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                                                                    Exhibit 10.1

                              EMPLOYMENT AGREEMENT

         This Employment Agreement is entered into this 1st day of June, 2001,
by and between American Healthways, Inc., a Delaware corporation ("Company") and
Jeffrey J. Rice, M.D. ("Officer").

                               W I T N E S S E T H

         I. Employment. In consideration of the mutual promises and agreements
contained herein, the Company employs Officer and Officer hereby accepts
employment under the terms and conditions hereinafter set forth.

         II. Duties. Officer is engaged as an Executive Vice President of the
Company. His powers and duties in that capacity shall be those normally
associated with the position of Executive Vice President. During the terms of
this Agreement, Officer shall also serve without additional compensation in such
other offices of the Company or its subsidiaries or affiliates to which he may
be elected or appointed by the Board of Directors or by the Chief Executive
Officer of the Company. If a Good Reason For Termination exists then it shall be
considered, at Officer's option, termination without just cause and in such
event Officer shall receive the payments and benefits set forth in Section VIII
hereof, with the date of termination for purposes of Section VIII hereof being
the date Officer delivers written notice of his exercise of this option. Officer
may exercise this option by delivering written notice to the Company at any time
within a 30-day period following his receipt of notice of the existence of a
Good Reason For Termination.

         III. Term. Subject to the terms and conditions set forth herein,
Officer shall be employed hereunder for a term beginning on June 1, 2001 and
terminating on May 31, 2003 (the "Expiration Date") unless sooner terminated or
further extended as hereinafter set forth. The Expiration Date shall be
automatically extended for one additional year at the end of the first term of
this Agreement and at the end of each year thereafter (so that the term of this
Agreement shall be extended automatically for one year and no more), unless the
Company notifies Officer in writing (the "Termination Notice") on or before
sixty (60) days prior to the end of the contract year that this automatic
extension provision is canceled and is of no further force and effect.
Notwithstanding the automatic extension of the Expiration Date or any other
provisions herein, this Agreement shall expire on the date that Officer becomes
65 years of age.

         IV. Compensation. For all duties rendered by Officer, the Company shall
pay Officer a minimum salary of $210,000 per year ("Minimum Salary"), payable in
equal monthly installments at the end of each month. In addition thereto,
commencing June 1, 2002, one year from the start of this Agreement and annually
thereafter should this Agreement be extended, the Minimum Salary shall be
increased and adjusted upward, based upon any increase in the Consumer Price
Index for Urban Wage Earners and Clerical Workers, U.S. All City Average Report,
of the U.S. Bureau of Labor Statistics (the "Consumer Price Index") or such
index fulfilling the same or similar purpose in the event the Consumer Price
Index is no longer maintained, in an amount not to exceed 5%. For purposes of
determining the increase in the Minimum Salary, the base month used in the
Consumer Price Index shall be the first full month preceding the commencement of
this Agreement. Such increase shall not be made retroactive for the first year
and such increase shall be made, no more frequently than annually, based upon
any such increased in the Consumer Price Index. In determining the amount of the
annual increase based on any increase in the Consumer Price Index, the
percentage of increase in the Consumer Price Index shall be


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multiplied times the Minimum Salary plus all other salary increases previously
granted by the Board of Directors to Officer and plus all previous adjustments
based upon increases in the Consumer Price Index ("Base Salary"). In addition
thereto, each year beginning June 1, 2002, Officer's compensation will be
reviewed by the Chief Executive Officer of the Company and, after taking into
consideration performance, the Chief Executive Officer of the Company may
increase Officer's Base Salary. Should such increase be equal to or greater than
the cost of living increase, or 5%, no cost of living increase will be granted
for that year. Officer shall participate in the Company's performance bonus plan
and any bonuses paid under such plan shall be in addition to the Base Salary
provided for in this Agreement but shall not be included as part of Base Salary
for the purpose of determining the increase or adjustment based upon the
Consumer Price Index. All compensation payable hereunder shall be subject to
withholding for federal income taxes, FICA and all other applicable federal,
state and local withholding requirements.

