<PAGE>   1
                                                                    EXHIBIT 10.5


                              EMPLOYMENT AGREEMENT


         This Employment Agreement (the "Agreement") is made and entered into
this 27th day of January, 1998, by and between MEDAPHIS CORPORATION, a Delaware
corporation (the "Company"), and Kevin P. Castle, a resident of the State of
Georgia (the "Employee").

                       Statement of Background Information

     The Company renders to hospitals, physicians, and/or other healthcare
organizations and providers: (a) billing services, accounts receivable
management services, collection services, electronic claims services, financial
management services, and practice and facilities management services: (b)
eligibility verification and certification for Medicaid, Medicare and other
healthcare assistance programs; (c) filing and other medical claims
securitization services; (d) medical coverage information services; and (e)
medical and insurance claims monitoring and tracking services (collectively the
"Processing Business").

     The Company also: (a) develops, markets and licenses to hospitals,
integrated healthcare delivery systems, and other healthcare providers and other
end users (collectively "Providers"), (i) strategic, operational and financial
information systems and services and decision support tools for healthcare
providers, (ii) software systems which provide claims and reimbursement services
and electronic claims processing, and (iii) software applications which assist
Providers with automated scheduling and resource management (the items discussed
in Sections (a)(i), (a)(ii) and (a)(iii) of this paragraph are referred to as
"Systems"), which Systems include, but are not limited to, nurse scheduling and
management information systems, operating room patient scheduling and surgery
information systems, enterprise wide patient scheduling and resource management
systems, enterprise-wide employee scheduling and management information systems
and related software interfaces to other information systems; and (b) provides
to Providers installation and support services related to the Company's Systems
(the "Systems Business").

     The Company also renders professional services with respect to the
development of computer software, algorithms, design, documentation, and related
materials, and the development, design, deployment, and operation of local and
wide area computer networks, all in conjunction with the sale, design,
deployment, operation and maintenance of custom computer processing systems for
improvement of operational efficiency or functionality through the use of image
storage and processing, work flow technology, optical character recognition or
other related technologies (the "System Integration Business") (the Processing
Business, the Systems Business, the Systems Integration Business and any other
distinct business segment in which the Company engages during Employee's
employment are collectively referred to herein as the "Business").

     In consideration of the mutual covenants, promises and conditions set forth
in this Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.       Employment. The Company hereby employs Employee and Employee hereby
         accepts such employment upon the terms and conditions set forth in this
         Agreement. For purposes of Sections 7 and 8 of this Agreement,
         "employment" shall mean any period of time during which the Company is
         paying the Employee salary, wages, or any other amounts, whether or not
         the Employee is currently performing services for the Company at the
         time of such payment.

2.       Duties of Employee. Employee's title will be Senior Vice President,
         Human Resources. Employee agrees to perform and discharge such duties
         as may be assigned to Employee from time to time by the Company to the
         reasonable satisfaction of the Company. Employee also agrees to comply
         with all of the Company's

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         policies, standards and regulations and to follow the instructions and
         directives of Employee's superiors within the Company, as promulgated
         by the officers of the Company. Employee will devote Employee's full
         professional and business-related time, skills and best efforts to such
         duties and will not, during the term of this Agreement, be engaged
         (whether or not during normal business hours) in any other business or
         professional activity, whether or not such activity is pursued for
         gain, profit or other pecuniary advantage, without the prior written
         consent of Carl James Schaper, or his designee, which consent will not
         be unreasonably withheld. This Section will not be construed to prevent
         Employee from (a) investing personal assets in businesses which do not
         compete with the Company in such form or manner that will not require
         any services on the part of Employee in the operation or the affairs of
         the companies in which such investments are made and in which
         Employee's participation is solely that of an investor; (b) purchasing
         securities in any corporation whose securities are listed on a national
         securities exchange or regularly traded in the over-the-counter market,
         provided that Employee at no time owns, directly or indirectly, in
         excess of one percent (1%) of the outstanding stock of any class of any
         such corporation engaged in a business competitive with that of the
         Company; or (c) participating in conferences, preparing and publishing
         papers or books or teaching, so long as Carl James Schaper, or his
         designee, approves such participation, preparation and publication or
         teaching prior to Employee's engaging therein, which approval will not
         be unreasonably withheld.

