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                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON D.C. 20549

                            ------------------------

                                   FORM 10-K

               ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
                        COMMISSION FILE NUMBER 000-22751

                            ------------------------

                          CONCENTRA MANAGED CARE, INC.

             (Exact name of Registrant as specified in its charter)

                  DELAWARE                             04-3363415
      (State or other jurisdiction of               (I.R.S. employer
       incorporation or organization)              identification No.)

   312 UNION WHARF, BOSTON MASSACHUSETTS                  02109
  (Address of principal executive offices)             (Zip code)

       Registrant's telephone number, including area code: (617) 367-2163

        Securities registered pursuant to Section 12(b) of the Act: None

    Securities registered pursuant to Section 12(g) of the Act: Common Stock

    Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/  No / /

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K /X/.

    The aggregate market value of the voting stock held by non-affiliates of the
Registrant totaled $1,082,718,910 (based on the closing price of the Company's
Common Stock on The Nasdaq National Market on March 16, 1998).

    As of March 16, 1997, the Registrant had outstanding an aggregate of
46,126,831 shares of its Common Stock, $.01 par value.

                      DOCUMENTS INCORPORATED BY REFERENCE

    Certain parts of the Registrant's 1997 Annual Report to Stockholders are
incorporated by reference into Part II and IV of this report.

    Certain parts of the Registrant's definitive Proxy Statement dated April 7,
1998 are incorporated by reference into Part III of this report.

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                          CONCENTRA MANAGED CARE, INC.
                                   FORM 10-K
                      FISCAL YEAR ENDED DECEMBER 31, 1997

                                     INDEX

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PART I

Item 1.     Business.......................................................................................          3

Item 2.     Properties.....................................................................................         26

Item 3.     Legal Proceedings..............................................................................         26

Item 4.     Submission of Matters to a Vote of Security Holders............................................         26

PART II

Item 5.     Market for Registrant's Common Equity and Related Stockholder Matters..........................         27

Item 6.     Selected Financial Data........................................................................         27

Item 7.     Management's Discussion and Analysis of Financial Condition and Results of Operations..........         27

Item 8.     Financial Statements and Supplementary Data....................................................         27

Item 9.     Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...........         27

PART III

Item 10.    Directors and Executive Officers of the Registrant.............................................         27

Item 11.    Executive Compensation.........................................................................         27

Item 12.    Security Ownership of Certain Beneficial Owners and Management.................................         27

Item 13.    Certain Relationships and Related Transactions.................................................         27

PART IV

Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K...............................         28
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                          FORWARD LOOKING INFORMATION

    This Report contains forward looking statements that involve risks and
uncertainties. Accordingly, no assurance can be given that the actual events and
results will not be materially different than the anticipated results described
in the forward looking statements. See "Item 1. Business--Competition" and "Item
1. Business--Risk Factors" for a description of various factors that could
materially affect the ability of the Company to achieve the anticipated results
described in the forward looking statements.

                                     PART I

ITEM 1.  BUSINESS

GENERAL

    Concentra Managed Care, Inc. (the "Company" or "Concentra")* is the leading
provider and comprehensive outsource solution for cost containment and fully
integrated care management for employers and payors in the occupational, auto
and group healthcare markets. The Company offers its comprehensive services to
employers, insurers and third-party administrators of all sizes. Concentra was
formed by the merger of OccuSystems, Inc. ("OccuSystems") and CRA Managed Care,
Inc., on August 29, 1997.

    The Company's continuum of services is comprised of three main categories:
(1) field case management, (2) specialized cost-containment services and (3)
health services. The Company's field case management organization consists of
1,350 field case managers in 130 offices in 49 states and the District of
Columbia, providing medical management and vocational rehabilitation services.
The Company's specialized cost-containment services, including first report of
injury services, utilization management, specialized preferred provider network
management, telephonic case management and medical bill review services, are
provided in 83 service locations in 49 states. Health services include primary
care services and preventive services including pre-employment testing and loss
prevention services, and are provided through 145 clinics located in 37 markets
in 20 states. Through the twelve months ended December 31, 1997, revenues from
field case management, specialized cost-containment services and health services
represented approximately 30%, 24% and 46% of total revenues, respectively.

INDUSTRY OVERVIEW

WORKERS' COMPENSATION

    Workers' compensation is a state-mandated, comprehensive insurance program
that requires employers to fund medical expenses, lost wages and other costs
resulting from work-related injuries and illnesses. Since their introduction in
the early 1900s, these programs have been expanded to all fifty states and the
District of Columbia. In addition, federal statutes provide workers'
compensation benefits for federal employees. Each state is responsible for
implementing and regulating its own program. Consequently, workers' compensation
benefits and arrangements vary on a state-by-state basis and are often highly
complex. According to statistics published in the 1998 Workers' Compensation
Year Book, total workers' compensation costs to employers in the United States
were estimated to be approximately $92 billion in 1996. While the industry is
fragmented with a large number of competitors in the various subsegments of
workers' compensation services, Concentra believes that it is the only
integrated provider of care management and cost-containment on a nationwide
basis.

    Workers' compensation legislation generally requires employers, directly or
indirectly through an insurance vehicle, to fund all of an employee's costs of
medical treatment and a significant portion of lost wages, legal fees and other
associated costs, with no co-payment or deductible due from the injured worker.
Typically, work-related injuries are broadly defined, and injured or ill
employees are entitled to extensive benefits. Employers are required directly or
indirectly to provide first-dollar coverage with no co-payment or deductible due
from the injured or ill employee for medical treatment and, in many states,

* "Concentra" is a registered service mark of Concentra Managed Care, Inc.

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there is no lifetime limit on expenses. However, in exchange for providing this
coverage for employees, employers are not subject to litigation by employees for
benefits in excess of those provided pursuant to the relevant state statute. In
most states, the extensive benefits coverage (for both medical costs and lost
wages) is provided through the purchase of commercial insurance from private
insurance companies, participation in state-run insurance funds or employer
self-insurance. In at least two states, employers are permitted to refrain from
purchasing or procuring any such insurance coverage, thereby exposing themselves
to significant potential liability as the result of an employee's work-related
injury or death. Such employers are sometimes termed "non-subscribers".

    Provider reimbursement methods vary on a state-by-state basis. A majority of
states have adopted fee schedules pursuant to which all health care providers
are uniformly reimbursed. The fee schedules are set by each state and generally
prescribe the maximum amounts that may be reimbursed for a designated procedure.
In states without fee schedules, health care providers are reimbursed based on
usual, customary and reasonable ("UCR") fees charged in the particular state in
which the services are provided. These fees are based on national data and are
adjusted geographically by zip code.

WORKERS' COMPENSATION MANAGED CARE SERVICES: FIELD CASE MANAGEMENT AND
  SPECIALIZED COST CONTAINMENT

    The workers' compensation managed care services market is served by the
Company and a small number of other competitors that offer a comprehensive line
of workers' compensation managed care services on a nationwide basis. A large
number of additional companies offer some managed care services on a limited
geographic basis. The result is a fragmented market with what the Company
believes is only a small number of companies offering a fully integrated and
comprehensive approach to managing workers' compensation costs on a nationwide
basis.

    Workers' compensation managed care services broadly fall into two
categories: field case management services and specialized cost containment
services. Field case management services involve working on a one-on-one basis
with injured employees and facilitating communication among their various health
care professionals, employers and insurance company adjusters. Field case
management services are designed both to assist in maximizing medical
improvement and, where appropriate, to expedite return to work. Specialized cost
containment services are designed to reduce the cost of workers' compensation
claims through a variety of techniques such as first report of injury services,
utilization management (precertification, concurrent review and retrospective
bill review), telephonic case management, Preferred Provided Organization
("PPO") network access, independent medical examinations ("IMEs"), peer reviews
and hospital bill auditing.

    Managed care techniques are intended to control the cost of health care
services and to measure the performance of providers through intervention and
on-going review of services proposed and actually provided. Managed care
techniques were originally developed to stem the rising costs of group health
medical care. Historically, employers were slow to apply managed care techniques
to workers' compensation costs primarily because the aggregate costs are
relatively small compared to costs associated with group health benefits and
because state-by-state regulations related to workers' compensation are far more
complex than those related to group health. However, in recent years, employers
and insurance carriers have been increasing their focus on applying managed care
techniques to control their workers' compensation costs.

    Since workers' compensation benefits are mandated by law and are subject to
extensive regulation, payors and employers do not have the same flexibility to
alter benefits as they have with other health benefit programs. In addition,
workers' compensation programs vary from state to state, making it difficult for
payors and multi-state employers to adopt uniform policies to administer, manage
and control the costs of benefits. As a result, managing the cost of workers'
compensation requires approaches that are tailored to the specific state
regulatory environment in which the employer operates. Many states do not permit

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employers to restrict a claimant's choice of provider, making it difficult for
employers to utilize managed care approaches characteristic of the group health
insurance market. However, employers in at least 35 states currently have the
right to direct employees to a specific primary health care provider during the
onset of a workers' compensation case, subject to the right of the employee to
change physicians after a specific period. Recently, a number of states have
adopted legislation encouraging the use of workers' compensation managed care
organizations ("MCOs") in an effort to allow employers to control their workers'
compensation costs. MCO laws generally provide employers an opportunity to
channel injured employees into provider networks. In certain states, MCO laws
require licensed MCOs to offer certain specified services, such as utilization
management, case management, peer review and provider bill review. Most of the
MCO laws adopted to date establish a framework within which a company such as
Concentra can provide its customers a full range of managed care services for
greater cost control.

GROUP HEALTH COST CONTAINMENT SERVICES

    The Company's recent acquisition of Preferred Payment Systems, Inc. ("PPS")
significantly expanded Concentra's current market presence in retrospective bill
review services for the group health marketplace. Through its comprehensive
portfolio of products, the Company reduces costs ordinarily payable on medical
bills submitted by healthcare providers and the administrative expense
associated with reviewing and analyzing medical bills. These services include
professional fee negotiation, line-item analysis, and other specialized audit
and bill review processes, as well as access to a nationwide PPO network.

WORKERS' COMPENSATION HEALTH SERVICES: OCCUPATIONAL HEALTHCARE

    The market to provide occupational healthcare services is highly fragmented.
Occupational healthcare care is largely provided by independent physicians, who
have experienced increasing pressures in recent years from cost containment
efforts, growing regulatory complexity, medical liability concerns and increased
competition. Although risk sharing programs have yet to become a major factor in
occupational healthcare, the Company anticipates that such programs, including
capitation plans (i.e., plans that charge fees on a per capita basis, regardless
of services provided) and case rate plans (i.e., plans that charge fees on a per
diagnosis basis), may play an increasing role in the delivery of occupational
healthcare services. In addition, the Company anticipates that competition in
the occupational healthcare industry may shift from individual practitioners to
specialized provider groups, such as those managed by the Company, insurance
companies, health maintenance organizations ("HMOs") and other significant
providers of managed care products.

    Occupational healthcare consists of two primary components: (i) workers'
compensation injury care and related services; and (ii) non-injury healthcare
services related to employer needs or statutory requirements.

INJURY CARE

    Due to several factors, including a general rise in the cost of occupational
healthcare and the requirement that employers pay the majority of lost wages and
all compensable medical and non-medical costs of their employees, the dollar
amount of workers' compensation claims has increased significantly in recent
years, resulting in escalating costs to employers. The Company anticipates that
employers' direct costs of workers' compensation will continue to escalate
primarily because of broader definitions of work-related injuries and illnesses
covered by workers' compensation laws, the shifting of medical costs from group
health plans to the workers' compensation system, an aging work force and, most
importantly, the absence of comprehensive cost containment programs (such as
those that encourage early return-to-work and limited duty) that are necessary
to reduce the non-medical costs associated with workers' compensation. As
workers' compensation costs escalate, the Company expects that employers will
continue to seek and implement strategies and programs to reduce workers'
compensation costs and to improve worker productivity, health and safety.

                                       5
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    Reimbursement to healthcare providers is determined by a number of different
methods in states where employers obtain workers' compensation insurance
coverage. As of December 31, 1997, 41 states had adopted fee schedules pursuant
to which all healthcare providers are uniformly reimbursed. These fee schedules
are set by each state and generally prescribe the maximum amounts that may be
reimbursed for a designated procedure. In states without fee schedules,
healthcare providers are reimbursed based on usual and customary fees charged in
the particular market for the services provided. Of the 21 states in which the
Company operates occupational healthcare clinics, 16 have fee schedules.

    Limitations on an employee's right to choose a specific healthcare provider
is dependent upon the particular state statute. According to the Workers'
Compensation Research Institute, as of December 31, 1996, 24 states limited the
employee's choice of provider and 36 states placed restrictions on switching
providers, including provisions requiring employer approval for any changes.
Generally, the employer will also have the ability to direct the employee when
the employer is self-insured or a non-subscriber. The Company believes that
employers greatly influence their employees' choices of physicians even in
states in which the employees may select their providers. As a result, it has
been the Company's experience that its results of operations and prospects in a
particular state are not materially dependent upon state statutes regarding
direction of employees.