         As additional compensation to the Officer for entering into the
non-competition provisions of Section XI(b) of this Agreement, the Company will
cause to be issued as soon as reasonably possible following the execution of
this Employment Agreement 4,762 shares of American Healthways, Inc.'s common
stock (the "Shares"). The Shares shall be subject to the restrictions set forth
in Section 3.5 of that certain Agreement and Plan of Merger dated as of April
30, 2001 (the "Merger Agreement") applicable to the Principal Shareholders (as
defined in the Merger Agreement).

         V. Extent of Service. Officer shall devote substantially all of his
working time, attention and energies to the business of the Company and shall
not during the term of this Agreement take directly or indirectly an active role
in any other business activity without the prior written consent of the Chief
Executive Officer of the Company; but this Section shall not prevent Officer
from making real estate or other investments of a passive nature or from
participating without compensation in the activities of a nonprofit charitable
organization where such participation does not require a substantial amount of
time and does not adversely affect his ability to perform his duties under this
Agreement. Officer shall not serve on the board of directors of an entity
outside of the Company and its affiliates without the prior approval of the
Chief Executive Officer of the Company.

         VI. Disability. During any period in which Officer fails to perform his
duties hereunder as a result of incapacity due to physical or mental illness,
Officer shall continue to receive his Base Salary until his employment is
terminated hereunder. In the case of incapacity due to physical or mental
illness resulting in Officer being absent from his duties hereunder on a full
time basis for more than ninety (90) consecutive days or for more than one
hundred and twenty (120) days in any consecutive six (6) month period or in the
case of a determination by the Board of Directors that Officer is permanently
and totally disabled from performing his duties hereunder, the Company may
terminate Officer's employment hereunder by the delivery of written notice of
termination. In the event the Company so terminates Officer under this Section,
such termination shall be considered termination without just cause and the
Company shall pay Officer such amounts and provide such benefits as are required
by Section VIII hereof, reduced by the benefits payable to Officer under the
Company's disability insurance policies.

         For purposes of this Section, the determination of whether Officer is
incapacitated due to physical or mental illness and therefore disabled shall be
made by the Chief Executive Officer of the Company upon advice of a licensed
physician.

         In the event of Officer's incapacity due to physical or mental illness,
Officer shall be entitled to participate in the Company's health insurance and
life insurance programs so long as is permitted under the provisions of these
coverage's. If Officer is no longer eligible for coverage in the Company's
health insurance plan, the Company shall pay the difference between the cost of
COBRA medical insurance coverage (available after active eligibility has ended)
and Officer's contribution to the plan immediately



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preceding the disability but in no event shall the Company pay this difference
for any period beyond the unexpired term of this Agreement or beyond the period
of Officer's eligibility to participate in COBRA health insurance benefits.
Following Officer's termination for disability, Officer's benefits for past
participation in the Company's bonus, capital accumulation and stock option
plans shall be determined in accordance with the provisions of those plans and
Officer shall not be eligible for further participation in these plans beyond
the date of termination.

         VII. Termination for Just Cause. For purposes of this Agreement, the
Company shall have the right to terminate Officer for "just cause" if, in the
good faith opinion of the Chief Executive Officer of the Company, Officer is
guilty of (i) intoxication while on duty, (ii) theft or dishonesty, (iii)
conviction of a crime involving moral turpitude, or (iv) upon written notice to
Officer, there is failure to cure within 30 days any willful and continued
neglect or gross negligence by Officer in the performance of his duties as an
officer or (v) upon written notice to Officer, there is failure to cure within
30 days any violation of Company Policy or Code of Conduct. For purposes of this
Section VII, determination of a violation shall be made by the Chief Executive
Officer of the Company. In making such determination, the Chief Executive
Officer of the Company shall not act unreasonably or arbitrarily.

