Exhibit 10.24

                       REGENCY HEALTH SERVICES, INC.

                   NON-QUALIFIED STOCK OPTION AGREEMENT

         This Option  Agreement is made and entered into by and between  REGENCY
HEALTH  SERVICES,  INC., a Delaware  corporation  (the "Company") and Richard K.
Matros  ("Employee"),  as of the  2nd  day  of  January,  1996  (which  date  is
hereinafter  referred to as the "Date of Grant").  If Employee is  presently  or
subsequently becomes employed by a subsidiary of the Company, the term "Company"
shall be deemed to refer  collectively to Regency Health Services,  Inc. and the
subsidiary or subsidiaries that employ the Employee.

                            R E C I T A L S

         WHEREAS,  the Company has adopted  the Regency  Health  Services,  Inc.
Long-Term  Incentive Plan (the "Plan") as an employee incentive to encourage key
employees  and the  officers of the Company to remain in its  employment  and to
enhance the ability of the Company to attract new employees  whose  services are
considered  unusually valuable by providing an opportunity to have a proprietary
interest in the success of the Company; and

         WHEREAS,   the  Committee   established   pursuant  to  the  Plan  (the
"Committee")  believes  that the  granting  of the Option  herein  described  to
Employee is consistent with the stated purposes for which the Plan was adopted;

         NOW, THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth and for other good and valuable consideration, the Company
and Employee agree as follows:

                             A G R E E M E N T

1. Grant of Option.  The Company  hereby grants to Employee the right and option
(hereinafter  referred to as the  "Option")  to purchase an  aggregate  of Three
Hundred  Thousand  (300,000)  shares (such number being subject to adjustment as
provided in  paragraph 10 hereof and Article 14 of the Plan) of the common stock
of Regency  Health  Services,  Inc.  (the  "Stock") on the terms and  conditions
herein set forth. This Option may be exercised in whole or in part and from time
to time as hereinafter provided.

2.       Purchase Price.  The price at which Employee shall be entitled to 
purchase the Stock covered by the Option shall be Ten Dollars and No Cents 
($10.00) per share.

3. Term of Option.  The Option  hereby  granted shall be and remain in force and
effect  for a period  of ten (10)  years  from the Date of  Grant,  through  and
including  the  normal  close of  business  of the  Company  on  January 2, 2006
("Expiration Date"), subject to earlier termination as provided in paragraphs 7,
8 and 10 hereof.

4.  Exercise of Option.  The Option may be exercised  by Employee in  accordance
with the vesting  schedule set forth in Exhibit "A" hereto as to all or any part
of the shares  covered  hereby by delivery  to the Company of written  notice of
exercise  and payment of the  purchase  price as provided in  paragraphs 5 and 6
hereof.

         In the event of a public  tender for all or any portion of the Stock of
the Company or in the event that a proposal to merge, consolidate,  or otherwise
combine  with  another  company  is  submitted  for  shareholder  approval,  the
Committee  may in its sole  discretion  declare  the  Option  to be  immediately
exercisable  even if the original  date for the  exercise of the Option,  as set
forth in the first paragraph of this paragraph 4, has not yet passed.

5. Method of  Exercising  Option.  Subject to the terms and  conditions  of this
Option Agreement,  the Option may be exercised by timely delivery to the Company
of written  notice,  which notice shall be effective on the date received by the
Company (the "Effective  Date").  The notice shall state Employee's  election to
exercise  the  Option,  the number of shares in respect of which an  election to
exercise has been made, the method of payment  elected (see paragraph 6 hereof),
the exact name or names in which the shares will be  registered,  and the Social
Security  number of  Employee.  Such notice  shall be signed by the Employee and
shall be  accompanied  by payment of the purchase  price of such shares.  In the
event the Option shall be exercised by a person or persons  other than  Employee
pursuant to paragraph 8 hereof, such notice shall be signed by such other person
or persons and shall be  accompanied  by proof  acceptable to the Company of the
legal  right of such  person or  persons  to  exercise  the  Option.  All shares
delivered by the Company upon exercise of the Option as provided herein shall be
fully paid and nonassessable upon delivery.

6. Method of Payment for Options.  Payment for shares purchased upon exercise of
the Option shall be made by the Participant by having the Company withhold Stock
(to the extent that Stock is issued  pursuant to the Award) having a Fair Market
Value on the date of exercise equal to the total exercise price otherwise due to
the company.

7. Termination of Employment.  In the event that Employee terminates  employment
on account of retirement  or for any other reason than for cause,  then Employee
may at any time within three (3) months next  succeeding  the effective  date of
termination  of  employment  exercise the Option to the extent that Employee was
entitled to exercise the Option at the date of termination,  provided that in no
event shall the Option, or any part thereof, be exercisable after the Expiration
Date.