NON-INJURY HEALTHCARE SERVICES

    Non-injury healthcare services provided by the Company include
employment-related physical examinations, drug and alcohol testing, functional
capacity testing and other related programs designed to meet specific employer
needs. Non-injury healthcare services also include programs to assist employers
in complying with a continuously expanding list of federal and state
governmental requirements, including hearing conservation programs, toxic
chemical exposure surveillance and monitoring programs, and Department of
Transportation and Federal Aviation Administration physical examinations.
Federal laws governing health issues in the workplace, including the Americans
with Disabilities Act (the "ADA"), have increased employers' demand for
healthcare professionals who are experts in the delivery of these regulated
services.

CONCENTRA'S BUSINESS STRATEGY

    The Company's objective is to expand and capitalize on its presence as a
national provider of fully-integrated care management and cost-containment
services. Concentra's strategy is to (i) leverage its national organization and
local market presence to expand its relationship with national payors who are
increasingly seeking national solutions to their workers' compensation, group
health and auto-injury needs; (ii) capitalize on its customer base by
cross-selling case management, cost-containment and health services to its
existing customers; (iii) continue to consolidate physician practices
specializing in occupational medicine; (iv) further develop and affiliate with
vertically integrated networks of providers, including specialists and
hospitals; (v) continue to streamline patient care, client communication and
claims resolution through the use of information technology; and (vi) expand its
product offerings and enhance opportunities for growth through additional
strategic acquisitions.

    The Company will seek to implement this strategy as follows:

CONTINUED FOCUS ON WORKERS' COMPENSATION MANAGED CARE

    The Company continually seeks to continue its primary focus on providing
workers' compensation managed care services to workers' compensation insurers,
TPAs and self-insured employers. The Company believes that to serve this complex
market, a core understanding of medical-related issues, a thorough understanding
of return to work issues and techniques, and an in-depth understanding of the
state-by-state regulatory environment is required. Concentra has developed such
expertise through its years of serving this market. Concentra believes it can
leverage its expertise through 19 years of experience serving this

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market through its predecessors CRA and OccuSystems as a highly skilled provider
of workers' compensation managed care services to further expand its national
market presence and increase its market share.

INCREASE GROUP HEALTH COST CONTAINMENT PENETRATION

    The Company will further expand its reach into the group health marketplace
by offering new and existing customers a comprehensive retrospective bill
auditing service which will help such customers contain costs related to
out-of-network group health charges. Through its newly acquired subsidiary, PPS,
Concentra is uniquely positioned to capitalize upon the experience gained
through its purchase and successful operation of Prompt Associates since October
1996.

INCREASE NATIONAL ACCOUNTS PENETRATION

    The Company is working to increase its penetration of large, national payors
by leveraging its broad-based workers' compensation expertise and its experience
with its existing base of national accounts. Many large, national insurance
carriers and self-insured employers are seeking workers' compensation managed
care service providers that have the ability to provide services on a nationwide
basis. These large payors want a comprehensive solution to their workers'
compensation needs from a service provider that is adept at understanding and
working with many different and complex state legislative environments. The
Company's national organization of local service locations enables the Company
to meet the needs of these large, national payors while maintaining the local
market presence necessary to monitor changes in state-specific regulations and
to facilitate case resolution through locally provided managed care services.

CROSS-SELL COMPREHENSIVE PRODUCT OFFERING

    The Company is positioned to capitalize on the relationships developed
through its 130 office field case management network by aggressively
cross-selling its specialized cost containment services to its existing customer
base. Concentra believes that it is one of a small number of companies with a
comprehensive offering of workers' compensation managed care services. The
Company complements its extensive field case management network with 83 service
locations nationwide that provide one or more specialized cost containment
services. Of the Company's approximately 1,250 case management customers, only
approximately 20% are also utilizing the Company's specialized cost containment
services. The Company believes that this low utilization rate among Concentra's
existing customers provides a significant opportunity to expand Concentra's
specialized cost containment business.

EMPHASIZE EARLY INTERVENTION

    The Company intends to increase its marketing of early intervention
services, such as first report of injury, precertification, telephonic case
management and access to PPO networks. Early intervention enables the Company to
promptly identify cases that have the potential to result in significant
expenses and to take appropriate measures to control these expenses before they
are incurred. In addition, the Company believes that providing early
intervention services generally results in the Company obtaining earlier access
to claims files, thereby improving the Company's opportunity to provide the full
range of its managed care services.

LEVERAGE MANAGED CARE EXPERTISE TO AUTOMOBILE INSURANCE MARKET

    The Company intends to capitalize on the recent introduction of managed care
techniques to the automobile insurance market. Concentra intends to leverage its
existing presence in the automobile insurance market and its existing office
infrastructure to efficiently expand the geographic coverage of automobile
managed care services.

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CONTINUE TO CONSOLIDATE PHYSICIAN PRACTICES SPECIALIZING IN OCCUPATIONAL
  MEDICINE

    The Company estimates that there are more than 2,000 healthcare centers in
the United States in which physicians who specialize in occupational medicine
are providing occupational healthcare services. The Company believes that, due
to increasing business and regulatory complexity, capital requirements and the
development of larger integrated networks such as the Company's, an increasing
number of physicians are seeking to affiliate with larger, professionally
managed organizations. The Company has established affiliations with more than
261 physicians and intends to move aggressively to establish additional
affiliations.

DEVELOP CLUSTERS OF OCCUPATIONAL HEALTHCARE CENTERS

    The Company organizes its centers in each market into clusters to serve
employers, payors and workers more effectively, to leverage management and other
resources and to facilitate the development of integrated networks of affiliated
physicians and other healthcare providers. The Company has entered into five
joint venture agreements through which it operates 15 centers and two management
agreements through which it operates five centers. The Company intends to
develop additional centers in new markets and within existing markets primarily
through acquisitions, joint ventures and management agreements. The Company is
in discussions with numerous potential acquisition and joint venture candidates
and is planning the development of several other centers.

DEVELOP AND AFFILIATE WITH VERTICALLY INTEGRATED NETWORKS OF PROVIDERS

    The Company is positioning its centers to operate successfully within
emerging models of healthcare payment and delivery by actively developing and
affiliating with vertically integrated networks of specialists, hospitals and
other healthcare providers. These networks are designed to provide quality care
to patients at substantially reduced costs. With these networks, the Company
believes that it can cost-effectively develop risk sharing programs, such as
case rate and capitation products, covering the full range of costs associated
with work-related injury and illness care.

EMPLOY ITS INFORMATION SYSTEMS AND ITS REGULATORY AND PRACTICE MANAGEMENT
  EXPERTISE TO OPTIMIZE THE PERFORMANCE OF ITS CENTERS AND ENHANCE ITS
  AFFILIATED PHYSICIANS' PRACTICES

    The Company's extensive proprietary knowledge base and information systems
relating to workplace injuries, treatment protocols, outcomes data and the
workers' compensation system enhance the Company's ability to furnish
high-quality, efficient healthcare services while complying with the complexity
of regulations governing the occupational healthcare system. Furthermore, it is
the Company's strategy to use its knowledge base and information systems to
continue to expand its non- injury care services. The Company's expertise also
allows it to efficiently run all business aspects of center operations,
including billing and collection, accounting, tax and financial management,
marketing, human resource and real estate management, enabling its affiliated
physicians to focus on the practice of medicine.

INNOVATIVE REIMBURSEMENT PROGRAMS

    Utilizing its proprietary information systems, the Company has developed an
extensive data base of clinical outcomes, established case rates by diagnosis
and conducted the risk analysis necessary to create and offer services on a case
rate and capitated basis. The Company is expanding its marketing of such
services to employers, insurers and managed care organizations and is working
with insurers and other payors to develop other innovative reimbursement
programs.

EXECUTE OTHER STRATEGIC ACQUISITIONS

    The Company will continue to seek other complementary strategic acquisitions
to further expand its product offerings and enhance its opportunities for
growth. While the Company currently maintains a

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broad offering of services, the evolution of the marketplace may give rise to
opportunities in the workers' compensation, group health and related industries.

SERVICES AND OPERATIONS

    Concentra's services include a full continuum of care management and cost
containment services.

FIELD CASE MANAGEMENT SERVICES

    Concentra provides field case management services to the workers'
compensation insurance industry through case managers working at the local level
on a one-on-one basis with injured employees and their various health care
professionals, employers and insurance company adjusters. The Company's services
are designed to assist in maximizing medical improvement and, where appropriate,
to expedite the employees' return to work through medical management and
vocational rehabilitation services.

    Concentra's field case management services consist of one-on-one management
of a work-related injury by the Company's approximately 1,350 field case
managers serving 49 states and the District of Columbia from Concentra's 130
local field case management offices. This service typically involves a case with
a significant potential or actual amount of lost work time or a catastrophic
injury that requires detailed management and therefore is referred out by the
local adjuster to the local Concentra marketer calling on that office. Concentra
field case managers specialize in expediting the injured employee's return to
work through both medical management and vocational rehabilitation by working
with all the interested parties in a work-related injury. Medical management
services provided by Concentra's field case managers include coordinating the
efforts of all the health care professionals involved and increasing the
effectiveness of the care being provided by encouraging compliance and active
participation on the part of the injured worker. Vocational rehabilitation
services include job analysis, work capacity assessments, labor market
assessments, job placement assistance and return to work coordination. Field
case management services represented approximately 38%, 34% and 30% of the
Company's revenues for the years ended December 31, 1995, 1996, and 1997,
respectively.

    The Company believes that the following factors will contribute to the
continued growth of its field case management services: (i) increased employer
acceptance of field case management techniques due to greater exposure to the
workers' compensation managed care market; (ii) earlier identification of
individuals in need of field case management services due to increased
utilization of the Company's specialized cost containment services, particularly
early intervention services; (iii) increased market share at the expense of
smaller, undercapitalized competitors; and (iv) the ability to access national
accounts for use of case management services.

SPECIALIZED COST CONTAINMENT SERVICES

    In 1990, as part of the Company's strategy of providing a comprehensive
range of services, Concentra began broadening its business by providing a number
of additional services focused directly on helping to reduce the medical and
lost wages indemnity costs associated with workers' compensation for its
clients. Today, these specialized cost containment services include first report
of injury service, utilization management (precertification, concurrent review
and retrospective bill review), telephonic case management, PPO network access,
IMEs, peer reviews and hospital bill auditing. By adding these services to
Concentra's traditional strength and national breadth in field case management,
the Company now offers its clients an integrated workers' compensation managed
care program. Concentra is able to offer its services on a combined basis as a
full service managed care program, beginning with the first report of injury and
including all managed care services needed to manage aggressively the medical
costs, temporary wage replacement payments and permanent disability payments
associated with a work-related injury. Concentra also offers each of its
services on an unbundled basis. Concentra's comprehensive approach to managing
workers' compensation costs serves the needs of a broad range of clients, from
local adjusters to national

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accounts. In addition to providing specialized cost containment services for
work-related injuries and illnesses, the Company also provides similar services
to payors of automobile accident medical claims and social security disability
advocacy services to payors of long term disability. Specialized cost
containment services collectively represented approximately 14%, 17% and 24% of
the Company's revenues for the fiscal years ending December 31, 1995, 1996 and
1997, respectively.

    The Company believes that the demand for specialized cost containment
services will continue to increase due to a number of factors, including: (i)
the increasing payor awareness of the availability of these techniques for cost
containment and case management; (ii) the perceived effectiveness of managed
care techniques at reducing costs for group health insurance plans; (iii) the
verifiable nature of the savings that can be obtained by application of
specialized cost containment techniques applicable to workers' compensation; and
(iv) the broad applicability of these techniques to all injured employees, not
just severely injured employees likely to be absent from work.

    FIRST REPORT OF INJURY SERVICE.  The Company provides a computerized first
report of injury reporting service through two national call centers to which an
employer or claims adjuster phones in all injuries as soon as they occur to the
Company's centralized service center. Through its June 1997 acquisition of First
Notice Systems, Inc. ("FNS"), the Company significantly expanded this capability
through the addition of two national call systems. Each report is electronically
transferred or mailed to the state agency, the employer and the insurance
company. This service assists in the timely preparation and distribution of
state-mandated injury reports and also provides Concentra and its customers with
an early intervention tool to maximize control over workers' compensation
claims. Concentra now has the ability to provide outsourced call center
reporting for first notice of injury/loss to the insurance industry. FNS
provides its services primarily to the auto industry for first notice of loss
reporting and to workers' compensation carriers for first report of injuries
reporting with property casualty carriers that write both auto and workers'
compensation insurance.