         VIII. Termination Without Just Cause. Officer's employment under this
Agreement may be terminated (i) by the Company at any time "without just cause"
by providing Officer with written notice, (ii) by the Company by providing
Officer with Termination Notice (as defined in Section III), (iii) by Officer at
any time within twelve (12) months following the occurrence of a Change In
Control (as defined in Section XIX herein), or (iv) by Officer within 30 days of
an event that provides Good Reason For Termination (as defined in Sections II
and XIX). Officer's termination date shall be deemed the date Officer receives
his written notice of termination or Termination Notice from the Company or the
date the Company receives notice from the Officer of his termination in
accordance with Section IX herein. In the event of such termination:

          a.   Subject to compliance by Officer with the provisions of Section
               VIII herein, the Company shall pay Officer from the termination
               date for a total of one (1) year or the remaining term of this
               Agreement, whichever is greater, monthly, an amount equal to his
               monthly Base Salary on the termination date.

          b.   Officer shall cease as of the termination date his further
               participation in the Company's stock option plans, capital
               accumulation plans, bonus plans, monthly automobile allowance and
               any other benefit or compensation plan in which Officer
               participated or was eligible to participate except as set forth
               in Section VIII(c) below. The Officer's termination date shall be
               utilized for any vesting provisions of the plans listed above in
               this subparagraph (b).

          c.   Following termination by the Company without just case, Officer
               shall be eligible to obtain COBRA health insurance coverage under
               the Company's health insurance plan for a period of time
               generally available to other participants eligible for such
               coverage. If the Officer elects this COBRA health insurance
               coverage, Officer's contribution to such coverage will continue
               at rates contributed by the Company's other officers as may be in
               effect from time to time while the Officer's COBRA health
               insurance coverage is in place. While life and disability
               insurance coverage cannot be provided following the Officer's
               termination under the terms of these group insurance plans, the
               Company will pay to Officer the equivalent amount of the
               Company's contribution to the premiums for these coverage's for
               the remaining payment term of this contract in an amount equal to
               the amount contributed by the Company for these coverage's for
               other officers of the Company in effect while Officer's coverage
               following termination is in place. If Officer



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               maintains COBRA health coverage with the Company upon new
               employment following termination from the Company, the full cost
               of the COBRA health insurance coverage shall be the
               responsibility of the Officer. In addition, upon new employment
               following termination from the Company, the Company's
               reimbursement of life and disability insurance premium
               contributions will also terminate.

          d.   No payments of Base Salary or of any other type of character
               shall be made to Officer after Officer becomes sixty five (65)
               years of age.

          e.   The Company shall be entitled to offset and reduce (as described
               below) any payments due to Officer hereunder by the amount earned
               by Officer in any active employment that he may receive during
               the remaining unexpired payment term of this Agreement from any
               other source whatsoever, except said funds shall not include
               income from dividends, investments, or passive income. Any
               payment reduction under this provision shall be calculated on a
               pro rata basis monthly by considering the earnings for a specific
               month versus the payments due for that month. As a condition for
               Officer receiving payments from the Company he agrees to furnish
               Company annually with full information regarding such employment
               and to provide a copy of his federal income tax returns for such
               periods on a timely basis.

          f.   The Company shall be entitled to offset and reduce any payments
               due to Officer hereunder by the amounts of unemployment
               insurance, social security insurance or like benefits received by
               Officer.

          g.   All payments hereunder will cease upon the death of Officer.

         IX. Termination by Officer. Officer may terminate his employment
  hereunder at any time upon sixty (60) days written notice. Upon such
  termination by Officer, other than termination in accordance with Section
  VIII. (iii) and (iv) herein, the Company shall pay the Officer his Base Salary
  due through the date on which his employment is terminated at the rate in
  effect at the time of notice of termination. The Company shall then have no
  further obligation to Officer under this Agreement.