         If Employee is terminated for cause, the Option shall lapse at the time
of such termination of employment.

8.  Death of  Employee.  In the event of the death of  Employee  within a period
during  which the Option,  or any part  thereof,  could have been  exercised  by
Employee,  including  three (3) months  after  Normal  Termination  (the "Option
Period"), the Option shall lapse unless it is exercised within the Option Period
and in no event  later than  fifteen  (15) months  after the date of  Employee's
death by the Employee's legal representative or representatives or by the person
or persons  entitled to do so under Employee's last will and testament or if the
Employee  fails to make a  testamentary  disposition of such Option or shall die
intestate,  by the person or persons  entitled to receive  such Option under the
applicable  laws if of descent  and  distribution.  An Option  may be  exercised
following  the death of the Employee only if the Option was  exercisable  by the
Employee  immediately  prior to his death. In no event shall the Option,  or any
part thereof, be exercisable after the Expiration Date. The Committee shall have
the right to require evidence  satisfactory to it of the rights of any person or
persons  seeking to exercise the Option  under this  paragraph 8 to exercise the
Option.

9.  Nontransferability.  The Option  granted by this Option  Agreement  shall be
exercisable  only during the term of the Option  provided in  paragraph 3 hereof
and, except as provided in paragraphs 7 and 8 above, only by Employee during his
lifetime and while an Employee of the Company. The Option granted by this Option
Agreement  shall be  subject to the  restrictions  on  transfer  as set forth in
Section 13.5 of the Plan.

10.  Adjustments  in Number of Shares  and  Option  Price.  In the event a stock
dividend is declared upon the Stock,  the remaining shares of Stock then subject
to this  Option  shall be  increased  proportionately  without any change in the
aggregate purchase price therefor.  In the event the Stock shall be changed into
or exchanged for a different  number or class of shares of stock into which each
outstanding share of Stock shall be so exchanged,  all without any change in the
aggregate purchase price for the shares then subject to the Option.

         Subject to any  required  action by the  stockholders,  if the  Company
shall be the surviving or resulting  corporation in any merger or consolidation,
the Option  granted  hereunder  shall pertain to and apply to the  securities or
rights to which a holder of the number of shares of Stock  subject to the Option
would have been entitled;  but a dissolution or liquidation of the Company, or a
merger or  consolidation  in which the Company is not the surviving or resulting
corporation, shall, in the sole discretion of the Committee:

(a) Cause the Option outstanding hereunder to terminate as of the date specified
by the  Committee,  except that the surviving or resulting  corporation,  in its
absolute  and  uncontrolled  discretion,  may  tender an option  or  options  to
purchase its shares or exercise such rights on terms and conditions,  both as to
the  number of shares  and  rights,  and  otherwise  which  shall  substantially
preserve the rights and benefits of the Option then outstanding hereunder; or

(b) The  Committee  may give Employee the right to exercise this Option prior to
the occurrence of the event otherwise terminating the Option over such period as
the Committee, in its sole and absolute discretion, shall determine.

11.  Delivery of Shares.  No shares of Stock shall be delivered upon exercise of
the  Option  until (i) the  purchase  price  shall have been paid in full in the
manner herein provided;  (ii) applicable taxes required to be withheld have been
paid or withheld in full; (iii) approval of any governmental  authority required
in connection with the Option,  or the issuance of shares  thereunder,  has been
received by the  Company;  and (iv) if required by the  Committee,  Employee has
delivered to the Committee an Investment Letter in form and content satisfactory
to the Company as provided in paragraph 12 hereof.

12.      Securities Act.  The Company shall have the right, but not the 
obligation, to cause the shares of Stock issuable upon exercise of the Option to
be registered under the appropriate rules and regulations of the Securities and 
Exchange Commission.

         The  Company  shall not be  required  to  deliver  any  shares of Stock
pursuant to the  exercise of all or any part of the Option if, in the opinion of
counsel for the Company,  such issuance would violate the Securities Act of 1933
or any other  applicable  federal or state  securities laws or regulations.  The
Committee  may require that  Employee,  prior to the issuance of any such shares
pursuant to  exercise  of the Option,  sign and deliver to the Company a written
statement  ("Investment  Letter")  stating (i) that Employee is  purchasing  the
shares for investment and not with a view to the sale or  distribution  thereof;
(ii) that Employee will not sell any shares received upon exercise of the Option
or any other  shares of the Company  that  Employee  may then own or  thereafter
acquire except either (a) through a broker on a national  securities exchange or
(b) with the prior written  approval of the Company;  and (iii)  containing such
other terms and conditions as counsel for the Company may reasonable  require to
assure compliance with the Securities Act of 1933 or other applicable federal or
state securities laws and regulations.  Such Investment  Letter shall be in form
and content acceptable to the Committee in its sole discretion.

