EXHIBIT 10.4

                                   PHYSICIANS

                           H E A L T H S E R V I C E S
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                       A Foundation Health Systems Company

June 10, 1998

Mr. Tom Wilfong
200 Bridlemere Avenue
Interlaken, NJ  07712

Dear Tom:

I would  like to  confirm  the  offer  made to you for the  Exempt  position  of
President,  New Jersey  Operations.  You will be reporting to the  President and
Chief Executive Officer for the Northeast Division of Foundation Health Systems,
Inc.  (FHS).  Your new monthly base salary in this  position,  effective June 1,
1998, will be $12,500.  Associates will be paid on a bi-weekly basis with 26 pay
periods per year.  We have also agreed to pay the  monthly  lease and  insurance
payment on a vehicle. You are also eligible for mileage reimbursement of .08 per
mile.

You will also be eligible to  participate  in the FHS Executive  Incentive  Plan
(`Plan') with a target  opportunity of 40 percent of your base annualized salary
for Plan year 1998 and 50 percent  for Plan year 1999.  Any plan bonus  payments
are governed by the provisions of the Plan and are dependent upon  attainment of
corporate, business entity and your individual goals.

As part of your long-term incentive program, you will be eligible to participate
in the Company's stock option program.  The Company's  management will recommend
to the  Compensation  and Stock Option  Committee  (hereafter  "Committee")  the
number of shares that you will receive. It will be within the sole discretion of
the Committee to determine  whether the  recommendation  to grant you a specific
number of shares will be  approved.  At all times,  stock option  grants  remain
within the sole discretion of the Committee.

You will  participate in the FHS Choices benefit  program.  This cafeteria style
plan includes medical, vision, dental, life insurance,  long-term and short-term
disability  protection,  an employee  assistance  program,  participation in our
401(k) Plan, and participation in our Deferred  Compensation  Plan. You are also
eligible to participate in the Senior Executive Retirement Plan ("SERP").

The  employment  relationship  with the Company is at the mutual consent of each
employee and the Company.  Nothing in this offer letter is intended to guarantee
your continued employment with the Company or employment for any specific length
of time.  While the  Company  hopes that the  employment  relationships  will be
mutually  beneficial and rewarding,  both you and the Company maintain the right
to terminate the  relationship  at-will,  at any time, with or without cause. In
the event that your employment is terminated by the Company for any reason other
that  `cause',  the Company  will  provide you with a minimum of sixty (60) days
notice  and a  severance  package,  provided  you  agree to sign  the  Company's
standard General Release  Agreement,  totaling one year of base salary in effect
at the date of termination. 

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Payment of the  severance  package will be made on a salary  continuation  basis
until the sum of one year of base salary is paid in full.  During this period of
severance,  the Company will pay the premium to provide you and your  dependents
medical and dental  coverage  under COBRA if you elect to continue your benefits
under COBRA.  Under the terms of this agreement,  `cause' is defined as a felony
conviction for fraud, misappropriation or embezzlement.

In  accepting  employment  with the  Company,  you  acknowledge  that no Company
representative has made an oral or written promise or representation contrary to
the above  paragraph  and that this is the only  agreement  between  you and the
Company concerning the duration of your employment and the at-will nature of the
employment relationship.

During  your  employment  with the  Company,  you will have access to and become
acquainted with certain  proprietary and confidential  information and practices
("Confidential Information").  Confidential information includes all information
that is not generally  known to the Company's  competitors  and the public,  and
that has or could have commercial value to the Company's business.  It includes,
but is not  limited  to,  customer  information,  customer  lists,  and  pricing
methodology.

In accepting  employment  with the Company,  you  acknowledge and agree that all
documents,  memoranda, reports, files, correspondence,  lists and other written,
electronic and graphic records affecting or relating the Company's business that
you may prepare,  use, observe,  possess or control (including,  but not limited
to, any materials containing  Confidential  Information) shall be and remain the
Company's  sole  property,  and you agree not to make use of or  disclose to any
third party any such material, confidential or otherwise, except for the benefit
of the Company and in the course of your  employment  with the Company.  If your
employment with the Company is terminated (voluntary or otherwise), you agree to
deliver to the Company  within five  business  days of  termination  all written
and/or  graphic  records  affecting  or  relating  to  the  Company's  business,
including but not limited to material containing Confidential Information.

Finally,  this  letter  sets  forth all the  terms of his  offer of  employment.
Together  it  supersedes  any  previous  and  contemporaneous  oral and  written
communications  and  representations.  To confirm your acceptance of these terms
please sign,  date and return a copy of this letter.  An additional  copy of the
offer letter is enclosed for your file.

Tom, we are excited about your  accepting this new challenge and we know you can
make significant contributions to our success. If you have any questions or wish
to discuss this confirmation, please feel free to contact me.

Sincerely,



/s/ Jay Schwanz
Jay Schwanz
Director of Human Resources


cc:  B. Natt

              /s/ Thomas Wilfong                                   6/11/98
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                  Tom Wilfong                                        Date