3.       Term. The term of this Agreement will be for a two (2) year period of
         time, commencing as of February 1, 1998 and expiring on January 31,
         2000, subject to earlier termination as provided for in Section 4 of
         this Agreement. Following the initial two (2) year term of this
         Agreement, the terms of this Agreement will continue to remain in
         effect for additional terms of one (1) year, unless either party gives
         notice of the intent to terminate this Agreement at least ninety (90)
         days prior to the expiration of the original term or any renewal term
         of this Agreement.

4.       Termination.

         (a) Termination by Company for Cause. Notwithstanding anything
         contained in Section 3 to the contrary, the Company may terminate this
         Agreement and all of its obligations hereunder immediately if any of
         the following events occur:

         (i) Employee materially breaches any of the terms or conditions set
         forth in this Agreement and fails to cure such breach within ten (10)
         days after Employee's receipt from the Company of written notice of
         such breach (notwithstanding the foregoing, no cure period shall be
         applicable to breaches by Employee of Sections 6, 7 or 8 of this
         Agreement);

         (ii) Employee engages in dishonest or illegal activities or commits or
         is convicted of any crime involving fraud, deceit or moral turpitude;
         or

         (iii) Employee dies or becomes mentally or physically incapacitated or
         disabled so as to be unable to perform Employee's duties under this
         Agreement. Without limiting the generality of the foregoing, Employee's
         inability to adequately perform services under this Agreement for a
         period of sixty (60) consecutive days will be conclusive evidence of
         such mental or physical incapacity or disability, unless such inability
         to adequately perform services under this Agreement is pursuant to a
         mental or physical incapacity or disability covered by the Family
         Medical Leave Act, in which case such sixty (60)-day period shall be
         extended to a one hundred and twenty (120)-day period.

         (b) Termination by Company Without Cause. Notwithstanding anything
         contained in Section 3 to the contrary, the Company may terminate
         Employee's employment pursuant to this Agreement without cause upon at
         least thirty (30) days' prior written notice to Employee. In the event
         Employee's employment with

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         the Company is terminated by the Company without cause, Employee will
         be entitled to receive salary continuation and health benefit
         continuation (at the salary and health benefit levels set forth below
         in Paragraph 5) for the balance of the term of this Agreement, or nine
         (9) months of salary continuation, whichever amount is greater. If
         Employee is terminated without cause under this Paragraph of the
         Agreement, Employee will not be entitled to any other consideration or
         be considered an employee of the Company for any other purposes,
         including the vesting of stock options, beyond Employee's termination
         date.

         (c) Change in Control. In the event there is a change in control of
         Medaphis Corporation, and (i) Employee's employment is terminated as a
         direct result of such change of control, or (ii) Employee suffers a
         material change in the terms and conditions of his employment (defined
         as (a) a material reduction (greater than 10%) in Employee's then
         current base salary; (b) a change in Employee's existing work location
         to a work location more than 50 miles from Employee's existing work
         location, except for required travel on the Company's business to an
         extent consistent with Employee's then present business travel
         obligations; or (c) an assignment to any duties inconsistent in a
         material adverse respect with Employee's then current position, duties,
         or responsibilities, other than an insubstantial and inadvertent act
         that is remedied by the Company promptly after receipt of notice
         thereof given by Employee) within one (1) year of such change in
         control, Employee will be entitled to receive a payment equal to the
         greater of (1) nine (9) months of salary continuation at Employee?s
         then current base salary, or (2) those payments due and owing to
         Employee under the remaining term of this Agreement, whichever is
         greater. For purposes of this Agreement, a "change in control" of
         Medaphis Corporation shall be deemed to occur upon any of the
         following:

         (i) a consolidation or merger of Medaphis Corporation with or into any
         other corporation, or any other entity or person, other than a
         wholly-owned subsidiary of Medaphis Corporation, excluding any
         transaction in which stockholders of Medaphis Corporation prior to the
         transaction will maintain voting control or own at least 50% of the
         resulting entity after the transaction;

         (ii) any corporate reorganization, including an exchange offer, in
         which Medaphis Corporation shall not be the continuing or surviving
         entity resulting from such reorganization, excluding any transaction in
         which stockholders of the Medaphis Corporation prior to the transaction
         will maintain voting control or own at least 50% of the resulting
         entity after the transaction; or

