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                                                                 Exhibit 10.13

                              EMPLOYMENT AGREEMENT


        THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
and is effective as of June 15, 1998, by and between ARV ASSISTED LIVING, INC.,
a Delaware corporation (the "Company"), and PATRICIA J. GIFFORD, M.D., an
individual ("Employee").


                                  R E C I T A L

        The Company desires to employ Employee and Employee desires to be
employed by the Company upon the terms and conditions set forth herein.

        NOW, THEREFORE, the parties hereto agree as follows:

        1. EMPLOYMENT. The Company hereby employs Employee and Employee hereby
accepts employment with the Company on the terms and conditions set forth
herein.

        2. DUTIES. At all times while Employee is an employee of the Company,
Employee shall perform the duties and obligations of Senior Vice President and
Medical Director of the Company. Employee shall at all times perform such duties
and obligations faithfully, diligently, and to the best of Employee's ability,
under the supervision of, and in accordance with lawful policies and directives
from time to time established by, the Company's Chief Executive Officer and the
Board of Directors (the "Board") and in compliance with all applicable laws and
the Company's Articles of Incorporation and Bylaws, and shall instruct and
require all those working with and under Employee to do the same. Employee's
employment hereunder shall be on a full-time basis and, except as permitted by
the prior written consent of the Board, Employee shall devote substantially all
of Employee's productive time, ability, and attention to the business of the
Company during the term of this Agreement. Unless otherwise consented to in
writing by Employee, Employee's permanent office location shall be in Orange
County, California.

        3. COMPENSATION.

            3.1 BASE SALARY. For Employee's services hereunder, the Company
shall initially pay the Employee an annual salary of $200,000 (the "Base
Salary"). The Base Salary shall be paid in accordance with the Company's normal
procedures for paying salaried employees.

            3.2 BASE SALARY INCREASES. The Base Salary shall be increased
effective as of the first of January of each year (the "Adjustment Date").



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            3.3 BONUSES. Employee shall receive a bonus for 1998 in the amount
of 15% of Employee's Base Salary. In the sole discretion of the Board or the
Executive Officers of the Company (the "Company's Management"), such bonus may
be increased. In subsequent years, no later than December 31st of each year,
Employee may receive discretionary bonuses, in the form of cash or property, as
determined by the Company's Management based on the earnings of the Company and
other criteria as determined by the Compensation Committee of the Board.
Employee's "target" for such discretionary bonuses shall, for purposes of
planning, be 25% of Employee's Base Salary. Any such bonuses shall be payable in
December or January, at the election of Employee.

            3.4 TAXES. All amounts paid to Employee hereunder shall be subject
to the applicable withholding of social security, federal, state, and other
taxes and deductions as required by law.

        4. BENEFITS.

            4.1 GROUP MEDICAL, DISABILITY, AND LIFE INSURANCE BENEFITS. During
the Term, if any such plans are in effect, Employee shall be eligible to
participate and the premiums shall be paid by the Company, in any group medical,
disability, and life insurance program as provided generally for employees of
the Company.

            4.2 VACATION. Employee shall be entitled to three weeks annual
vacation during the Term in accordance with the policies contained in the
Company's Corporate Employee Handbook. Time spent by Employee for required
classes or conferences for physician/executive certification will not be
considered vacation time for purposes of this Agreement.

            4.3 RETIREMENT PLANS. During the Term, if any such plans are in
effect, Employee shall be included in and able to participate in any retirement,
pension, or other deferred or supplemental compensation plans operated by the
Company including without limitation, the Company's 401K plan.

            4.4 STOCK OPTIONS. During the Term, Employee shall be eligible to
participate in any stock option plan instituted by the Company. Employee will
initially receive an option to purchase 30,000 shares of the common stock of
ARV, which option shall vest 20% per year beginning on the second anniversary of
this Agreement. The strike price for such initial option will be the market
closing price of the Company's stock as of the business day prior to the date
hereof.