    UTILIZATION MANAGEMENT: PRECERTIFICATION AND CONCURRENT REVIEW.  Concentra's
precertification and concurrent review services are used by clients to ensure
that certain medical procedures are precertified by a Concentra registered nurse
and/or physician for medical necessity and appropriateness of treatment before
the medical procedure is performed. Concentra's determinations represent only
recommendations to the customer, the ultimate decision to approve or disapprove
the request is made by the claims adjuster. Precertification calls are made by
either the claimant or the provider to one of Concentra's national utilization
management reporting units. Once a treatment plan has been precertified, a
Concentra employee performs a follow-up call (concurrent review) at the end of
an approved time period to evaluate compliance and/or discuss alternative plans.

    UTILIZATION MANAGEMENT: RETROSPECTIVE BILL REVIEW.  Through a sophisticated
software program, Concentra reviews and reduces its customers' medical bills
(including hospital bills) to either the various state-mandated fee schedules
for workers' compensation claims or a percentage of the UCR rates that exist in
non-fee schedule states. Additionally, this automated retrospective bill review
service enables clients to access certain PPO pricing schedules that represent
additional savings below the fee schedules or UCR rates. The savings that accrue
to Concentra's clients for this service can be significant. Retrospective bill
review also creates an important historical database for provider practice
patterns and managed care provider compliance requirements. Concentra provides
retrospective bill review service from 43 service locations throughout the
country, 20 of which are operated at a client location using Concentra
employees. The Company also establishes arrangements that enable customers to
run the retrospective bill review service in-house by their own employees.

    ACCESS TO PREFERRED PROVIDER NETWORKS.  Concentra provides its clients with
access to PPO networks within all the markets Concentra serves through one of
its own PPOs, including its recently acquired Focus subsidiary, or by
contracting with existing national or regional PPOs. These PPOs provide injured
workers with access to quality medical care and pre-negotiated volume discounts,
thereby offering Concentra's

                                       10
<PAGE>
clients the ability to influence, or in certain states to direct, their
employees into the PPO network as a means of managing their work-related claims.
In addition to providing a vehicle for managing the workers' compensation
process, the discounts associated with these PPO arrangements generate
additional savings through the retrospective bill review program described
above. Focus' national network includes approximately 201,000 individual
providers and 3,041 hospitals covering 36 states and the District of Columbia.

    TELEPHONIC CASE MANAGEMENT.  This service provides for short-duration (30 to
60 days) telephonic management of workers' compensation claims. The telephonic
case management units accept first reports of injury, negotiate discounts with
hospitals and other providers, identify care alternatives and work with injured
employees to minimize lost time on the job. Each of the telephonic case
management units is staffed with nurses who are experienced in medical case
management. The telephonic case management units represent an important
component of early intervention and act as a referral source of appropriate
cases to Concentra's local field case management offices. This service is
offered from five locations across the country.

    INDEPENDENT MEDICAL EXAMS.  IMEs are provided to assess independently the
extent and nature of an employee's injury or illness. Concentra provides its
clients with access to independent physicians who perform the IMEs from 16 of
the Company's service locations and, upon completion, prepare reports describing
their findings.

    PEER REVIEWS.  This service is provided by a physician, therapist,
chiropractor or other provider who reviews medical files to confirm that the
care being provided appears to be necessary and appropriate. The reviewer does
not meet with the patient, but merely reviews the file as presented.

    HOSPITAL BILL AUDITS.  This service is provided by the Company's registered
nurses who review hospital bills for appropriateness, relatedness and medical
necessity. The nurse may subsequently negotiate fees and obtain discounts for
prompt payment or inappropriate charges. Through its recently announced
acquisition of PPS, the Company has further expanded its client base for
hospital bill audits to include the group health payor community. PPS is a
leading provider of out-of-network bill review services to the group health
payor community. These services reduce clients' costs by utilizing the Company's
team of negotiators and proprietary data base systems to reprice inpatient
hospital and outpatient facility bills on a line-by-line basis. Such bills are
repriced to either a usual and customary rate, a PPO contract rate, or a
combination thereof. PPS provides these services nationwide through its offices
in three states. Concentra has created a data base over the past seven years
from the details of inpatient hospital and outpatient facility bills from across
the country which has allowed it to standardize a high percentage of hospital
charge codes for a significant number of such institutions.

    AUTOMOBILE INSURANCE MANAGED CARE.  The Company offers an integrated service
to the automobile insurance market that permits insurers to direct automobile
accident victims into networks of medical providers. The Company currently
offers this integrated service in Colorado, New York and Hawaii and has produced
significant savings for its insurance company clients since the initiation of
its services. Services offered to the automobile insurance market include
precertification, telephonic case management, direction of injured persons into
specialized PPO networks, medical bill review and field case management.

OCCUPATIONAL HEALTHCARE SERVICES

    Due to increasing financial, administrative, regulatory and legal burdens
associated with the practice of medicine in the emerging managed care
environment, many physicians are seeking alternative practice models such as
large group practices. The Company seeks to provide the necessary business
support services to enable physicians to focus on the medical rather than the
business aspects of their practices. The Company provides a wide array of
business services with which the Company is affiliated (the "Physician Groups"),
such as providing nurses and other medical support personnel, practice and
facilities

                                       11
<PAGE>
management, billing and collection, accounting, tax and financial management,
human resource management, risk management, marketing and information-based
services such as process management and outcomes analysis. As another service to
the Physician Groups, the Company recruits physicians, nurses, physical
therapists and other healthcare providers.

    Physician and physical therapy services are provided at the Company's
occupational healthcare centers under agreements with the Physician Groups,
which are independently organized professional corporations that hire licensed
physicians and physical therapists to provide medical services to the centers'
patients. The management agreements between the Company and the Physician Groups
with respect to the 261 affiliated physicians have 40-year terms. Pursuant to
each management agreement, receivables are collected by the Company on behalf of
the Physician Groups. The Company advances funds for payment of each Physician
Group's expenses, including salaries, shortly after services are rendered to
patients. Under the terms of each management agreement, the Company provides
each Physician Group with most non-physician support and all facilities,
supplies and marketing services necessary for the Physician Group to render
services to the centers' patients. For those services, the Company receives a
management fee based on a portion of cash receipts from all medical services
generated by the Physician Group. The management fee is subject to renegotiation
and may be adjusted from time to time to reflect industry practice, business
conditions and actual expenses for administrative discounts and bad debts. The
Company provides services to the Physician Groups as an independent contractor
and is responsible only for the non-medical aspects of the Physician Groups'
practices. The Physician Groups retain sole responsibility for all medical
decisions.

    Individual physicians who perform services pursuant to contracts with a
Physician Group are employees of the Physician Group. The physicians providing
services for the Physician Groups do not maintain other practices. The owners of
the Physician Groups are physicians, and each Physician Group has a physician
medical director. It is the responsibility of the owners of the Physician Group
to hire and manage all physicians associated with the Physician Group and to
develop operating policies and procedures and professional standards and
controls. Pursuant to each management agreement, the Physician Group indemnifies
the Company from any loss or expense arising from acts or omissions of the
Physician Group or its professionals or other personnel, including claims for
malpractice.

OCCUPATIONAL HEALTHCARE CENTERS

    The Company's 145 occupational healthcare centers provide treatment for
work-related injuries and illnesses, physical and rehabilitation therapy,
preplacement physical examinations and evaluations, case management, diagnostic
testing, drug and alcohol testing and various other employer-requested or
government-mandated occupational health services. During the twelve months ended
December 31, 1997, 52% of all patient visits to the Company's centers were for
the treatment of injuries or illnesses and 48% were for physical examinations
and other non-injury occupational medical services.

    Preplacement physical examinations and drug and alcohol testing are most
frequently conducted on a walk-in basis but may be scheduled in advance. More
specialized services, such as audiogram testing or pulmonary function testing,
are usually scheduled in advance. Employees suffering from work-related injuries
or illnesses are treated on an urgent basis. The most common treatments to
employees are for soft tissue injuries, lacerations (including tendon repairs),
moderate trauma injuries to the spine or extremities, and exposure to hazardous
material.

    Each of the Company's centers is staffed with at least one licensed
physician who is an employee of a Physician Group and at least one licensed
physical therapist. The licensed physicians are generally trained and
experienced in occupational and industrial medicine or have emergency, family
practice, internal medicine or general medicine backgrounds. Most centers
utilize a staff of between 10 and 15 full-time persons (or their part-time
equivalents), including licensed physicians, nurses, licensed physical
therapists and administrative support personnel.

                                       12
<PAGE>
JOINT VENTURES AND MANAGEMENT AGREEMENTS

    The Company's strategy is to continue to develop clusters of occupational
healthcare centers in new and existing geographic markets through the formation
of strategic joint ventures in addition to the acquisition and development of
physician practices. In selected markets in which a hospital management company,
hospital system or other healthcare provider has a significant presence, the
Company may focus its expansion efforts on the establishment of joint ventures
or management contracts. In its joint venture relationships, the Company
typically acquires a majority ownership interest in the venture and agrees to
manage the venture for a management fee based on net revenues. Effective May 1
1997, the Company formed a joint venture with Pinnacle Health Hospitals and
Community General Osteopathic Hospital to operate occupational healthcare
centers in the Harrisburg, Pennsylvania, area. Also effective May 1, 1997, the
Company formed a joint venture with St. Vincent Infirmary Medical Center to
operate occupational healthcare centers in the Little Rock, Arkansas, area. In
addition, the Company operates joint ventures in Tucson, Arizona with El Dorado
Hospital and Medical Center (owned by Columbia/HCA Healthcare Corporation, in
Oklahoma City, Oklahoma with INTEGRIS Ambulatory Care Corporation, and in Des
Moines, Iowa, with Mercy Clinics, Inc., an affiliate of Mercy Hospital System.
The Company is currently in negotiations with other joint venture candidates in
certain other markets. The Company currently manages four centers in Dade and
Broward Counties, Florida through a management agreement with Palmetto General
Hospital, an affiliate of Tenet Health System, and one center in Fargo, North
Dakota through an agreement with a physician group. See "Risk
Factors--Dependence on Future Acquisitions and Joint Ventures."

OTHER ANCILLARY PROGRAMS

    The Company offers other ancillary programs as discussed below. It has been
the Company's experience that, by offering a full range of programs to
complement its core occupational healthcare and care management operations, it
strengthens its relationships with existing clients and increases the likelihood
of attracting new clients. The Company anticipates expanding its ancillary
programs as needed to address occupational legislation and regulations enacted
in the future.

    COMPLIANCE WITH ADA.  The ADA is a federal statute that generally prohibits
employers from discriminating against qualified disabled individuals in the
areas of the job application process, hiring, discharge, compensation and job
training. The ADA became effective July 26, 1992, for employers with more than
25 employees, and now applies to all employers with 15 or more employees. The
Company, through its "ADApt Program," assists employers with ADA compliance
issues by proactively addressing ADA requirements relating to job descriptions,
pre-placement physical examinations, analysis and compliance and confidentiality
of applicant/employee information. ADApt helps employers adapt their hiring and
termination procedures, job descriptions and injury/illness management programs
in order to comply with ADA guidelines.

    RISK ASSESSMENT AND INJURY PREVENTION PROGRAMS.  The Company assists clients
in reducing workplace injuries and illnesses through its on-site risk assessment
and injury prevention programs. These programs include identifying workplace
hazards, designing plant-specific safety programs and helping clients comply
with federal and state occupational health regulations. The Company also
provides ongoing educational programs for its clients.

CUSTOMERS

    Concentra has over 1,250 managed care services customers across the United
States and Canada, including most of the major underwriters of workers'
compensation insurance, large TPAs and self-insured employers. The Company's
largest managed care services customer in 1997 accounted for approximately 3.4%
of total managed care services revenue and 1.8% of total Company revenue. The
Company is

                                       13
<PAGE>
compensated primarily on a fee-for-service basis. The Company's occupational
healthcare centers currently serve more than 70,000 employers, ranging from
large corporations to businesses with only a few employees. Due to the nature of
its business, the Company's marketing efforts are primarily directed toward
employers with a significant number of employees. Business derived from
employees of companies with 50 or less employees is generally due to an
occupational healthcare center's location, name recognition, quality service and
convenience.

    Although the Company has entered into written agreements with certain of its
customers from time to time, it has not been the Company's historical practice
to enter into written agreements with its customers. Accordingly, the Company's
customers generally can elect to terminate their relationships with the Company
on short notice.

SALES AND MARKETING

    The Company actively markets its services primarily to workers' compensation
insurance companies, third party administrators ("TPAs") and employers and
employer groups. The Company also markets to the automobile insurance market,
group health and long-term disability marketplaces, but to a significantly
lesser degree. The Company's marketing organization includes over 250 full-time
sales and marketing personnel. While the majority of Concentra's current managed
care services business is generated from workers' compensation insurance
companies, self-insured employers (often in connection with a TPA) also have
been an important source of business and the Company believes they will likely
become more important in the future as larger corporations continue to evaluate
self-insuring their workers' compensation programs.