         (iii) the sale of a substantial portion of Medaphis Corporation?s
         assets, which shall be deemed to occur on the date that any one person,
         or more than one person acting as a group, acquires (or has acquired
         during the 12-month period ending on the date of the most recent
         acquisition by such person or persons) assets from Medaphis Corporation
         that (a) have a total fair market value equal to more than 50% of the
         total fair market value of all the assets of Medaphis Corporation,
         immediately prior to such acquisition or acquisitions, or (b)
         represents a majority of the common stock of any (1) subsidiary of
         Medaphis Corporation, the revenues of which, in the most recent fiscal
         year, represent more than 75% of the consolidated gross revenues of
         Medaphis Corporation and its subsidiaries. Notwithstanding the
         foregoing, a transfer of assets or common stock in a subsidiary by
         Medaphis Corporation will not be treated as a sale of a substantial
         portion of Medaphis Corporation?s assets if the assets are transferred
         to an entity, 50% or more of the total value or voting power of which
         is owned, directly or indirectly, by Medaphis Corporation.

5.  Compensation and Benefits.

         a)  Annual Salary. During the term of this Agreement and for all 
         services rendered by Employee under this Agreement, the Company will
         pay Employee a base salary of Two Hundred Thousand Dollars (200,000.00)

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         per annum in equal bi-weekly installments. Such annual salary will be
         subject to adjustments by any increases given in the normal course of
         business.

         b) Incentive Compensation. Employee shall be eligible to participate in
         the Medaphis Corporation and its Subsidiary Corporations Incentive
         Compensation Plan at a participation category of fifty percent (50%) of
         Employee's base salary, payable at the discretion of the Medaphis
         Corporation Board of Directors.

         c) Stock Options. As soon as reasonably practicable after the signing
         of this Agreement, and subject to the approval of the Compensation
         Committee of the Board of Directors of Medaphis Corporation, the
         Company will cause Medaphis to issue to Employee, effective as of the
         date approved by the Compensation Committee of the Board of Directors
         of Medaphis Corporation, options to purchase One Hundred Thousand
         (100,000) shares of Medaphis Common Stock pursuant to the terms and
         conditions of the Amended and Restated Medaphis Corporation
         Non-Qualified Stock Option Plan ("Stock Option Plan"), as amended. Such
         options will vest at the rate of thirty-three and one-third percent
         (33.33%) per year for a three-year period beginning on the starting
         date of this Agreement, subject to the terms and conditions of the
         Stock Option Plan. Such options shall vest in full immediately upon the
         occurrence of certain change in control events outlined in the Stock
         Option Plan. Employee shall be considered for additional grants of
         options to purchase shares of Medaphis common stock in a manner which
         is consistent with other senior officers of the Company. However,
         nothing in this Agreement shall give rise to a contractual right to
         Employee to receive grants of additional stock options of Medaphis.
         Further, Medaphis has no obligation to Employee to create parity with
         any other Medaphis executives with respect to any options granted to
         such other executives.

         d) Other Benefits. Employee will be entitled to such fringe benefits as
         may be provided from time-to-time by the Company to its employees,
         including, but not limited to, group health insurance, life and
         disability insurance and any other fringe benefits now or hereafter
         provided by the Company to its employees, if and when Employee meets
         the eligibility requirements for any such benefit. The Company reserves
         the right to change or discontinue any employee benefit plans or
         programs now being offered to its employees; provided, however, that
         all benefits provided for employees of the same position and status as
         Employee will be provided to Employee on an equal basis.

         e) Business Expenses. Employee will be reimbursed for all reasonable
         expenses incurred in the discharge of Employee's duties under this
         Agreement pursuant to the Company's standard reimbursement policies.

         f) Withholding. The Company will deduct and withhold from the payments
         made to Employee under this Agreement, state and federal income taxes,
         FICA and other amounts normally withheld from compensation due
         employees.

         g) Signing Bonus. Upon execution of this Agreement, the Company will
         pay Employee a signing bonus in the amount of Twenty-Five Thousand
         Dollars ($25,000.00). Employee will be eligible to receive an
         additional Twenty-Five Thousand Dollars ($25,000.00) following the
         first anniversary date of Employee's commencement of employment with
         the Company. In the event Employee voluntarily resigns for any reason
         during the initial year of his employment with the Company, Employee
         agrees that he will repay the initial Twenty-Five Thousand Dollar
         signing bonus.