         X. Termination Upon Death. If Officer dies during the term of this
  Agreement, the Company shall pay his Base Salary due through the date of his
  death at the rate in effect at the time of his death. The Company shall then
  have no further obligations to Officer or any representative of his estate or
  his heirs except that Officer's estate or beneficiaries as the case may be
  shall be paid such amounts as may be payable under the Company's life
  insurance policies and other plans as they relate to benefits following death
  then in effect for the benefit of Officer.

         XI. Restrictive Covenants.

               (a)  Confidential Information. Officer agrees not to disclose,
                    either during the time he is employed by the Company or
                    following termination of his employment hereunder, to any
                    person other than a person to whom disclosure is necessary
                    in connection with the performance of his duties or to any
                    person specifically authorized by the Chief Executive
                    Officer of the Company any material confidential information
                    concerning the Company, including, but not limited to
                    identities of customers and prospective customers identities
                    of individual contacts at customers, information about
                    Company colleagues, models and strategies, contract formats,
                    business plans and related operation methodologies,


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                    financial information or measures, data bases, computer
                    programs, treatment protocols, operating procedures and
                    organization structures.

               (b)  Non-Competition. During the term of employment provided
                    hereunder and continuing during the period while any amounts
                    are being paid to Officer pursuant to the terms of the
                    Agreement, and for a period of one (1) year thereafter,
                    Officer will not (a) directly or indirectly own, manage,
                    operate, control or participate in the ownership,
                    management, operation or control of, or be connected as an
                    officer, employee, partner, director or otherwise with, or
                    any have financial interest in, or aid or assist anyone else
                    in the conduct of, any business which is in competition with
                    any business conducted by the Company or which Officer knew
                    or had reason to know the Company was actively evaluating
                    for possible entry, provided that ownership of five (5)
                    percent or less of the voting stock of any public
                    corporation shall not constitute a violation hereof.

               (c)  Non-Solicitation. During the term of employment provided for
                    hereunder and continuing during the period while any amounts
                    are being paid to Officer pursuant to the terms of this
                    Agreement, and for a period of one (1) year thereafter,
                    Officer will not (a) directly or indirectly solicit business
                    which could reasonably be expected to conflict with the
                    Company's interest from any entity, organization or person
                    which has contracted with the Company, which has been doing
                    business with the Company, from which the Company was
                    soliciting business at the time of the termination of
                    employment or from which Officer knew or had reason to know
                    that Company was going to solicit business at the time of
                    termination of employment, or (b) employ, solicit for
                    employment, or advise or recommend to any other persons that
                    they employ or solicit for employment, any employee of the
                    Company.

               (d)  Consultation. Officer shall, at the Company's written
                    request, during the period he is receiving any payment from
                    the Company hereunder, cooperate with the Company in
                    concluding any matters in which Officer was involved during
                    the term of his employment and will make himself available
                    for consultation with the Company on other matters otherwise
                    of interest to the Company. The Company agrees that such
                    requests shall be reasonable in number and will consider
                    Officer's time required for other employment and/or
                    employment search.

               (e)  Enforcement. Officer and the Company acknowledge and agree
                    that any of the covenants contained in this Section XI may
                    be specifically enforced through injunctive relief but such
                    right to injunctive relief shall not preclude the Company
                    from other remedies, which may be available to it.

               (f)  Continuing Obligation. Notwithstanding any provision to the
                    contrary or otherwise contained in this Agreement, the
                    Agreement and covenants contained in this Section XI shall
                    not terminate upon Officer's termination of his employment
                    with the Company or upon the termination of this Agreement
                    under any other provision of this Agreement.

               (g)  Consideration. Officer acknowledges and agrees that he is
                    entering into the covenants contained in this Section XI as
                    an inducement to the Company to acquire, by way of merger,
                    CareSteps.com, Inc. pursuant to the terms of the



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                    Merger Agreement and in consideration of the mutual promises
                    and agreements otherwise contained in this Agreement.