    Marketing of Concentra's services occurs at both the local insurance company
adjuster and employer level for much of the field case management and
occupational healthcare center business as well as the corporate level for
national managed care accounts and self-insured corporations where a more
sophisticated sales presentation is required. The Company's local marketing has
been a critically important component of the Company's marketing strategy
because of the decision-making authority that resides at the local level and the
relationship-driven nature of that portion of the business. However, with the
advent of comprehensive managed care legislation, a more proactive environment
for workers' compensation change and a more sophisticated product offered by
Concentra, the Company will continue to focus on the marketing of national
headquarters offices of insurance companies and self-insured companies.
Concentra has a dedicated staff of national accounts salespeople responsible for
marketing and coordinating a full selection of services to corporate offices. In
addition, the Company periodically distributes follow-up questionnaires to
employers and patients to monitor and enhance medical care and service
satisfaction levels.

QUALITY ASSURANCE

    The Company regularly evaluates its quality of service delivery by means of
audits of compliance with special instructions, completion of activities in a
timely fashion, quality of reporting, identification of savings, accuracy of
billing and professionalism in contacts with health care providers and the
effectiveness of the Company's services. Audits are conducted on a nationwide
basis for a particular customer or on a local office basis by selecting random
files for review. A detailed report is generated outlining the audit findings
and providing specific recommendations for service delivery improvements. When
appropriate, follow-up audits are conducted to ensure that recommendations from
the initial audit have been implemented.

                                       14
<PAGE>
COMPETITION

MANAGED CARE SERVICES

    The managed care services market is fragmented, with a large number of
competitors. Concentra competes with numerous companies, including national
managed care providers, insurance companies, and Health Maintenance
Organizations ("HMOs"). Concentra's primary competitors are companies that offer
one or more workers' compensation managed care services on a national basis. The
Company also competes with numerous smaller companies which generally provide
unbundled services on a local level where such companies often have a
relationship with a local adjuster. Several large workers' compensation
insurance carriers offer managed care services for their insurance customers
either through the insurance carrier's own personnel or by outsourcing various
services to providers such as Concentra. The Company also competes to some
degree with large HMOs, which, Concentra believes, have historically focused
their networks primarily on controlling health care costs rather than managing
the process of returning an injured employee to work.

    The Company believes that, as managed care techniques continue to gain
acceptance in the workers' compensation marketplace, Concentra's competitors
will increasingly consist of nationally focused workers' compensation managed
care service companies, insurance companies, HMOs and other significant
providers of managed care products. Many of the Company's current and potential
competitors are significantly larger and have greater financial and marketing
resources than those of the Company.

    Within the past few years, several states have experienced decreases in
workers' compensation insurance premium rates. The Company believes that managed
care and return to work services will continue to be necessary in the future to
sustain and increase workers' compensation cost savings.

    The Company competes on the basis of its specialized knowledge and expertise
in the workers' compensation managed care services industry, effectiveness of
services, ability to offer a range of services in multiple markets, information
systems and price.

OCCUPATIONAL HEALTHCARE SERVICES

    The market to provide healthcare services within the workers' compensation
system is also highly fragmented and competitive. The Company's competitors have
typically been independent physicians, hospital emergency departments and
hospital medical centers. The Company believes that, as integrated networks are
developed, its competitors will increasingly consist of specialized provider
groups, insurance companies, HMOs and other managed care providers.

    The Company competes on the basis of its specialization in the occupational
healthcare industry, knowledge and expertise, effectiveness of services, ability
to offer services in multiple markets and information systems. The Company
believes that it has a unique competitive advantage by specializing in and
focusing on occupational medicine at the primary care provider level, which is
the entry point to the occupational healthcare delivery system.

    The recruiting of physicians, nurses, physical therapists and other
healthcare providers can be competitive, although the Company has experienced
less difficulty in recruiting as the Company has grown and its reputation has
developed. The loss of services provided by physicians, other providers or
physical therapists for an extended period of time, or the inability to attract
such individuals, could have an adverse effect on the Company's business.

INFORMATION SERVICES

    The Company has developed proprietary management and patient billing
information systems to monitor and process each case that the Company manages
and to administer a significant portion of the Company's receivables. The
Company also uses licensed software from national vendors to maintain its

                                       15
<PAGE>
financial records and perform other general business. As part of these systems,
the Company employs a personal computer network to transmit patient and billing
information from certain of its centers via a telecommunications network to the
Company's various central business offices. The Company employs a Chief
Information Officer who evaluates the Company's current systems and prospective
business information needs and whose staff refines and enhances the systems to
address changing information requirements.

    The Company is currently establishing a wide area network ("WAN") in each
market in which it provides occupational healthcare services. All occupational
healthcare centers in a market will utilize a patient administration system
(called "OccuSource-SM-") which runs on a client/server architecture allowing
each center to access and share a common database for its market. The database
contains employer protocols, patient records and other information regarding the
Company's operations in such market. Creating a WAN in each market allows the
centers in the market to share information and thereby improve center and
physician efficiencies and enhance customer service. The Company is linking each
market WAN into a nationwide WAN in order to create a centralized repository of
Company data to be used, among other things, for clinical outcomes analysis. The
Company believes that its commitment to continued development of its information
services provides a unique and sustainable competitive advantage within the
occupational healthcare industry.

GOVERNMENT REGULATION

GENERAL

    As a provider of care management and cost containment services, the
Company's operations and relationships are subject to extensive and increasing
regulation by a number of governmental entities at the federal, state and local
levels. The Company is also subject to laws and regulations relating to business
corporations in general.

    Laws and regulations affecting the Company's operations fall into five
principal categories: (i) workers' compensation laws that restrict the methods
and procedures that the Company may employ in its workers' compensation managed
care programs or require licensor, certification or other approval of such
programs; (ii) laws that require licensing, certification or other approval of
businesses, such as the Company, that provide medical review services; (iii)
laws regulating the operation of managed care provider networks; (iv) laws
regarding the provision of healthcare services; and (v) proposed laws which, if
adopted, would have as their objective the reform of the health care system as a
whole. Laws and regulations affecting the Company's operations change
frequently.

    The Company believes that it is in material compliance with regulatory
requirements applicable to its business. Nevertheless, because of the special
nature of the Company's relationship with the Physician Groups, many aspects of
the Company's business operations have not been the subject of state or federal
regulatory interpretation and there can be no assurance that a review of the
Company's or the Physician Groups' business by courts or regulatory authorities
will not result in a determination that could adversely affect the operations of
the Company or the Physician Groups or that the healthcare regulatory
environment will not change so as to restrict the Company's or the Physician
Groups' existing operations or their expansion.

WORKERS' COMPENSATION LEGISLATION

    In performing workers' compensation managed care services, the Company must
comply with state workers' compensation laws. Workers' compensation laws require
employers to assume financial responsibility for medical costs, a portion of
lost wages and related legal costs of work-related illnesses and injuries. These
laws establish the rights of workers to receive benefits and to appeal benefit
denials. The workers' compensation laws also regulate the methods and procedures
which the Company may employ in its workers' compensation managed care programs.
For example, workers' compensation laws prohibit

                                       16
<PAGE>
medical co-payments and deductibles by employees. In addition, certain states
restrict employers' rights to select health care providers and establish maximum
fee levels for treatment of injured workers.

    In several states, recent workers' compensation reform legislation has eased
to some degree these regulatory restraints on managed care for injured workers.
Legislative reforms in some states permit employers to designate health plans
such as HMOs and PPOs to cover workers' compensation claimants. In some
instances, such health plans are required to obtain licensor, certification or
other approvals to cover workers' compensation claimants. Because many health
plans have the capacity to manage health care for workers' compensation
claimants, such legislation may intensify competition in the market served by
the Company.

    Within the past few years, several states have experienced decreases in the
number of workers' compensation claims and the cost per claim, which have been
reflected in workers' compensation insurance premium rate reductions in those
states. The Company believes that these declines in workers' compensation costs
are due principally to intensified efforts by payors to manage and control
claims costs, to improve risk management by employers and to legislative
reforms. If declines in workers' compensation costs occur in many states and
persist over the long-term, such declines may have an adverse impact upon the
Company's business and results of operations.

    Many states are considering or have enacted legislation reforming their
workers' compensation laws. These reforms generally give employers greater
control over who will provide medical care to their employees and where those
services will be provided, and attempt to contain medical costs associated with
workers' compensation claims. At present, ten of the states in which the Company
does business have implemented treatment-specific fee schedules that set maximum
reimbursement levels for healthcare services. The federal government and four
states provide for a "reasonableness" review of medical costs paid or reimbursed
by workers' compensation. When not governed by a fee schedule, the Company
adjusts its charges to the usual and customary levels authorized by the payor.

SPECIALIZED COST CONTAINMENT SERVICES

    Many of the Company's specialized cost containment services include
prospective or concurrent review of requests for medical care or therapy.
Approximately half of the states have enacted laws that require licensor,
certification or other approval of businesses, such as the Company, that provide
medical review services. Some of these laws apply to medical review of care
covered by workers' compensation. These laws typically establish minimum
standards for qualifications of personnel, confidentiality, internal quality
control, and dispute resolution procedures. These regulatory programs may result
in increased costs of operation for the Company, which may have an adverse
impact upon the Company's ability to compete with other available alternatives
for health care cost control.

USE OF PROVIDER NETWORKS

    The Company's ability to provide comprehensive workers' compensation managed
care services depends in part on its ability to contract with or create networks
of health care providers which share the Company's objectives. For some of its
clients, the Company offers injured workers access to networks of providers who
are selected by the Company for quality of care and pricing. New laws regulating
the operation of managed care provider networks have been adopted by a number of
states. These laws may apply to managed care provider networks having contracts
with the Company or to provider networks which the Company may organize or
acquire. To the extent the Company is governed by these regulations, it may be
subject to additional licensing requirements, financial oversight and procedural
standards for beneficiaries and providers.

                                       17
<PAGE>
AUTOMOBILE INSURANCE LEGISLATION

    The automobile insurance industry, like the workers' compensation industry,
is regulated on a state-by-state basis. While regulatory approval is not
required for the Company to offer most of its services to the automobile
insurance market, state regulatory approval is required in order to offer
automobile insurers products that permit them to direct claimants into a network
of medical providers. To date, only Colorado, New York and Hawaii have
legislation that permits such direction of care and the Company offers this
managed care service to automobile insurers in Colorado. No assurance can be
given that other states will adopt legislation permitting such direction of care
for automobile accident victims or, if such legislation is adopted, that the
Company will be able to obtain regulatory approval to provide such services.

CORPORATE PRACTICE OF MEDICINE AND OTHER LAWS

    Most states limit the practice of medicine to licensed individuals or
professional organizations comprised of licensed individuals. Many states also
limit the scope of business relationships between business entities such as the
Company and licensed professionals and professional corporations, particularly
with respect to fee-splitting between a physician and another person or entity
and non-physicians exercising control over physicians engaged in the practice of
medicine.

    Laws and regulations relating to the practice of medicine, fee-splitting and
similar issues vary widely from state to state, are often vague, and are seldom
interpreted by courts or regulatory agencies in a manner that provides guidance
with respect to business operations such as those of the Company. Although the
Company attempts to structure all of its operations so that they comply with the
relevant state statutes and believes that its operations and planned activities
do not violate any applicable medical practice, fee-splitting or similar laws,
there can be no assurance that (i) courts or governmental officials with the
power to interpret or enforce these laws and regulations will not assert that
the Company or certain transactions in which it is involved are in violation of
such laws and regulations and (ii) future interpretations of such laws and
regulations will not require structural and organizational modifications of the
Company's business.

FRAUD AND ABUSE LAWS

    A federal law (the "Anti-Kickback Statute") prohibits any offer, payment,
solicitation or receipt of any form of remuneration to induce or in return for
the referral of Medicare or other governmental health program patients or
patient care opportunities, or in return for the purchase, lease or order of
items or services that are covered by Medicare or other governmental health
programs. Violations of the statute can result in the imposition of substantial
civil and criminal penalties. In addition, as of January 1, 1995, certain
anti-referral provisions (the "Stark Amendments") prohibit a physician with a
"financial interest" in an entity from referring a patient to that entity for
the provision of any of 11 "designated medical services" (some of which are
provided by Physician Groups affiliated with the Company).

    At least six of the states in which the Company conducts business (Arizona,
California, Florida, New Jersey, Maryland and Texas) have enacted statutes
similar in scope and purpose to the Anti-Kickback Statute. There is no authority
interpreting these statutes in a manner directly relevant to the Company's
business. The Company believes that regulatory authorities and state courts
interpreting these statutes may regard federal law under the Anti-Kickback
Statute as persuasive, and further believes that its arrangements with the
Physician Groups comply with the Anti-Kickback Statute. In addition, most states
have statutes, regulations or professional codes that restrict a physician from
accepting various kinds of remuneration in exchange for making referrals.
Several states are considering legislation that would prohibit referrals by a
physician to an entity in which the physician has a specified financial
interest.