6.       Non-Disclosure of Proprietary Information. Employee recognizes and
         acknowledges that the Trade Secrets (as defined below) and Confidential
         Information (as defined below) of the Company and its affiliates and
         all physical embodiments thereof (as they may exist from time-to-time,
         collectively, the "Proprietary Information") are valuable, special and
         unique assets of the Company's and its affiliates' businesses.

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         Employee further acknowledges that access to such Proprietary
         Information is essential to the performance of Employee's duties under
         this Agreement. Therefore, in order to obtain access to such
         Proprietary Information, Employee agrees that, except with respect to
         those duties assigned to him by the Company, Employee shall hold in
         confidence all Proprietary Information and will not reproduce, use,
         distribute, disclose, publish or otherwise disseminate any Proprietary
         Information, in whole or in part, and will take no action causing, or
         fail to take any action necessary to prevent causing, any Proprietary
         Information to lose its character as Proprietary Information, nor will
         Employee make use of any such information for Employee's own purposes
         or for the benefit of any person, firm, corporation, association or
         other entity (except the Company) under any circumstances.

         For purposes of this Agreement, the term "Trade Secrets" means
         information, including, but not limited to, any technical or
         nontechnical data, formula, pattern, compilation, program, device,
         method, technique, drawing, process, financial data, financial plan,
         product plan, list of actual or potential customers or suppliers, or
         other information similar to any of the foregoing, which derives
         economic value, actual or potential, from not being generally known to,
         and not being readily ascertainable by proper means by, other persons
         who can derive economic value from its disclosure or use. For purposes
         of this Agreement, the term "Trade Secrets" does not include
         information that Employee can show by competent proof (i) was known to
         Employee and reduced to writing prior to disclosure by the Company (but
         only if Employee promptly notifies the Company of Employee's prior
         knowledge); (ii) was generally known to the public at the time the
         Company disclosed the information to Employee; (iii) became generally
         known to the public after disclosure by the Company through no act or
         omission of Employee; or (iv) was disclosed to Employee by a third
         party having a bona fide right both to possess the information and to
         disclose the information to Employee. The term "Confidential
         Information" means any data or information of the Company, other than
         trade secrets, which is valuable to the Company and not generally known
         to competitors of the Company. The provisions of this Section 6 will
         apply to Trade Secrets for so long as such information remains a trade
         secret and to Confidential Information during Employee's employment
         with the Company and for a period of two (2) years following any
         termination of Employee's employment with the Company for whatever
         reason.

7.A.     Non-Competition Covenant. During Employee's employment by the Company 
         and for a period of two (2) years following any termination of
         Employee's employment for whatever reason, Employee will not, directly
         or indirectly, on Employee's own behalf or in the service of or on
         behalf of any other individual or entity, compete with the Company
         within the Geographical Area (as hereinafter defined). The term
         "compete" means to engage in, have any equity or profit interest in,
         make any loan to or for the benefit of, or render any services of any
         kind to, directly or indirectly, on Employee's own behalf or in the
         service of or on behalf of any other individual or entity, either as a
         proprietor, employee, agent, independent contractor, consultant,
         director, officer, partner or stockholder (other than a stockholder of
         a corporation listed on a national securities exchange or whose stock
         is regularly traded in the over-the-counter market, provided that
         Employee at no time owns, directly or indirectly, in excess of one
         percent (1%) of the outstanding stock of any class of any such
         corporation) of any business which provides Business products or
         services. For purposes of this Agreement, the term "Geographical Area"
         means the territory located within a seventy-five (75) mile radius of
         each facility for which Employee has management responsibility during
         Employee's employment with the Company.

  B.     Non-Solicitation of Clients Covenant. Employee agrees that during
         Employee's employment by the Company and for a period of two (2) years
         following the termination of Employee's employment for whatever reason,
         Employee will not, directly or indirectly, on Employee's own behalf or
         in the service of or on behalf of any other individual or entity,
         divert, solicit or attempt to solicit any individual or entity (i) who
         is a client of the Company at any time during the six (6)-month period
         prior to Employee's termination of employment with the Company
         ("Client"), or was actively sought by the Company as a prospective
         client, and (ii) with whom

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         Employee had material contact while employed by the Company to provide
         Business services or products to such Clients or prospects.