         XII. Vacation. During each year of this Agreement, Officer shall be
  entitled to vacation in accordance with Company policy in effect from time to
  time, but in any event not less than 4 weeks per year.

         XIII. Benefits. In addition to the benefits specifically provided for
  herein, Officer shall be entitled to participate while employed by the Company
  in all benefit plans maintained by the Company for officers generally
  according to the terms of such plans.

         XIV. Notices. Any notice required or permitted to be given under this
  Agreement shall be sufficient if in writing and sent by registered or
  certified mail to his residence in the case of Officer, or to its  principal
  office in the case of the Company and the date of mailing shall be deemed the
  date which such notice has been provided.

         XV. Waiver of Breach. The waiver by either party of any provision of
  this Agreement shall not operate or be construed as a waiver of any subsequent
  breach by the other party.

         XVI. Assignment. The rights and obligations of the Company under this
  Agreement shall inure to the benefit of and shall be binding upon the
  successors and assigns of the Company. The Officer acknowledges that the
  services to be rendered by him are unique and personal, and Officer may not
  assign any of his rights or delegate any of his duties or obligations under
  this Agreement.

         XVII. Entire Agreement. This instrument contains the entire agreement
  of the parties and supersedes all other prior agreement, employment contracts
  and understandings, both written and oral, express or implied with respect to
  the subject matter of this Agreement and may not be changed orally but only by
  an agreement in writing signed by the party against whom enforcement of any
  waiver, change, modification, extension or discharge is sought. The laws of
  the State of Tennessee shall govern this Agreement.

         XVIII. Headings. The sections, subjects and headings of this Agreement
  are inserted for convenience only and shall not affect in any way the meaning
  or interpretation of this Agreement.

         XIX. Definitions. For purposes of this Agreement, the following
  definitions shall apply:

               (a)  A "Change of Control" shall be deemed to mean:

                    (i)  a transaction or series of transactions (occurring
                         within 24 months of each other) in which all or any
                         substantial (defined as more than fifty percent (50%)
                         of the assets of American Healthways, Inc.) portion of
                         Company assets have been acquired through a merger,
                         business combination, purchase or similar transaction
                         by any entity or person, other than an entity
                         controlled by American Healthways, Inc. or

                    (ii) a transfer or series of transfers (occurring within 24
                         months of each other) in which securities representing
                         control of American Healthways, Inc. ("control" being
                         defined as greater than fifty percent (50%) of the
                         outstanding voting power of the outstanding securities
                         of American Healthways, Inc.) are acquired by or
                         otherwise are beneficially owned,



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                         directly or indirectly, by any corporation, person or
                         "group" (as such term is used in Section 13(d)(3) of
                         the Securities Exchange Act of 1934).

               (b)  A "Good Reason For Termination" shall exist if:

                    (i)  there is a significant change in the nature or scope of
                         the Officer's authority and responsibilities;

                    (ii) there is a reduction in Officer's rate of base salary
                         (for reasons other than Company performance) or overall
                         compensation;

                   (iii) the Company changes the principal location in which
                         Officer is required to perform services outside a
                         fifty-mile radius of Metropolitan Nashville without
                         Officer's consent;

                    (iv) Officer shall no longer report to the CEO; or

                    (v)  Officer is denied access to Company Information and
                         Meetings. Company Information and Meetings shall
                         include information available to employees of a similar
                         position as Officer such as (a) financial information,
                         data and reports, (b) contracts and (c) meetings which
                         include Company employees, and shall include meetings
                         of the Board of Directors, except executive sessions.

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

                                  ----------------------------------------------
                                  Jeffrey J. Rice, M.D.


                                  AMERICAN HEALTHWAYS, INC.


                                  By:
                                      ------------------------------------------
                                  Title: Executive Vice President - Fianance and
                                         Administration, Chief Financial Officer
                                         and Secretary





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