    All of the foregoing laws are subject to modification and interpretation,
have not often been interpreted by appropriate authorities in a manner directly
relevant to the Company's business, and are enforced by authorities vested with
broad discretion. The Company has attempted to structure all of its

                                       18
<PAGE>
operations so that they comply with all applicable state anti-referral
prohibitions. The Company also continually monitors developments in this area.
If these laws are interpreted in a manner contrary to the Company's
interpretation, reinterpreted, or amended, or if new legislation is enacted with
respect to healthcare fraud and abuse or similar issues, the Company will seek
to restructure any affected operations so as to maintain compliance with
applicable law. No assurance can be given that such restructuring will be
possible, or, if possible, will not adversely affect the Company's business.

UNCERTAINTIES RELATED TO CHANGING HEALTHCARE ENVIRONMENT

    In recent years, the healthcare industry has experienced change. Although
managed care has yet to become a major factor in occupational healthcare, the
Company anticipates that managed care programs, including capitation plans, may
play an increasing role in the delivery of occupational healthcare services, and
competition in the occupational healthcare industry may shift from individual
practitioners to specialized provider groups such as those managed by the
Company, insurance companies, HMOs and other significant providers of managed
care products. To facilitate the Company's managed care strategy, the Company is
developing risk-sharing products for the workers' compensation industry that
will be marketed to employers, insurers and managed care organizations. No
assurance can be given that the Company will prosper in the changing healthcare
environment or that the Company's strategy to develop managed care programs will
succeed in meeting employers' and workers' occupational healthcare needs. See
"Strategy."

    Increasing health care costs have caused the federal government and many
states to advance health care reform proposals. One of the proposals being
considered is 24-hour health coverage, in which the coverage of traditional
employer-sponsored health plans is combined with workers' compensation coverage
to provide a single insurance plan for work-related and non-work-related health
problems. Incorporating workers' compensation coverage into conventional health
plans may adversely affect the market for the Company's services.

ENVIRONMENTAL

    The Company is subject to various federal, state and local statutes and
ordinances regulating the disposal of infectious waste. If any environmental
regulatory agency finds the Company's facilities to be in violation of waste
laws, penalties and fines may be imposed for each day of violation and the
affected facility could be forced to cease operations. The Company believes that
its waste handling and discharge practices are in material compliance with
applicable law.

ERISA

    The provision of goods and services to certain types of employee health
benefit plans is subject to the Employee Retirement Income Security Act of 1974
("ERISA"). ERISA is a complex set of laws and regulations subject to periodic
interpretation by the Internal Revenue Service and the Department of Labor
("DOL"). ERISA regulates certain aspects of the relationship between the
Company's managed care contracts and employers that maintain employee benefit
plans subject to ERISA. DOL is engaged in ongoing ERISA enforcement activities
that may result in additional constraints on how ERISA-governed benefit plans
conduct their activities. There can be no assurance that future revisions to or
judicial or regulatory interpretations of ERISA will not have a material adverse
effect on the Company's business or results of operations.

SEASONALITY

    The Company's health services business is seasonal in nature. Patient visits
at the Company's centers are lower in the first and fourth quarters, primarily
because of fewer occupational injuries and illnesses during those time periods
due to plant closings, vacations, and holidays. In addition, employers generally

                                       19
<PAGE>
hire fewer employees in the fourth quarter, thereby reducing the number of
pre-hiring physical examinations and drug and alcohol tests conducted at the
Company's centers during that quarter. Although the Company's expansion of
services and rapid growth may obscure the effect of seasonality in the Company's
financial results, the Company's first and fourth quarters generally reflect
lower net health services revenues on a same market basis when compared to the
Company's second and third quarters.

INSURANCE

    The Physician Groups maintain medical malpractice insurance under one
insurance policy in the amount of $1,000,000 per occurrence and $15,000,000 in
the aggregate. Pursuant to the management agreements between the Company and the
Physician Groups, each Physician Group has agreed to indemnify the Company from
certain losses, including medical malpractice. In addition, the Company
maintains an umbrella policy that provides excess medical malpractice insurance
in the amount of $10,000,000 per occurrence and $10,000,000 in the aggregate and
$3,000,000 of general liability insurance.

    The Company is party to certain claims and litigation in the ordinary course
of business. The Company is not involved in any legal proceeding that it
believes will result, individually or in the aggregate, in a material adverse
effect upon its financial condition or results of operations.

                                       20
<PAGE>
EMPLOYEES

    The Company currently has approximately 7,270 employees. None of Concentra's
employees is subject to a collective bargaining agreement. The Company has
experienced no work stoppages and believes that its employee relations are good.
All physicians, physician assistants, and physical therapists who provide
professional services in the Company's occupational healthcare clinics are
either employed by or contract with the professional associations with which the
Company is affiliated.

RISK FACTORS

DEPENDENCE ON FUTURE ACQUISITIONS AND JOINT VENTURES; ACQUISITION RISKS

    The Company's growth in new and existing markets is dependent upon an
aggressive acquisition and joint venture strategy. The Company is in various
stages of negotiations to acquire businesses and practices from a number of
prospective selling groups. There can be no assurance that further suitable
acquisition candidates can be found, that acquisitions can be financed or
consummated on favorable terms or that such acquisitions, if completed, will be
successful. In addition, there can be no assurance that the Company will be able
to integrate successfully the operations of any acquired business or institute
Company-wide systems and procedures to operate successfully the combined
enterprises. The success of the Company's acquisitions will be determined by
numerous factors, including the Company's ability to identify suitable
acquisition candidates, competition for such acquisitions, the purchase price,
the financial performance of the acquired businesses after acquisition and the
ability of the Company to integrate effectively the operations of acquired
businesses. A strategy of growth by acquisition also involves the risk of
assuming unknown or contingent liabilities of the acquired business, which could
be material, individually or in the aggregate. Any failure by the Company to
identify suitable candidates for acquisition, to integrate or operate acquired
businesses effectively or to insulate itself from unwanted liabilities of
acquired businesses may have a material adverse effect on the Company's
business, financial condition and results of operations. The Emerging Issues
Task Force of the Financial Accounting Standards Board is currently evaluating
certain matters relating to the physician practice management industry,
including a review of accounting for business combinations. The Company is
unable to predict the impact, if any, that this review may have on the Company's
acquisition strategy.

    The Company has also entered into, and is in various stages of negotiations
to form, joint ventures to own and operate occupational healthcare centers in
selected markets and to enter into management agreements in selected markets.
The Company's strategy is to form these joint ventures or enter into these
management agreements with competitively-positioned hospital management
companies, hospital systems and other healthcare providers. There can be no
assurances that the Company will continue to utilize joint ventures or
management agreements as part of its growth strategy, that further suitable
joint ventures or management agreements can be formed or that such existing or
future ventures will be successful.

EFFECT OF AMORTIZATION ON RESULTS OF OPERATIONS

    The Company has pursued acquisitions as an important component of its
business strategy, and expects that it will continue to pursue acquisitions. The
Company has had, and will continue to have, significant charges for depreciation
and amortization expense related to the fixed assets and intangibles acquired,
or to be acquired, in its acquisitions. Consequently, the Company expects that
such depreciation and amortization will continue to impact its results of
operations. The Company periodically reviews whether changes have occurred,
either specific to the business or generally in the industry, which might
require revision of the remaining estimated useful life of the assigned goodwill
or render all or a portion of the goodwill non-recoverable. In accordance with
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed of," impairments are
determined by comparing undiscounted estimated future cash flows to the carrying
value of long-lived

                                       21
<PAGE>
assets. At December 31, 1997, intangible assets were approximately $229 million
compared to total assets of $436 million and stockholders' equity of $223
million.

MANAGEMENT OF GROWTH

    The Company has experienced rapid growth. The continued rapid growth of the
Company could place a significant strain on its management and other resources.
The Company anticipates that continued growth, if any, will require it to
continue to recruit, hire, train and retain a substantial number of new and
highly skilled administrative, information technology, finance, sales and
marketing and support personnel. The Company's ability to compete effectively
and to manage future growth, if any, will depend on its ability to continue to
implement and improve operational, financial and management information systems
on a timely basis and to expand, train, motivate and manage its work force.
Should the Company continue to experience rapid growth, there can be no
assurance that the Company's personnel, systems, procedures and controls will be
adequate to support the Company's operations or that management will adequately
anticipate all demands that growth will place on the Company. If the Company's
management is unable to manage growth effectively, the quality of the Company's
products and its business, operating results and financial condition could be
materially and adversely affected.

COMPETITION

    The market to provide healthcare services within the workers' compensation
system is highly fragmented and competitive. The Company's primary competitors
have typically been independent physicians, hospital emergency departments and
hospital-owned or hospital-affiliated medical facilities. The Company believes
that, due to the emergence of managed care, its competitors will increasingly
consist of specialized provider groups, insurance companies, HMOs and other
significant providers of managed care products.

    The Company also faces competition from large insurers, HMOs, PPOs, TPAs and
other managed health care companies. The Company believes that, as managed care
techniques continue to gain acceptance in the workers' compensation marketplace,
the Company's competitors will increasingly consist of nationally focused
workers' compensation managed care service companies, insurance companies, HMOs
and other significant providers of managed care products. Legislative reforms in
some states permit employers to designate health plans such as HMOs and PPOs to
cover workers' compensation claimants. Because many health plans have the
ability to manage medical costs for workers' compensation claimants, such
legislation may intensify competition in the market served by the Company. Many
of the Company's current and potential competitors are significantly larger and
have greater financial and marketing resources than those of the Company, and
there can be no assurance that the Company will continue to maintain its
existing performance or be successful with any new products or in any new
geographic markets it may enter.

UNCERTAINTIES RELATED TO CHANGING HEALTHCARE ENVIRONMENT; CHANGES IN MARKET
  DYNAMICS

    The healthcare industry has experienced substantial changes in recent years.
Although managed care has yet to become a major factor in occupational
healthcare, the Company anticipates that managed care programs, including case
rate and capitation plans, may play an increasing role in the delivery of
occupational healthcare services, and that competition in the occupational
healthcare industry may shift from individual practitioners to specialized
provider groups such as those managed by the Company, insurance companies, HMOs
and other significant providers of managed care products. To facilitate the
Company's managed care strategy, the Company is developing risk-sharing products
for the workers' compensation industry that will be marketed to employers,
insurers and managed care organizations. No assurance can be given that the
Company will prosper in the changing healthcare environment or that the
Company's strategy to develop managed care programs will succeed in meeting
employers' and workers' occupational healthcare needs.

                                       22
<PAGE>
    Legislative reforms in some states permit employers to designate health
plans such as HMOs and PPOs to cover workers' compensation claimants. Because
many health plans have the capacity to manage health care for workers'
compensation claimants, such legislation may intensify competition in the market
served by the Company. Within the past few years, several states have
experienced decreases in the number of workers' compensation claims and the
average cost per claim which have been reflected in workers' compensation
insurance premium rate reductions in those states. The Company believes that
declines in workers' compensation costs in these states are due principally to
intensified efforts by payors to manage and control claim costs, to improved
risk management by employers and to legislative reforms. If declines in workers'
compensation costs occur in many states and persist over the long-term, they may
have an adverse impact on the Company's business and results of operations.

UNCERTAINTIES REGARDING HEALTHCARE REFORM

    There have been numerous initiatives at the federal and state levels for
comprehensive reforms affecting the payment for and availability of healthcare
services. The Company believes that such initiatives will continue during the
foreseeable future. Aspects of certain of these reforms as proposed in the past
could, if adopted, adversely affect the Company.

RISKS INHERENT IN PROVISION OF MEDICAL SERVICES; POSSIBLE LITIGATION AND LEGAL
  LIABILITY

    The professional associations with which the Company is affiliated (the
"Physician Groups") and certain employees of the Company are involved in the
delivery of healthcare services to the public and, therefore, are exposed to the
risk of professional liability claims. Claims of this nature, if successful,
could result in substantial damage awards to the claimants which may exceed the
limits of any applicable insurance coverage. The Company is indemnified under
its management agreements with the Physician Groups for claims against them,
maintains liability insurance for itself and negotiates liability insurance for
the physicians in the Physician Groups. Successful malpractice claims asserted
against the Physician Groups or the Company, however, could have a material
adverse effect on the Company's financial condition and profitability.

    The Company, through its utilization management services, makes
recommendations concerning the appropriateness of providers' proposed medical
treatment plans of patients throughout the country, and as a result it could be
subject to changes arising from any adverse medical consequences. The Company
does not grant or deny claims for payment of benefits and the Company does not
believe that it engages in the practice of medicine or the delivery of medical
services. There can be no assurance, however, that the Company will not be
subject to claims or litigation related to the grant or denial of claims for
payment of benefits or allegations that the Company engages in the practice of
medicine or the delivery of medical services. In addition, there can be no
assurance that the Company will not be subject to other litigation that may
adversely affect the Company's business or results of operations. The Company
maintains errors and omissions insurance and such other lines of coverage as the
Company believes are reasonable in light of the Company's experience to date.
There can be no assurance, however, that such insurance will be sufficient or
available at reasonable cost to protect the Company from liability which might
adversely affect the Company's business or results of operations.