        5. BUSINESS EXPENSES AND REIMBURSEMENT.

            5.1 BUSINESS EXPENSES. Employee shall be entitled to reimbursement
by the Company within ten (10) days following written request for any ordinary
and necessary business expenses incurred by Employee in the performance of
Employee's duties for an on behalf of the Company during the Term, including,
without limitation, the cost of entertainment, travel, lodging and meals. All
such written requests shall be deemed accepted and finally approved if the
Company does not contest any such request within sixty (60) days following
submittal to the Company.

            5.2 REIMBURSEMENT. Employee agrees that, if at any time after
Employee's receipt of a business expense reimbursement payment, an appropriate
taxing authority makes an Adverse Determination (as defined herein), Employee
shall reimburse the Company for the amounts subject to the Adverse
Determination. For the purposes of this Section, an "Adverse Determination"
means any determination by a taxing authority (not successfully appealed to or
overturned by a court) that an expense reimbursed to Employee under Section 5.1
hereof was either not: (i) substantiated as required by Section 274 of the
Internal Revenue Code of 1986, as amended (the "Code") and the regulations
promulgated thereunder; or (ii) a bona fide business expense of the Company.

        6. CONFIDENTIALITY. During the Term, Employee will have access to and
become acquainted with what Employee and the Company acknowledge are trade
secrets and other confidential information which are owned by the Company,
including, without limitation, any and all files, records, documents,
specifications, equipment, and similar items of or related to the Company, its
operations, and its business, whether prepared by Employee or otherwise coming
into Employee's possession (collectively, the "Information"). Employee shall not
disclose the Information, directly or indirectly, or use it in any way, during
the Term or thereafter except as required in the course of Employee's employment
with the Company.




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        7.  TERMINATION.

            7.1 TERMINATION AT WILL.

                7.1.1 BY THE COMPANY. Subject to Section 7.2 hereof, the Company
may terminate this Agreement at any time, for any reason, or for no reason,
either with or without cause, by delivering written notice to Employee.

                7.1.2 BY EMPLOYEE. Subject to Section 7.2 hereof, Employee may
terminate this Agreement at any time, for any reason, or for no reason, either
with or without cause, by delivering thirty (30) day's prior written notice to
the Company; provided, however, that the Company may reduce such thirty (30) -
day period in its sole discretion.

            7.2 SEVERANCE PAY.

                7.2.1 TERMINATION BY THE COMPANY WITHOUT CAUSE. If the Company
terminates Employee without cause (as defined below), in addition to payment of
Employee's Base Salary, accrued vacation and reimbursable expenses through the
date of termination, the Company shall pay to Employee upon such termination a
lump-sum amount equal to the remaining amount of Base Salary that would be paid
to Employee if employment continued through the end of the initial two-year term
of this Agreement. For the purposes of this Section 7.2.1, termination "without
cause" shall include termination by the Company for any reason other than if (a)
Employee willfully breaches any material provision of this Agreement or
habitually neglects Employee's duties; or (b) Employee is convicted of a felony.
In addition, Employee shall be deemed to be terminated by the Company if
Employee's title, responsibilities are changed and such change reduces
Employee's responsibility, authority or supervisory abilities within the
Company.

                7.2.2 VOLUNTARY TERMINATION BY EMPLOYEE. If Employee voluntarily
terminates Employee's employment with the Company, Employee shall not be
eligible to receive any severance pay as provided in Section 7.2.1 hereof.
Within ten (10) days following such termination, Employee shall be paid
Employee's Base Salary, accrued vacation and reimbursable expenses payable
through the date of the termination of Employee's employment. Termination by
Employee shall include the death or Disability (as defined herein) of Employee.
For the purposes of this Section, "Disability" shall mean any physical or mental
disability which causes Employee to be unable to substantially perform
Employee's normal duties as an employee of the Company; provided, however, that
Employee shall not be considered disabled until: (i) Employee has been so
disabled for one hundred eighty (180) days; (ii) Employee's attending physician
shall have furnished to the Company certification that the return of Employee to
his duties as an employee of the Company is impossible or improbable; and (iii)
Employee is determined to be totally disabled by the disability insurer then
insuring Employee, if any.