C.       Construction. The parties hereto agree that any judicial authority
         construing all or any portion of this Section 7 or Section 8 below may,
         if it chooses, sever any portion of the Geographical Area, client base,
         prospective relationship or prospect list or any prohibited business
         activity from the coverage of such Section and to apply the provisions
         of such Section to the remaining portion of the Geographical Area, the
         client base or the prospective relationship or prospect list, or the
         remaining business activities not so severed by such judicial
         authority. In addition, it is the intent of the parties that the
         judicial authority may, if it chooses, replace each such severed
         provision with a provision as similar in terms to such severed
         provision as may be possible and be legal, valid and enforceable. It is
         the intent of the parties that Sections 7 and 8 be enforced to the
         maximum extent permitted by law. In the event that any provision of
         either such Section is determined not to be specifically enforceable,
         the Company shall nevertheless be entitled to bring an action to seek
         to recover monetary damages as a result of the breach of such provision
         by Employee.

8.       Non-Solicitation of Employees Covenant. Employee further agrees and
         represents that during Employee's employment by the Company and for a
         period of two (2) years following any termination of Employee's
         employment for whatever reason, Employee will not, directly or
         indirectly, on Employee's own behalf or in the service of, or on behalf
         of any other individual or entity, divert, solicit or hire away, or
         attempt to divert, solicit or hire away, to or for any individual or
         entity which is engaged in providing Business services or products, any
         person employed by the Company for whom Employee had supervisory
         responsibility or with whom Employee had material contact while
         employed by the Company, whether or not such employee is a full-time
         employee or temporary employee of the Company, whether or not such
         employee is employed pursuant to written agreement and whether or not
         such employee is employed for a determined period or at-will.

9.       Existing Restrictive Covenants. Employee represents and warrants that
         Employee's employment with the Company does not and will not breach any
         agreement which Employee has with any former employer to keep in
         confidence confidential information or not to compete with any such
         former employer. Employee will not disclose to the Company or use on
         its behalf any confidential information of any other party required to
         be kept confidential by Employee.

10.      Return of Proprietary Information. Employee acknowledges that as a
         result of Employee's employment with the Company, Employee may come
         into the possession and control of Proprietary Information, such as
         proprietary documents, drawings, specifications, manuals, notes,
         computer programs, or other proprietary material. Employee
         acknowledges, warrants and agrees that Employee will return to the
         Company all such items and any copies or excerpts thereof, and any
         other properties, files or documents obtained as a result of Employee's
         employment with the Company, immediately upon the termination of
         Employee's employment with the Company.

11.      Proprietary Rights. During the course of Employee's employment with the
         Company, Employee may make, develop or conceive of useful processes,
         machines, compositions of matter, computer software, algorithms, works
         of authorship expressing such algorithm, or any other discovery, idea,
         concept, document or improvement which relates to or is useful to the
         Company's Business (the "Inventions"), whether or not subject to
         copyright or patent protection, and which may or may not be considered
         Proprietary Information. Employee acknowledges that all such Inventions
         will be "works made for hire" under United States copyright law and
         will remain the sole and exclusive property of the Company. Employee
         also hereby assigns and agrees to assign to the Company, in perpetuity,
         all right, title and interest Employee may have in and to such
         Inventions, including without limitation, all copyrights, and the right
         to apply for any form of patent, utility

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         model, industrial design or similar proprietary right recognized by any
         state, country or jurisdiction. Employee further agrees, at the
         Company's request and expense, to do all things and sign all documents
         or instruments necessary, in the opinion of the Company, to eliminate
         any ambiguity as to the ownership of, and rights of the Company to,
         such Inventions, including filing copyright and patent registrations
         and defending and enforcing in litigation or otherwise all such rights.