CORPORATE PRACTICE OF MEDICINE AND OTHER LAWS AND REGULATIONS

    Most states limit the practice of medicine to licensed individuals or
professional organizations comprised of licensed individuals. Many states also
limit the scope of business relationships between business entities such as the
Company and licensed professionals and professional corporations, particularly
with respect to fee-splitting between a physician and another person or entity
and non-physicians exercising control over physicians engaged in the practice of
medicine.

                                       23
<PAGE>
    Laws and regulations relating to the practice of medicine, fee-splitting and
similar issues vary widely from state to state, are often vague, and are seldom
interpreted by courts or regulatory agencies in a manner that provides guidance
with respect to business operations such as those of the Company. Although the
Company attempts to structure all of its operations so that they comply with the
relevant state statutes and applicable medical practice, fee-splitting and
similar laws, there can be no assurance that (i) courts or governmental
officials with the power to interpret or enforce these laws and regulations will
not assert that the Company or certain transactions in which it is involved are
in violation of such laws and regulations and (ii) future interpretations of
such laws and regulations will not require structural and organizational
modifications of the Company's business.

    Many states, including a number of those in which the Company transacts
business, have licensing and other regulatory requirements applicable to the
Company's business. Approximately half of the states have enacted laws that
require licensing of businesses which provide medical review services, such as
the Company. Some of these laws apply to medical review of care covered by
workers' compensation. These laws typically establish minimum standards for
qualifications of personnel, confidentiality, internal quality control, and
dispute resolution procedures. These regulatory programs may result in increased
costs of operation for the Company, which may have an adverse impact upon the
Company's ability to compete with other available alternatives for healthcare
cost control. In addition, new laws regulating the operation of managed care
provider networks have been adopted by a number of states. These laws may apply
to managed care provider networks having contracts with the Company or to
provider networks which the Company has organized and may organize in the
future. To the extent the Company is governed by these regulations, it may be
subject to additional licensing requirements, financial oversight and procedural
standards for beneficiaries and providers. Regulation in the healthcare and
workers' compensation fields is constantly evolving. The Company is unable to
predict what additional government regulations, if any, affecting its business
may be promulgated in the future. The Company's business may be adversely
affected by failure to comply with existing laws and regulations, failure to
obtain necessary licenses and government approvals or failure to adapt to new or
modified regulatory requirements. In addition, the automobile insurance
industry, like the workers' compensation industry, is regulated on a
state-by-state basis. Although regulatory approval is not required for the
Company to offer most of its services to the automobile insurance market, state
regulatory approval is required in order to offer automobile insurers' products
that permit them to direct claimants into a network of medical providers.

FRAUD AND ABUSE LAWS

    A federal law (the "Anti-Kickback Statute") prohibits the offer, payment,
solicitation or receipt of any form of remuneration to induce or in return for
the referral of Medicare or other governmental health program patients or
patient care opportunities, or in return for the purchase, lease or order of
items or services that are covered by Medicare or other governmental health
programs. Violations of the statute can result in the imposition of substantial
civil and criminal penalties. In addition, as of January 1, 1995, certain
anti-referral provisions (the "Stark Amendments") prohibit a physician with a
"financial interest" in an entity from referring a patient to that entity for
the provision of any of eleven "designated health services" (some of which are
provided by Physician Groups affiliated with the Company).

    At least six of the states in which the Company conducts business (Florida,
California, Texas, Arizona, New Jersey and Maryland) have enacted statutes
similar in scope and purpose to the Anti-Kickback Statute. There is currently no
authority interpreting these statutes in a manner directly relevant to the
Company's business. The Company believes that regulatory authorities and state
courts interpreting these statutes may regard federal law under the
Anti-Kickback Statute as persuasive, and further believes that its arrangements
with the Physician Groups comply with the Anti-Kickback Statute. In addition,
most states have statutes, regulations or professional codes that restrict a
physician from accepting various kinds of remuneration in exchange for making
referrals. Several states are considering legislation that would prohibit
referrals by a physician to an entity in which the physician has a specified
financial interest.

                                       24
<PAGE>
    All of the foregoing laws are subject to modification and interpretation,
and have not often been interpreted by appropriate authorities in a manner
adverse to the Company's business, and are enforced by authorities vested with
broad discretion. The Company has attempted to structure all of its operations
so that they comply with all applicable anti-kickback and anti-referral
prohibitions. The Company also continually monitors developments in this area.
If these laws are interpreted in a manner contrary to the Company's
interpretation, are reinterpreted or amended, or if new legislation is enacted
with respect to healthcare fraud and abuse or similar issues, the Company will
seek to restructure any affected operations so as to maintain compliance with
applicable law. No assurance can be given that such restructuring will be
possible, or, if possible, will not adversely affect the Company's business or
results of operations.

RELIANCE ON DATA PROCESSING AND LICENSED SOFTWARE

    Certain aspects of the Company's business are dependent upon its ability to
store, retrieve, process and manage data and to maintain and upgrade its data
processing capabilities. Interruption of data processing capabilities for any
extended length of time, loss of stored data, programming errors or other
computer problems could have a material adverse affect on the Company's business
and results of operations. Certain of the software used by the Company within
its medical bill review operation is licensed from an independent third party
software company pursuant to a non-exclusive license that may be terminated by
either party upon six months notice. While the Company has historically
maintained a good relationship with the licensor, there can be no assurance that
this software license will not be terminated or that the licensor will be able
to continue the license on its existing terms. Although management believes that
alternative software would be available if the existing license were terminated,
such termination could be disruptive and could have a material adverse effect on
the Company's business and results of operations.

INFORMATION SYSTEM UPGRADES AND YEAR 2000 COMPLIANCE

    The Company continually evaluates and upgrades its management information
systems. The Company has completed a number of acquisitions in recent years, and
the information systems of some of the acquired operations have not been fully
integrated with the Company's information systems. Although the Company does not
anticipate any disruption in its operations or financial reporting as a result
of system upgrades or system integrations, there can be no assurance that such
disruption will not occur or that the desired benefits from the system upgrades
will be realized. Currently, there is significant uncertainty in the software
industry and among software users regarding the impact of the year 2000 on
installed software. Software database modifications and/or implementation
modifications will be required to enable such software to distinguish between
21st and 20th century dates. The Company uses third-party system software which
will need to be modified or replaced in order to address year 2000 compliance.
If the Company does not identify and implement modifications or new software
prior to January 1, 2000, its operations could be disrupted. In addition, the
Company's operations could be disrupted if the companies with which the Company
does business do not identify and correct any such year 2000 problems and such
failure adversely affects their ability to do business with the Company. While
the Company considers the cost to become year 2000 compliant to be a normal
operating cost necessary to periodically upgrade system software, there can be
no assurance that costs incurred in becoming year 2000 compliant will not have a
material adverse effect on the Company's business or operating results or
financial condition.

VOLATILITY OF STOCK PRICE

    The market price of the Company's Common Stock has been volatile and may be
volatile in the future. Future developments concerning the Company or its
competitors, including developments related to governmental regulations,
acquisitions, operating results, the healthcare industry generally and general
market and economic conditions, may have a significant impact on the market
price of the Company's Common Stock.

                                       25
<PAGE>
DIVIDEND POLICY AND RESTRICTIONS

    The Company does not intend to pay cash dividends on the Common Stock in the
foreseeable future and anticipates that future earnings will be retained to
finance future operations and expansion. The revolving credit agreement with its
senior lenders prohibits the Company from paying dividends and making other
distributions on its Common Stock.

ANTI-TAKEOVER PROVISIONS

    Certain provisions of the Company's Certificate of Incorporation and certain
provisions of the Delaware General Corporation Law may make it difficult to
change control of the Company and replace incumbent management. For example, the
Company's Certificate of Incorporation provides for a staggered Board of
Directors and permits the Board of Directors, without stockholder approval, to
issue additional shares of Common Stock or establish one or more series of
Preferred Stock having such number of shares, designations, relative voting
rights, dividend rates, liquidation and other rights, preferences and
limitations as the Board of Directors may determine. The Company has also
adopted a Rights Plan, which is intended to deter certain takeover practices or
takeover bids.

ITEM 2.  PROPERTIES

    The Company's principal corporate office is located in Boston,
Massachusetts. The Company leases the 11,000 square feet of space in this site
pursuant to a lease agreement expiring in 2003. Except for ten offices which are
owned by the Company, the Company also leases all of its offices located in 49
states and three Canadian provinces. Thirteen of the Company's offices are
leased from Colonial Realty Trust, of which Ms. Silverman and Mr. Larson are the
trustees and beneficiaries. The Company believes that its facilities are
adequate for its current needs and that suitable additional space will be
available as required.

ITEM 3.  LEGAL PROCEEDINGS

    The Company is party to certain claims and litigation in the ordinary course
of business. The Company is not involved in any legal proceeding that it
believes will result, individually or in the aggregate, in a material adverse
effect upon its financial condition or results of operations.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    During the fourth quarter of 1997, no matter was submitted to a vote of
security holders.

                                       26
<PAGE>
                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    Incorporated herein by reference from page 36 of the Registrant's 1997
Annual Report to Shareholders.

ITEM 6.  SELECTED FINANCIAL DATA

    Incorporated herein by reference to Note 13 to the Consolidated Financial
Statements on page 34 of the Registrant's 1997 Annual Report to Shareholders.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS

    Incorporated herein by reference from pages 14 through 18 of the
Registrant's 1997 Annual Report to Shareholders.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    Incorporated herein by reference from pages 19 through 35 of the
Registrant's 1997 Annual Report to Shareholders.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURE

    Not Applicable

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    Information contained under the captions "Section 16(a) Beneficial Ownership
Reporting Compliance," "Governance of the Company," "Election of Directors" and
"Executive Officers of the Company" in the Company's definitive Proxy Statement,
which will be filed with the Commission on or about April 4, 1998, is
incorporated herein by reference.

ITEM 11.  EXECUTIVE COMPENSATION

    Information contained under the captions "Executive Compensation",
"Compensation Plans," "Option and Compensation Committee Report on Executive
Compensation" and "Governance of the Company--Committees of the Board of
Directors" in the Company's definitive Proxy Statement, which will be filed with
the Commission on or about April 4, 1998, is incorporated herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    Information contained under the caption "Security Ownership of Certain
Beneficial Owners" and "Management" in the Company's definitive Proxy Statement,
which will be filed with the Commission on or about April 4, 1998, is
incorporated herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    Information contained under the caption "Certain Transactions" in the
Company's definitive Proxy Statement, which will be filed with the Commission on
or about April 4, 1998, is incorporated herein by reference.

                                       27
<PAGE>
                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

    (a) (1) CONSOLIDATED FINANCIAL STATEMENTS

    (2) FINANCIAL STATEMENT SCHEDULE

    The financial statement schedule, Supplemental Schedule II--Allowance for
Doubtful Accounts, is filed with this report and appears on page S-1.

    The Report of Independent Accountants on Financial Statement Schedules is
filed with this report and appears on page 34.

    All other schedules for which provision is made in Regulation S-X of the
Securities and Exchange Commission, are not required under the related
instructions or are not applicable and, therefore, have been omitted.

    (3) EXHIBITS

    The following is a list of exhibits filed as part of the Form 10-K:

<TABLE>
<CAPTION>
  EXHIBIT
  NUMBER                                                   DESCRIPTION
-----------  --------------------------------------------------------------------------------------------------------
<C>          <S>
       2.1   Agreement and Plan of Reorganization dated April 21, 1997 among CRA Managed Care, Inc. ("CRA"),
             OccuSystems, Inc. ("OccuSystems") and the Registrant (incorporated by reference to Appendix A to the
             Joint Proxy Statement/Prospectus forming a part of the Registrant's Registration Statement on Form S-4
             (File No. 333-27105) filed with the Securities and Exchange Commission (the "SEC") on July 31, 1997)

      +2.2   Agreement and Plan of Merger dated February 24, 1998 among the Registrant and Preferred Payment Systems,
             Inc.

