Agreement
("Agreement") dated April 11, 1997 and wish to amend certain terms of the
Agreement to enable Hospital to comply with HCFA's interpretation of the
Medicare provider-based designation rules and to maintain the provider-based
designation status of its Programs under the Agreement, as mandated by HCFA's
Region IX, by entering into this Amendment.

                                    AGREEMENT

         NOW, THEREFORE, Hospital and PMR, intending to be legally bound hereby,
agree as follows:

1.   Common Ownership and Control. The Programs' operation under the Agreement
     is subject to the ultimate control of the Hospital's Board of Trustees. The
     Programs shall be operated in accordance with Hospital's governing
     policies, bylaws, practices and procedures. This provision does not change
     the parties' initial agreement since the parties have always understood
     that the Hospital has had control over the Programs and that PMR was bound
     to manage the Programs in accordance with the Hospital's governing
     policies, bylaws, practices and procedures.

2.   Program Premises. Hospital shall be assigned or sublet the leases of the
     Program premises (as defined under the Agreement) and shall lease directly,
     or otherwise own or control, the premises at which all Program services are
     furnished. Hospital shall be responsible for all costs associated with
     occupying the Program premises for operation of the Programs.



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3.   Personnel. Hospital shall employ personnel consisting of therapists,
     nurses, community liaison/intake workers, and care coordinators
     (collectively, "Personnel") who provide direct patient care to patients of
     the Program. Personnel shall be subject to the ultimate supervision and
     complete control of the Administrator of the Hospital and shall be subject
     exclusively to Hospital's disciplinary process, bylaws, policies and
     procedures, rules and regulations and all human resource requirements of
     the Hospital. PMR shall assist Hospital in the transfer to the Hospital of
     existing Personnel of the Programs who are currently employed by PMR, to
     the extent the Hospital independently decides to hire such persons.
     Hospital shall maintain files of the credentials of the Personnel showing
     an active review of the person's credentials by a person experienced in
     behavioral health employed by the Hospital. To the extent applicable, those
     Personnel who are allied health practitioners shall maintain membership in
     Hospital's allied health practitioner staff. In addition, Personnel shall
     wear the Hospital's identification badges to the same extent required of
     other personnel employed by the Hospital (although such badges may be
     distinguished from employee badges to the extent that the Hospital
     uniformly gives its personnel distinctive badges). Hospital shall ensure
     that a copy of the Hospital's rules governing conduct of personnel and
     other Hospital manuals on premises are maintained at the Program sites and
     that such rules and manuals are made available to Personnel of the
     Programs. PMR shall continue to employ or engage the Program Administrator
     and administrative personnel not involved in the delivery of direct patient
     care to patients of the Program.

4.   Medical Staff Oversight. Hospital shall approve the Programs' Medical
     Directors who were previously, and continue to be, duly licensed
     psychiatrists who are active members of the Hospital's medical staff and
     shall report as necessary or appropriate to the Chief of the Section of
     Psychiatry, Department of Medicine, of the Hospital. All attending
     physicians at the Program shall be, as required in the past, members in
     good standing on the active medical staff of the Hospital. Through the
     Hospital's organizational structure, which is the same throughout the
     Hospital's system, the medical staff has ultimate oversight of the
     Department of Medicine, and controls the quality and credentials of its
     members who head its inpatient and outpatient departments.

5.   Program Administrator. The Program Administrator shall report to and be
     accountable to the Administrator of the Hospital who is responsible for the
     Program and other patient care departments of the Hospital and who reports
     to the Scripps Health Management Team, which includes the Chief Executive
     Officer, and shall report through the Administrator of the Hospital to the
     governing body of the Hospital. The Program Administrator shall continue to
     submit daily reports by facsimile to the Administrator of the Hospital. The
     Program Administrators shall be required, as required in the past, to
     attend meetings of the Hospital's department managers and to attend
     meetings of the behavioral health managers of the Hospital and Scripps
     Health.


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6.   Medical Records. All patient medical records shall continue to be
     integrated into the unified records system of the Hospital. Medical records
     shall be compiled, checked for completeness and retained in accordance with
     Hospital's policies. The medical record number shall be issued by the
     Hospital upon a patient's admission to the Program. Medical record forms
     shall be provided by or approved by the Hospital's Medical Records
     Committee.


7.   Indemnification.

         (a) Hospital agrees to indemnify, defend and hold PMR (together with
         its officers, directors, agents, employees and representatives)
         harmless from and against all claims, demands, causes of action,
         judgments, damages, costs and expenses (including without limitation,
         reasonable attorneys' fees and court costs), deficiencies and
         settlements which relate to matters, actions or omissions arising or
         occurring as a result of any activity (or lack thereof) of the Hospital
         or Personnel under this Agreement to the extent that the Personnel or
         any employee of Hospital is/are responsible for or the cause of such
         activity (or lack thereof). Hospital agrees to add PMR as an additional
         insured under its workers compensation, comprehensive general liability
         and property insurance policies.

         (b) PMR agrees to indemnify, defend and hold Hospital (together with
         its officers, directors, agents, employees and representatives)
         harmless from and against all claims, demands, causes of action,
         judgments, damages, costs and expenses (including without limitation,
         reasonable attorneys' fees and court costs), deficiencies and
         settlements which relate to matters, actions or omissions arising or
         occurring as a result of any activity (or lack thereof) of PMR under
         this Agreement to the extent that PMR or any employee of PMR is
         responsible for or the cause of such activity (or lack thereof). PMR
         agrees to add Hospital as an additional insured under its workers
         compensation and comprehensive general liability insurance policies.

8.   Paragraph 7.1 of the Agreement regarding limitations on hiring is hereby
     void and of no force and effect; provided however, that the Hospital shall
     not hire, offer employment or engage any Program Administrator or PMR
     management personnel during the term of the Agreement and any extension or
     renewal thereof and for a period of one (1) year thereafter.

9.   Paragraph 4 of the Agreement regarding compensation to PMR is amended such
     that PMR's fee is reduced, as reflected in the revised Exhibit C attached
     hereto, as a result of the changes set forth in Sections 2 and 3 of this
     Amendment.


10.  The Agreement terminates with respect to the Program sites located in
     Vista, Chula Vista, and El Centro, California, as of the close of business
     on July 14, 1998.




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         All other terms and provision of the Agreement shall remain in full
force and effect, except as modified herein.




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         IN WITNESS WHEREOF, the parties hereto have executed this Amendment
effective as of the day and year noted above as the Effective Date.

SCRIPPS HEALTH                              PMR CORPORATION




By:/s/ E. J. Rood                           By:/s/ Fred Furman
   -------------------------------             ---------------------------------
Printed Name: E.J. Rood                     Printed Name: Fred D. Furman
              --------------------                        ----------------------
Title: Chief Financial Officer              Title: President
       --------------------------                  -----------------------------



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                              [EXHIBITS EXCLUDED]