         If  shares  of Stock  or  other  securities  issuable  pursuant  to the
exercise of the Option have not been registered under the Securities Act of 1933
or other applicable federal or state securities laws or regulations, such shares
shall bear a legend restricting the transferability  thereof,  such legend to be
substantially in the following form:

     "The shares  represented by this  certificate  have not been  registered or
     qualified  under federal or state  securities  laws.  The shares may not be
     offered  for  sale,  sold,  pledged  or  otherwise  disposed  of  unless so
     registered  or  qualified,  unless  an  exemption  exists  or  unless  such
     disposition is not subject to the federal or state securities laws, and the
     availability  of any exemption or the  inapplicability  of such  securities
     laws must be  established  by an  opinion of  counsel,  which  opinion  and
     counsel shall both be reasonably satisfactory to the Company."

13. Federal and State Taxes.  Upon exercise of the Option,  or any part thereof,
the Employee may incur certain liabilities for federal, state or local taxes and
the Company may be required by law to withhold  such taxes for payment to taxing
authorities.  Upon  determination by the Company of the amount of taxes required
to be withheld,  if any, with respect to the shares to be issued pursuant to the
exercise  of the Option,  Employee  shall pay all  Federal,  state and local tax
withholding  requirements  by having the Company  withhold  Stock (to the extent
that Stock is issued  pursuant to the Award)  having a Fair Market  Value on the
date that tax is to be  determined  equal to the tax  otherwise  required by the
withheld.

14.      Definitions; Copy of Plan.  To the extent not specifically provided 
herein, all capitalized terms used in this Option Agreement shall have the same 
meanings ascribed to them in the Plan.  By the execution of this Agreement, 
Employee acknowledges receipt of a copy of the Plan.

15.  Administration.  This Option Agreement shall at all times be subject to the
terms  and  conditions  of the  Plan  and the  Plan  shall  in all  respects  be
administered by the Committee in accordance with the terms of and as provided in
the Plan. The Committee shall have the sole and complete discretion with respect
to all matters  reserved to it by the Plan and  decisions of the majority of the
Committee with respect  thereto and to this Option  Agreement shall be final and
binding upon Employee and the Company.  In the event of any conflict between the
terms and  conditions of this Option  Agreement and the Plan,  the provisions of
the Plan shall control.

16.      Continuation of Employment. This Option Agreement shall not be 
construed to confer upon Employee any right to continue in the employ of the 
Company and shall not limit the right of the Company, in its sole discretion, to
terminate the employment of Employee at any time.

17.      Obligations to Exercise.  Employee shall have no obligation to exercise
any option granted by this Agreement.

18.      Governing Law.  This Option Agreement shall be interpreted and 
administered under the laws of the State of Delaware.

19. Amendments. This Option Agreement may be amended only by a written agreement
executed by the Company and Employee.  The Company and Employee acknowledge that
changes  in  federal  tax laws  enacted  subsequent  to the Date of  Grant,  and
applicable  to stock  options,  may provide  for tax  benefits to the Company or
Employee.  In any such event,  the Company and  Employee  agree that this Option
Agreement may be amended as necessary to secure for the Company and Employee any
benefits that may result from such legislation. Any such amendment shall be made
only upon the mutual consent of the parties, which consent (of either party) may
be withheld for any reason.

         IN WITNESS WHEREOF,  the Company has caused this Option Agreement to be
duly  executed by its  officers  thereunto  duly  authorized,  and  Employee has
hereunto set his hand as of the day and year first above written.

"COMPANY"                                    "EMPLOYEE"

REGENCY HEALTH SERVICES, INC.

By:___________________________              _________________________
   Bruce Broussard, Chief                   Richard K. Matros
   Financial Officer

By:___________________________
   David A. Grant, Secretary



<PAGE>


                                        EXHIBIT "A"


         Amount Vested and Exercisable                       Vesting Date
         [Accretive, not cumulative]


1.       20,000.............................................January 2, 1997

2.       20,000.............................................January 2, 1998

3.       20,000.............................................January 2, 1999

4.       20,000.............................................January 2, 2000

5.       20,000.............................................January 2, 2001

6.       40,000.............................................January 2, 2002

7.       40,000.............................................January 2, 2003

8.       40,000.............................................January 2, 2004

9.       40,000.............................................January 2, 2005

10.      40,000.............................................July 2, 2005


Notwithstanding   the  foregoing,   the  amounts  vested  shall  be  subject  to
acceleration in accordance with the attached Addendum.