       2.3   Asset Purchase Agreement dated June 4, 1997, among CRA, FNS Acquisition Corp., First Notice Systems,
             Inc. and the stockholders of First Notice Systems, Inc. (incorporated by reference to Exhibit 1 to CRA's
             Current Report on Form 8-K (File No. 02-25856) dated June 18, 1997)

      +3.1   Amended and Restated Certificate of Incorporation dated August 27, 1997

       3.2   Bylaws of Registrant (incorporated by reference to Exhibit 3.3 to the Registrant's Registration
             Statement on Form S-4 (File No. 333-27105) filed with the SEC on July 31, 1997)

       4.1   Form of Certificate of Common Stock, par value $.01 per share, of the Registrant (incorporated by
             reference to Exhibit 4.1 to the Registrant's Registration Statement on Form S-4 (File No. 333-27105)
             filed with the SEC on July 31, 1997)

       4.2   Indenture dated December 24, 1996 between OccuSystems and United States Trust Company of New York, as
             Trustee, (the "OccuSystems Indenture") relating to the 6% Convertible Subordinated Notes due 2001
             (incorporated by reference to Exhibit 4.1 to OccuSystems' Registration Statement on Form S-3 (File No.
             333-20933) as filed with the SEC on January 31, 1997)

      +4.2   First Supplemental Indenture dated August 29, 1997 between OccuSystems, the Registrant and United States
             Trust Company of New York, as Trust, relating to the 6% Convertible Subordinated Notes due 2001

       4.3   Indenture dated as of March 16, 1998 between the Registrant and Chase Bank of Texas, N.A., as Trustee,
             (the "Concentra Indenture") relating to the 4.5% Convertible Subordinated Notes due 2003 (incorporated
             by reference to the Registrant's Current Report on Form 8-K (File No. 000-22751) filed with the SEC on
             March 30, 1998)
</TABLE>

                                       28
<PAGE>
<TABLE>
<C>          <S>
       4.4   Form of 6% Convertible Subordinated Note due 2001, establishing the terms of the 6% Convertible
             Subordinated Notes due 2001 pursuant to the OccuSystems Indenture (incorporated by reference to Exhibit
             A to the OccuSystems Indenture which Indenture is incorporated by reference to Exhibit 4.1 to
             OccuSystems' Registration Statement on Form S-3 (File No. 333-20933) as filed with the SEC on January
             31, 1997)

       4.5   Form of 4.5% Convertible Subordinated Notes due 2003, establishing the terms of the 4.5% Convertible
             Subordinated Notes due 2003 pursuant to the Concentra Indenture (incorporated by reference to the
             Registrant's Current Report on Form 8-K (File No.000-22751) filed with the SEC on March 30, 1998)

      +4.6   Certificate of Designation of Series A Junior Participating Preferred Stock

       4.7   Form of Right Certificate (included as Exhibit B to the Rights Agreement filed as Exhibit 10.2 hereto).
             Pursuant to the Rights Agreement, printed Right Certificates will not be delivered until as soon as
             practicable after the Distribution Date (as defined in the Rights Agreement)

       4.8   Registration Rights Agreement dated as of March 11, 1998, among the Registrant, BT Alex. Brown
             Incorporated, BancAmerica Robertson Stephens, Donaldson, Lufkin & Jenrette Securities Corporation and
             Piper Jaffray Inc. (incorporated by reference to the Registrant's Current Report on Form 8-K (File No.
             000-22751) filed with the SEC on March 30, 1998)

       4.9   Registration Rights Agreement dated as of March 8, 1994, among Comprehensive Rehabilitation Associates,
             Inc., J.H. Whitney & Co., Whitney 1990 Equity Fund, L.P., Whitney Subordinated Debt Fund, L.P., First
             Union Corporation, Lois E. Silverman and Donald J. Larson (incorporated by reference to Exhibit 10.7 to
             CRA's Registration Statement on Form S-1 (File No. 33-90426) filed with the SEC on March 17, 1995)

     +10.1   Amended and Restated Credit Agreement dated as of February 20, 1998, between the Registrant, as
             Borrower, and First Union National Bank, as Administrative Agent, Fleet National Bank, as Documentation
             Agent, and the banks and financial institutions listed as signatories thereto, as amended by that
             certain letter agreement dated as of March 9, 1998, and as further amended by that certain letter
             agreement dated as of March 12, 1998

      10.2   Purchase Agreement dated as of March 11, 1998, among the Registrant, BT Alex. Brown Incorporated,
             BancAmerica Robertson Stephens, Donaldson, Lufkin & Jenrette Securities Corporation and Piper Jaffray,
             Inc. (incorporated by reference to the Registrant's Current Form on Form 8-K (File No. 000-22751) filed
             with the SEC on March 30, 1998)

      10.3   Rights Agreement dated September 29, 1997 between the Registrant and ChaseMellon Shareholder Services,
             L.L.C. (incorporated by reference to Exhibit 1 to the Registrant's Registration Statement on Form 8-A
             filed with the SEC on October 1, 1998)

      10.4   Concentra Managed Care, Inc. 1997 Long-Term Incentive Plan (incorporated by reference to Appendix G to
             the Joint Proxy Statement/Prospectus forming a part of the Registrant's Registration Statement on Form
             S-4 (File No. 333-27105) filed with the SEC on July 31, 1997)

      10.5   Concentra Managed Care, Inc. 1997 Employee Stock Purchase Plan (incorporated by reference to Appendix H
             to the Joint Proxy Statement/Prospectus forming a part of the Registrant's Registration Statement on
             Form S-4 (file no. 333-27105) filed with the SEC on July 31, 1997)

      10.6   CRA Managed Care, Inc. 1995 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.25 to
             CRA's Registration Statement on Form S-1 (File No. 33-90426) filed with the SEC on March 17, 1995)

      10.7   CRA Managed Care, Inc. 1994 Non-Qualified Stock Option Plan for Non-Employee Directors (incorporated by
             reference to Exhibit 10.3 to CRA's Registration Statement on Form S-1 (File No. 33-90426) filed with the
             SEC on March 17, 1995)
</TABLE>

                                       29
<PAGE>
<TABLE>
<C>          <S>
      10.8   CRA Managed Care, Inc. 1994 Non-Qualified Time Acceleration Restricted Stock Option Plan (incorporated
             by reference to Exhibit 10.5 to CRA's Registration Statement on Form S-1 (File No. 33-90426) filed with
             the SEC on March 17, 1995)

      10.9   OccuSystems, Inc. 1995 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.10 to
             OccuSystems' Registration Statement on Form S-1 (File No. 33-79734) filed with the SEC on May 8, 1995)

      10.10  First Amended and Restated OccuSystems, Inc. and its Subsidiaries and Affiliates Stock Option and
             Restricted Stock Purchase Plan dated April 28, 1992 (incorporated by reference to Exhibit 10.11 to
             OccuSystems' Registration Statement on Form S-1 (File No. 33-79734) filed with the SEC on May 8, 1995)

      10.11  Employment Agreement dated April 21, 1997, between the Registrant and Donald J. Larson (incorporated by
             reference to Exhibit 10.8 to the Registrant's Registration Statement on Form S-4 (File No. 333-27105)
             filed with the SEC on July 31, 1997)

      10.12  Employment Agreement dated April 21, 1997, between the Registrant and Joseph F. Peace (incorporated by
             reference to Exhibit 10.9 to the Registrant's Registration Statement on Form S-4 (File No. 333-27105)
             filed with the SEC on July 31, 1997)

      10.13  Employment Agreement dated April 21, 1997, between the Registrant and Richard A. Parr II (incorporated
             by reference to Exhibit 10.11 to the Registrant's Registration Statement on Form S-4 (File No.
             333-27105) filed with the SEC on July 31, 1997)

      10.14  Employment Agreement dated April 21, 1997, between the Registrant and Daniel J. Thomas (incorporated by
             reference to Exhibit 10.12 to the Registrant's Registration Statement on Form S-4 (File No. 333-27105)
             filed with the SEC on July 31, 1997)

      10.15  Employment Agreement dated April 21, 1997, between the Registrant and W. Thomas Fogarty (incorporated by
             reference to Exhibit 10.13 to the Registrant's Registration Statement on Form S-4 (File No. 333-27105)
             filed with the SEC on July 31, 1997)

      10.16  Employment Agreement dated April 21, 1997, between the Registrant and James M. Greenwood (incorporated
             by reference to Exhibit 10.15 to the Registrant's Registration Statement on Form S-4 (File No.
             333-27105) filed with the SEC on July 31, 1997)

     +10.17  Indemnification Agreement dated September 17, 1997, between the Registrant and Donald J. Larson
             (identical agreements were executed between the Registrant and each of the following: Joseph F. Peace,
             Richard A. Parr II, Daniel J. Thomas, James M. Greenwood, W. Tom Fogarty, Kenneth Loffredo, Mitchell T.
             Rabkin, George H. Conrades, Robert A. Ortenzio, Lois E. Silverman, Paul B. Queally, John K. Carlyle,
             Robert W. O'Leary)

      10.18  Termination Agreement dated as of May 15, 1997, between the Registrant and Lois E. Silverman
             (incorporated by reference to Exhibit 10.17 to the Registrant's Registration Statement on Form S-4 (File
             No. 333-27105) filed with the SEC on July 31, 1997)

      10.19  Termination Agreement dated as of May 15, 1997, between the Registrant and Richard D. Rehm (incorporated
             by reference to Exhibit 10.18 to the Registrant's Registration Statement on Form S-4 (File No.
             333-27105) filed with the SEC on July 31, 1997)

      10.20  Agreement of Acceptance dated as of July 29, 1997, among the Registrant, Donald J. Larson and Lois E.
             Silverman (incorporated by reference to Exhibit 10.19 to the Registrant's Registration Statement on Form
             S-4 (File No. 333-27105) filed with the SEC on July 31, 1997)

      10.21  Software License Agreement dated February 10, 1995 between CRA and CompReview, Inc. (confidential
             treatment granted) (incorporation by reference to CRA's Registration Statement on Form S-1 (File No.
             33-90426) filed with the SEC on March 17, 1995)
</TABLE>

                                       30
<PAGE>
<TABLE>
<C>          <S>
      10.22  Lease Agreement dated January 1, 1994 between the Registrant and Colonial Realty Trust for office space
             located at 168 U.S. Route 1, Falmouth, ME 04105 (incorporated by reference to Exhibit 10.10 to CRA's
             Registration Statement on Form S-1 (File No. 33-90426) filed with the SEC on March 17, 1995)

      10.23  Lease Agreement dated January 1, 1994 between the Registrant and Colonial Realty Trust for office space
             located at 46 Austin Street, Newtonville, MA 02160 (incorporated by reference to Exhibit 10.11 to CRA's
             Registration Statement on Form S-1 (File No. 33-90426) filed with the SEC on March 17, 1995)

      10.24  Lease Agreement dated January 1, 1994 between the Registrant and Colonial Realty Trust for office space
             located at 312 Union Wharf, Boston, MA 02109 (incorporated by reference to Exhibit 10.17 to CRA's
             Registration Statement on Form S-1 (File No. 33-90426) filed with the SEC on March 17, 1995)

      10.25  Lease Agreement dated January 1, 1994 between the Registrant and Colonial Realty Trust for office space
             located at 565 Turnpike Street, North Andover, MA 01845 (incorporated by reference to Exhibit 10.18 to
             CRA's Registration Statement on Form S-1 (File No. 33-90426) filed with the SEC on March 17, 1995)

      10.26  Lease Agreement dated January 1, 1994 between the Registrant and Colonial Realty Trust for office space
             located at 15A Riverway Place, Bedford, NH 03110 (incorporated by reference to Exhibit 10.19 to CRA's
             Registration Statement on Form S-1 (File No. 33-90426) filed with the SEC on March 17, 1995)

      10.27  Lease Agreement dated January 1, 1994 between the Registrant and Colonial Realty Trust for office space
             located at 509 Stillwells Corner Road, Freehold, NJ 07728 (incorporated by reference to Exhibit 10.20 to
             CRA's Registration Statement on Form S-1 (File No. 33-90426) filed with the SEC on March 17, 1995)

      10.28  Lease Agreement dated January 1, 1994 between the Registrant and Colonial Realty Trust for office space
             located at 732 Thimble Shoals Blvd., Newport News, VA 23606 (incorporated by reference to Exhibit 10.21
             to CRA's Registration Statement on Form S-1 (File No. 33-90426) filed with the SEC on March 17, 1995)

      10.29  Lease Agreement dated January 1, 1994 between the Registrant and Colonial Realty Trust for office space
             located at 10132 Colvin Run Road, Suite A, Great Falls, VA 22066 (incorporated by reference to Exhibit
             10.22 to CRA's Registration Statement on Form S-1 (File No. 33-90426) filed with the SEC on March 17,
             1995)

      10.30  Occupational Medicine Center Management and Consulting Agreement dated December 31, 1993, between
             Concentra Health Services, Inc. (formerly OccuCenters, Inc.) ("CHS") and Occupational Health Centers of
             Southwest, P.A., a Texas professional association (incorporated by reference to Exhibit 10.6 to
             OccuSystems' Annual Report on Form 10-K (File No. 0-24440) filed with the SEC on March 29, 1996)

      10.31  Occupational Medicine Center Management and Consulting Agreement dated December 31, 1993, between CHS
             and Occupational Health Centers of Southwest, P.A., a Arizona professional association (incorporated by
             reference to Exhibit 10.7 to OccuSystems' Annual Report on Form 10-K (File No. 0-24440) filed with the
             SEC on March 29, 1996)

      10.32  Occupational Medicine Center Management and Consulting Agreement dated December 31, 1993, between CHS
             and Occupational Health Centers of New Jersey, a New Jersey professional association (incorporated by
             reference to Exhibit 10.8 to OccuSystems' Registration Statement on Form S-1 (File No. 33-01660) filed
             with the SEC on March 28, 1996)
</TABLE>

                                       31
<PAGE>
<TABLE>
<C>          <S>
      10.33  Warrant Agreement dated January 3, 1995 between OccuSystems and Creditanstalt-Bankverein (incorporation
             by reference to Exhibit 10.13 to OccuSystems' Registration Statement on Form S-1 (File No. 33-01660)
             filed with the SEC on March 28, 1996)

     +10.34  Voting Agreement dated May 15, 1997, by and between Lois E. Silverman and Donald J. Larson

     +11.1   Statement regarding calculation of shares used in determining earnings per share and pro forma earnings
             per share.