         Employee will not be obligated to assign to the Company any Invention
         made by Employee while in the Company's employ which does not relate to
         any business or activity in which the Company is or may reasonably be
         expected to become engaged, except that Employee is so obligated if the
         same relates to or is based on Proprietary Information to which
         Employee will have had access during and by virtue of Employee's
         employment or which arises out of work assigned to Employee by the
         Company. Employee will not be obligated to assign any Invention which
         may be wholly conceived by Employee after Employee leaves the employ of
         the Company, except that Employee is so obligated if such Invention
         involves the utilization of Proprietary Information obtained while in
         the employ of the Company. Employee is not obligated to assign any
         Invention which relates to or would be useful in any business or
         activities in which the Company is engaged if such Invention was
         conceived and reduced to practice by Employee prior to Employee's
         employment with the Company.

12.      Remedies. Employee agrees and acknowledges that the violation of any of
         the covenants or agreements contained in Sections 6, 7, 8, 9, 10 and 11
         of this Agreement would cause irreparable injury to the Company, that
         the remedy at law for any such violation or threatened violation
         thereof would be inadequate, and that the Company will be entitled, in
         addition to any other remedy, to temporary and permanent injunctive or
         other equitable relief without the necessity of proving actual damages
         or posting a bond.

13.      Notices. Any notice or communication under this Agreement will be in
         writing and sent by registered or certified mail addressed to the
         respective parties as follows:

     If to the Company:                 If to Employee:

     Medaphis Corporation
     2700 Cumberland Parkway            Kevin P. Castle
     Suite 300                          4629 Briar Hill Cove
     Atlanta, GA 30339                  Berkeley Lake, GA  30096
     Attn: General Counsel

14.      Severability. Subject to the application of Section 7(C) to the
         interpretation of Sections 7 and 8, in case one or more of the
         provisions contained in this Agreement is for any reason held to be
         invalid, illegal or unenforceable in any respect, the parties agree
         that it is their intent that the same will not affect any other
         provision in this Agreement, and this Agreement will be construed as if
         such invalid or illegal or unenforceable provision had never been
         contained herein. It is the intent of the parties that this Agreement
         be enforced to the maximum extent permitted by law.

15.      Entire Agreement. This Agreement embodies the entire agreement of the
         parties relating to the subject matter of this Agreement and supersedes
         all prior agreements, oral or written, regarding the subject matter
         hereof. No amendment or modification of this Agreement will be valid or
         binding upon the parties unless made in writing and signed by the
         parties.


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16.      Binding Effect. This Agreement will be binding upon the parties and
         their respective heirs, representatives, successors, transferees and
         permitted assigns.

17.      Assignment. This Agreement is one for personal services and will not be
         assigned by Employee. The Company may assign this Agreement to its
         parent company or to any of its subsidiaries or affiliated companies;
         provided that the parent or any subsidiary or affiliate fulfills the
         obligations of the Company under this Agreement.

18.      Governing Law. This Agreement is entered into and will be interpreted
         and enforced pursuant to the laws of the State of Georgia. The parties
         hereto hereby agree that the appropriate forum and venue for any
         disputes between any of the parties hereto arising out of this
         Agreement shall be any court located in the geographical area comprised
         by the United States District Court for the Northern District of
         Georgia and each of the parties hereto hereby submits to the personal
         jurisdiction of any such court. The foregoing shall not limit the
         rights of any party to obtain execution of judgment in any other
         jurisdiction. The parties further agree, to the extent permitted by
         law, that a final and unappealable judgment against either of them in
         any action or proceeding contemplated above shall be conclusive and may
         be enforced in any other jurisdiction within or outside the United
         States by suit on the judgment, a certified exemplified copy of which
         shall be conclusive evidence of the fact and amount of such judgment.

19.      Surviving Terms. Sections 6, 7, 8, 9, 10, 11 and 12 of this Agreement
         shall survive termination of this Agreement.


     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.


COMPANY:                                                  EMPLOYEE:

MEDAPHIS CORPORATION

By:/s/ Randolph L. M. Hutto                               /s/ Kevin P. Castle
   --------------------------------                       ---------------------
                                                          Kevin P. Castle

Title: Executive Vice President
       ----------------------------



THIS AGREEMENT IS NOT VALID AND BINDING UPON THE COMPANY UNTIL SIGNED BY DAVID
E. MCDOWELL OR RANDOLPH L. M. HUTTO, ESQ.


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                                    EXHIBIT A

                                   INVENTIONS






Employee represents that there are no Inventions.



                                                           /s/ KPC
                                                           ---------------------
                                                          Employee Initials







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