            7.3 CHANGE IN CONTROL. Notwithstanding anything to the contrary
contained in Section 7.2 hereof, following a change in the ownership, or
effective control of the Company or in the ownership of a substantial portion of
the Company's assets (any one of which shall be referred to herein as "Change in
Control"), in the event Employee's employment is terminated either voluntarily
or involuntarily within three (3) months of the Change in Control, the Company
shall immediately pay to Employee the Base Salary, Employee's accrued vacation
and reimbursable expenses through the date of Change in Control, and an amount
equal to two times the Base Salary (the "Change in Control Bonus"); provided,
however, that, if applicable, the amount of the Change in Control Bonus shall be
reduced so that no portion of the Change in Control Bonus shall be deemed to be
an "excess parachute payment" under Section 280G of the Internal Revenue Code of
1986, as amended, or any replacement statute. The determination of the existence
of an "excess parachute payment" shall be made by the Company's independent
accountants who prepare and file the federal income tax returns for the Company.
The Company shall pay the expenses incurred by such accountants pursuant to this
Section. In addition, any options to purchase the common stock of the Company
previously granted to Employee and not otherwise vested shall be fully vested as
of the date of the Change in Control. For the purposes of this Section: (i)
"change in the ownership of the Company" shall mean the date that any person or
persons acting as a group, acquires ownership of the capital stock of the
Company and the acquired capital stock together with capital stock held by such
person or group, gives the acquiring person or group possession of more than
fifty percent (50%) of the total fair market value or the total voting power of
the capital stock of the Company; (ii) "change in effective control of the
Company" shall mean that either: (A) any one person, or more than one person
acting as a group, would acquire (or had acquired during the twelve (12) - month
period ending on the date of the most recent acquisition by such person or
persons) ownership of the capital stock of the Company possessing fifty percent
(50%) or more of the total voting power of the capital stock of the Company; or
(B) a majority of the members of the Board was replaced during any twelve (12) -
month period by directors whose appointment or election was not endorsed by a
majority of the members of the Board prior to the date of such appointment or
election; and (iii) "change in ownership of a substantial portion of the
Company's assets shall mean 





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the date on which one person, or more than one person acting as a group, would
acquire (or had acquired during the twelve (12) - month period ending on the
date of the most recent acquisition by such person or persons) assets from the
Company that have a total fair market value equal to, or more than, thirty three
and one-third percent (33-1/3%) of the total fair market value of all of the
assets of the Company immediately prior to such acquisitions. All determinations
of the applicability of this Section shall be made consistent with the Proposed
Regulations Section 1.280G-1 promulgated by the Internal Revenue Service, or any
successor regulations.

            7.4  Term. THIS AGREEMENT SHALL COMMENCE UPON THE DATE HEREOF AND
SHALL CONTINUE IN FORCE FOR A PERIOD OF TWO YEARS OR UNTIL EITHER EMPLOYEE OR
EMPLOYER SHALL NOTIFY THE OTHER OF TERMINATION OF EMPLOYMENT PURSUANT TO SECTION
7.1 HEREOF.


            7.5 RETURN OF DOCUMENTS. Upon termination (voluntary or otherwise)
of this Agreement, Employee shall immediately deliver to the Company any and all
property, files, records and other documents in Employee's possession or under
Employee's control belonging to the Company, including all copies of such
documents and credit cards.