<PAGE>


                                                Addendum to Exhibit A
                                             Non-Qualified Stock Option
                                                Dated January 2, 1996
                                                  Richard K. Matros

1. If actual "EVA" (as defined  below) for calendar  year 1996 equals or exceeds
$205,181,000,  the Option shall vest and be  exercisable  as to 43,333 shares on
January 2, 1997, in lieu of the amount set forth on line 1 of Exhibit A.

2. If actual EVA for  calendar  year 1997  equals or exceeds  $205,640,000,  the
Option shall vest and be  exercisable  as to 43,333 shares on January 2, 1998 in
lieu of the  amount set forth on line 2 of  Exhibit  A, but in  addition  to any
Options which otherwise theretofore vested.

3. If actual EVA for  calendar  year 1998  equals or exceeds  $205,765,000,  the
Option shall vest and be  exercisable  as to 43,333 shares on January 2, 1998 in
lieu of the  amount set forth on line 2 of  Exhibit  A, but in  addition  to any
options which otherwise theretofore vested.

4. If the combined  actual EVA for each of the three years 1996,  1997 and 1998,
equals or exceeds  $616,586,000,  the Option shall vest and be exercisable as to
200,000 shares (inclusive of all shares which periodically vested) on January 2,
1999.

5. If  combined  actual  EVA for each of years  1996,  1997 and 1998,  equals or
exceeds  $616,745,000,  the Option shall vest and be  exercisable  as to 250,000
shares (inclusive of all shares which previously vested) on January 2, 1999.

6. If combined  actual EVA for each of the years  1996,  1997 and 1998 equals or
exceeds $616,903,000,  the Option shall vest and be exercisable as to all shares
on January 2, 1999.

         Any  acceleration  of vesting  shall be deemed to be pro rata as to all
options which  otherwise would vest from and after January 2, 2000. For example,
if accelerated vesting occurs under paragraph 1 of this Addendum, the additional
number of shares that will vest in each of  installments  4 and 5 will be 16,667
in lieu of 20,000  [(20,000 - [43,333 - 20,000]  (PI) 7)], and 36,667 in lieu of
40,000 for each of  installments 6 through 10. If installments 1 and 2 were both
accelerated, the number of shares that will vest in each of installments 4 and 5
would be 13,333 in lieu of 20,000 [(20,000 - [86,666 - 40,000] (PI) 7)] and will
be 33,333 in lieu of 40,000 for installments 6 through 10.

         As used herein the term "EVA" shall mean an amount of money  calculated
in accordance with the following formula:

EVA =    (NOPAT - Capital Charges) + (Base Market Value of Equity)

NOPAT =  EBDITA - Cash Taxes - Routine Capital Expenditures - Interest Income

EBDITA = Earnings before depreciation, interest, taxes, amortization and 
         non-recurring charges

Routine Capital Expenditures =      Annual Average Beds X $350 per bed

Capital Charges = After Tax Cost of Capital X Average Capital Employed

Cash Taxes  =  Income  taxes  per  GAAP + Taxes  saved  on
               Interest  Expense  - Taxes on  Interest  Income - Tax
               Loss Carry Forward + Taxes on  Nonrecurring  losses -
               Taxes on Non-recurring gains

After Tax  Cost  of   Capital   = (Outstanding Debt/Capitalization X After
                                  tax debt  costs) +  (Market Value of 
                                  Equity/Capitalization     X
                                  Equity Cost of Capital)

Average Capital Employed = Average of Capitalization

Outstanding Debt =  Long-Term Debt for borrowed money in  accordance with GAAP -
                    Convertible debentures - Cash Balances

Capitalization =  Market Value of Equity + Outstanding Debt

After tax debt costs =     Weighted Average of (Outstanding Debt X Interest 
                           Rate) X (1 - Marginal Tax Rate)

Market Value of Equity =   (No. of Fully Diluted Shares X $11.50 as at 12/31/96;
                           $13.225 as at 12/31/97; and $15.21 at as 12/31/98))

Equity Cost of Capital =   15%

Taxes Saved on Interest Expense =   Marginal tax rate X interest expense

Taxes on Interest Income = Marginal tax rate X interest income

Base Market Value of Equity =       No. of Fully Diluted Shares at 3/31/96 X $10

         Any ambiguity or dispute in connection with calculation of EVA shall be
determined in good faith by the Committee.