        8.  MISCELLANEOUS PROVISIONS.

            8.1 NOTICES. Except as otherwise provided in this Agreement, all
notices, requests, demands, and other communications under this Agreement shall
be given in writing and shall be served either personally, by facsimile or
delivered by first class mail, registered or certified, postage prepaid, and
properly addressed as follows:

            If to the Company:           ARV Assisted Living, Inc.
                                         245 Fischer Avenue, Bldg. D-1
                                         Costa Mesa, CA 92626-3545
                                         Attention:  Board of Directors
                                         Fax No. (714) 751-1743

            If to Employee:              Patricia J. Gifford, M.D.



            Notices shall be deemed received at the earliest of the actual
receipt, confirmed facsimile or three (3) days following mailing.

            8.2 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter contained
herein and supersedes all prior agreements, representations, and understandings
of the parties.

            8.3 ATTORNEY'S FEES. In the event of any proceeding arising out of
or related to this Agreement, the prevailing party shall be entitled to recover
all of its costs and expenses incurred in connection with such proceeding,
including, without limitation, court costs and reasonable attorney's fees,
whether or not such proceeding is prosecuted to judgment.

            8.4 AMENDMENTS. This Agreement may not be amended, supplemented,
canceled, or discharged except by written instrument executed by the parties
hereto.

            8.5 WAIVERS. All waivers hereunder shall be in writing. No wavier by
any party hereto of any breach or anticipated breach of any provision of this
Agreement by any other party shall be deemed a waiver of any other
contemporaneous, preceding, or succeeding breach or anticipated breach, whether
or not similar, on the part of the same or any other party.

            8.6 SEVERABILITY. In the event that any provision of this Agreement
shall be unenforceable or inoperative as a matter or law, the remaining portions
or provisions shall remain in full force and effect.

            8.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
representatives, executors, administrators, successors, and assigns; provided,
however, that Employee may not assign any or all of his rights or duties
hereunder except following the prior written consent of the Company.




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            8.8 COUNTERPARTS. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute one and the same Agreement.

            8.9 SECTION HEADINGS. The section headings used in this Agreement
are inserted for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.

            8.10 GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with the laws of the State of California.

            8.11 ADVICE OF COUNSEL. Employee acknowledges that Employee has been
advised to seek independent legal counsel for advice regarding the effect of the
terms and provisions hereof, and has either obtained such advice of independent
legal counsel, or has voluntarily and without compulsion elected to enter into
and be bound by the terms of this Agreement without such advice of independent
legal counsel.

            8.12 ARBITRATION. Any dispute arising out of or related to this
Agreement shall be submitted to arbitration in Orange County, California, before
a sole arbitrator selected from Judicial Arbitration and Mediation Services,
Inc., Orange County, California, or its successor ("JAM"), or if JAMS is no
longer able to supply the arbitrator, such arbitrator shall be selected from the
American Arbitration Association, and shall be conducted in accordance with the
provisions of California Code of Civil Procedure Section 1280 et seq. as the
exclusive remedy of such dispute; provided, however, that provisional injunctive
relief may, but need not, be sought in a court of law while arbitration
proceeding are pending, and any provisional injunctive relief granted by such
court shall remain effective until the matter is finally determined by the
Arbitrator. Final resolution of any dispute through arbitration may include any
remedy or relief which the Arbitrator deems just and equitable, including
permanent injunctive relief or specific performance, or both, and the Arbitrator
is hereby empowered to award such relief. Any award or relief granted by the
Arbitrator hereunder shall be final and binding on the parties hereto and may be
enforced by any court of competent jurisdiction.

        IN WITNESS WHEREOF, the parties hereto have duly executed this
Employment Agreement as of the date first above written.

                                        THE COMPANY
                                        -----------

                                        ARV ASSISTED LIVING, INC., a
                                        Delaware corporation


                                        By: /s/Howard G. Phanstiel
                                            ------------------------------------
                                            Howard G. Phanstiel
                                            Chairman and CEO


                                        EMPLOYEE
                                        --------

                                        /s/Patricia J. Gifford, M.D.
                                        ----------------------------------------
                                        Patricia J. Gifford, M.D.