     +13.1   Excerpts from the Company's 1997 Annual Report to Stockholders.

     +21.1   List of Subsidiaries.

     +23.1   Consent of Arthur Andersen LLP.

     +27.1   Financial Data Schedule

     +27.2   Financial Data Schedule

     +27.3   Financial Data Schedule
</TABLE>

------------------------

+   Filed herewith.

    (b) REPORTS ON FORM 8-K.

REPORTS ON FORM 8-K

    During the quarter ended December 31, 1997, the Registrant filed the
following Current Reports on Form 8-K:

    (1) On November 7, 1997, the Company filed a Current Report on Form 8-K
dated October 31, 1997, reporting under Item 5 (Other Events) the earnings for
the quarter ended September 30, 1997 for the Registrant.

    (2) On October 14, 1997, the Company filed a Current Report on Form 8-K
dated October 9, 1997, reporting under Item 5 (Other Events) the consummation of
the purchase of 16 occupational medicine centers from Vencor, Inc.

    (3) On October 1, 1997, the Company filed a Current Report on Form 8-K dated
September 29, 1997, reporting under Item 5 (Other Events) the declaration of a
dividend of one preferred share purchase right for each outstanding share of
common stock of the Registrant in connection with the Registrant's Rights
Agreement dated as of September 29, 1997 between the Registrant and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent.

                                       32
<PAGE>
                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 31st day of
March, 1998.

<TABLE>
<S>                             <C>  <C>
                                CONCENTRA MANAGED CARE, INC.

                                By:             /s/ JOSEPH F. PESCE
                                     -----------------------------------------
                                                  Joseph F. Pesce
                                     EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL
                                     OFFICER AND TREASURER (PRINCIPAL FINANCIAL
                                              AND ACCOUNTING OFFICER)
</TABLE>

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated.

          SIGNATURE                       TITLE                    DATE
------------------------------  --------------------------  -------------------
                                Chairman, Chief Executive
     /s/ DONALD J. LARSON         Officer and Director
------------------------------    (Principal Executive        March 31, 1998
       Donald J. Larson           Officer

     /s/ DANIEL J. THOMAS       President and Chief
------------------------------    Operating Officer and       March 31, 1998
       Daniel J. Thomas           Director

                                Executive Vice President,
     /s/ JOSEPH F. PESCE          Chief Financial Officer,
------------------------------    and Treasurer (Principal    March 31, 1998
       Joseph F. Pesce            Financial and Accounting
                                  Officer)

     /s/ JOHN K. CARLYLE
------------------------------  Director                      March 31, 1998
       John K. Carlyle

    /s/ GEORGE H. CONRADES
------------------------------  Director                      March 31, 1998
      George H. Conrades

    /s/ ROBERT W. O'LEARY
------------------------------  Director                      March 31, 1998
      Robert W. O'Leary

    /s/ ROBERT A. ORTENZIO
------------------------------  Director                      March 31, 1998
      Robert A. Ortenzio

     /s/ PAUL B. QUEALLY
------------------------------  Director                      March 31, 1998
       Paul B. Queally

    /s/ MITCHELL T. RABKIN
------------------------------  Director                      March 31, 1998
      Mitchell T. Rabkin

    /s/ LOIS E. SILVERMAN
------------------------------  Director                      March 31, 1998
      Lois E. Silverman

                                       33
<PAGE>
             REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES

To Concentra Managed Care, Inc.:

    We have audited in accordance with generally accepted auditing standards,
the financial statements of Concentra Managed Care, Inc. incorporated by
reference in this Form 10-K and have issued our report thereon dated January 30,
1998 (except with respect to the matter discussed in Footnote 14, as to which
the date is March 11, 1998). Our audit was made for the purpose of forming an
opinion on the basic financial statements taken as a whole. The schedule listed
in the index of the financial statement schedules is presented for the purpose
of complying with the Securities and Exchange Commission's rules and is not part
of the basic financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.

Arthur Andersen LLP
Boston, Massachusetts
January 30, 1998

                                       34
<PAGE>
                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
 EXHIBIT
  NUMBER                                                                                                          PAGE
----------                                                                                                        -----
<C>         <S>                                                                                                <C>

      2.1   Agreement and Plan of Reorganization dated April 21, 1997 among CRA Managed Care, Inc. ("CRA"),
            OccuSystems, Inc. ("OccuSystems") and the Registrant (incorporated by reference to Appendix A to
            the Joint Proxy Statement/Prospectus forming a part of the Registrant's Registration Statement on
            Form S-4 (File No. 333-27105) filed with the Securities and Exchange Commission (the "SEC") on
            July 31, 1997)

     +2.2   Agreement and Plan of Merger dated February 24, 1998 among the Registrant and Preferred Payment
            Systems, Inc.

      2.3   Asset Purchase Agreement dated June 4, 1997, among CRA, FNS Acquisition Corp., First Notice
            Systems, Inc. and the stockholders of First Notice Systems, Inc. (incorporated by reference to
            Exhibit 1 to CRA's Current Report on Form 8-K (File No. 02-25856) dated June 18, 1997)

     +3.1   Amended and Restated Certificate of Incorporation dated August 27, 1997

      3.2   Bylaws of Registrant (incorporated by reference to Exhibit 3.3 to the Registrant's Registration
            Statement on Form S-4 (File No. 333-27105) filed with the SEC on July 31, 1997)

      4.1   Form of Certificate of Common Stock, par value $.01 per share, of the Registrant (incorporated by
            reference to Exhibit 4.1 to the Registrant's Registration Statement on Form S-4 (File No.
            333-27105) filed with the SEC on July 31, 1997)

      4.2   Indenture dated December 24, 1996 between OccuSystems and United States Trust Company of New
            York, as Trustee, (the "OccuSystems Indenture") relating to the 6% Convertible Subordinated Notes
            due 2001 (incorporated by reference to Exhibit 4.1 to OccuSystems' Registration Statement on Form
            S-3 (File No. 333-20933) as filed with the SEC on January 31, 1997)

     +4.2   First Supplemental Indenture dated August 29, 1997 between OccuSystems, the Registrant and United
            States Trust Company of New York, as Trust, relating to the 6% Convertible Subordinated Notes due
            2001

      4.3   Indenture dated as of March 16, 1998 between the Registrant and Chase Bank of Texas, N.A., as
            Trustee, (the "Concentra Indenture") relating to the 4.5% Convertible Subordinated Notes due 2003
            (incorporated by reference to the Registrant's Current Report on Form 8-K (File No. 000-22751)
            filed with the SEC on March 30, 1998)

      4.4   Form of 6% Convertible Subordinated Note due 2001, establishing the terms of the 6% Convertible
            Subordinated Notes due 2001 pursuant to the OccuSystems Indenture (incorporated by reference to
            Exhibit A to the OccuSystems Indenture which Indenture is incorporated by reference to Exhibit
            4.1 to OccuSystems' Registration Statement on Form S-3 (File No. 333-20933) as filed with the SEC
            on January 31, 1997)

      4.5   Form of 4.5% Convertible Subordinated Notes due 2003, establishing the terms of the 4.5%
            Convertible Subordinated Notes due 2003 pursuant to the Concentra Indenture (incorporated by
            reference to the Registrant's Current Report on Form 8-K (File No.000-22751) filed with the SEC
            on March 30, 1998)

     +4.6   Certificate of Designation of Series A Junior Participating Preferred Stock

      4.7   Form of Right Certificate (included as Exhibit B to the Rights Agreement filed as Exhibit 10.2
            hereto). Pursuant to the Rights Agreement, printed Right Certificates will not be delivered until
            as soon as practicable after the Distribution Date (as defined in the Rights Agreement)
</TABLE>

                                       35
<PAGE>
<TABLE>
<C>         <S>                                                                                                <C>
      4.8   Registration Rights Agreement dated as of March 11, 1998, among the Registrant, BT Alex. Brown
            Incorporated, BancAmerica Robertson Stephens, Donaldson, Lufkin & Jenrette Securities Corporation
            and Piper Jaffray Inc. (incorporated by reference to the Registrant's Current Report on Form 8-K
            (File No. 000-22751) filed with the SEC on March 30, 1998)

      4.9   Registration Rights Agreement dated as of March 8, 1994, among Comprehensive Rehabilitation
            Associates, Inc., J.H. Whitney & Co., Whitney 1990 Equity Fund, L.P., Whitney Subordinated Debt
            Fund, L.P., First Union Corporation, Lois E. Silverman and Donald J. Larson (incorporated by
            reference to Exhibit 10.7 to CRA's Registration Statement on Form S-1 (File No. 33-90426) filed
            with the SEC on March 17, 1995)

    +10.1   Amended and Restated Credit Agreement dated as of February 20, 1998, between the Registrant, as
            Borrower, and First Union National Bank, as Administrative Agent, Fleet National Bank, as
            Documentation Agent, and the banks and financial institutions listed as signatories thereto, as
            amended by that certain letter agreement dated as of March 9, 1998, and as further amended by
            that certain letter agreement dated as of March 12, 1998

     10.2   Purchase Agreement dated as of March 11, 1998, among the Registrant, BT Alex. Brown Incorporated,
            BancAmerica Robertson Stephens, Donaldson, Lufkin & Jenrette Securities Corporation and Piper
            Jaffray, Inc. (incorporated by reference to the Registrant's Current Form on Form 8-K (File No.
            000-22751) filed with the SEC on March 30, 1998)

     10.3   Rights Agreement dated September 29, 1997 between the Registrant and ChaseMellon Shareholder
            Services, L.L.C. (incorporated by reference to Exhibit 1 to the Registrant's Registration
            Statement on Form 8-A filed with the SEC on October 1, 1998)

     10.4   Concentra Managed Care, Inc. 1997 Long-Term Incentive Plan (incorporated by reference to Appendix
            G to the Joint Proxy Statement/Prospectus forming a part of the Registrant's Registration
            Statement on Form S-4 (File No. 333-27105) filed with the SEC on July 31, 1997)

     10.5   Concentra Managed Care, Inc. 1997 Employee Stock Purchase Plan (incorporated by reference to
            Appendix H to the Joint Proxy Statement/Prospectus forming a part of the Registrant's
            Registration Statement on Form S-4 (file no. 333-27105) filed with the SEC on July 31, 1997)

     10.6   CRA Managed Care, Inc. 1995 Employee Stock Purchase Plan (incorporated by reference to Exhibit
            10.25 to CRA's Registration Statement on Form S-1 (File No. 33-90426) filed with the SEC on March
            17, 1995)

     10.7   CRA Managed Care, Inc. 1994 Non-Qualified Stock Option Plan for Non-Employee Directors
            (incorporated by reference to Exhibit 10.3 to CRA's Registration Statement on Form S-1 (File No.
            33-90426) filed with the SEC on March 17, 1995)

     10.8   CRA Managed Care, Inc. 1994 Non-Qualified Time Acceleration Restricted Stock Option Plan
            (incorporated by reference to Exhibit 10.5 to CRA's Registration Statement on Form S-1 (File No.
            33-90426) filed with the SEC on March 17, 1995)

     10.9   OccuSystems, Inc. 1995 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.10 to
            OccuSystems' Registration Statement on Form S-1 (File No. 33-79734) filed with the SEC on May 8,
            1995)

     10.10  First Amended and Restated OccuSystems, Inc. and its Subsidiaries and Affiliates Stock Option and
            Restricted Stock Purchase Plan dated April 28, 1992 (incorporated by reference to Exhibit 10.11
            to OccuSystems' Registration Statement on Form S-1 (File No. 33-79734) filed with the SEC on May
            8, 1995)
</TABLE>

                                       36
<PAGE>
<TABLE>
<C>         <S>                                                                                                <C>
     10.11  Employment Agreement dated April 21, 1997, between the Registrant and Donald J. Larson
            (incorporated by reference to Exhibit 10.8 to the Registrant's Registration Statement on Form S-4
            (File No. 333-27105) filed with the SEC on July 31, 1997)

     10.12  Employment Agreement dated April 21, 1997, between the Registrant and Joseph F. Peace
            (incorporated by reference to Exhibit 10.9 to the Registrant's Registration Statement on Form S-4
            (File No. 333-27105) filed with the SEC on July 31, 1997)

     10.13  Employment Agreement dated April 21, 1997, between the Registrant and Richard A. Parr II
            (incorporated by reference to Exhibit 10.11 to the Registrant's Registration Statement on Form
            S-4 (File No. 333-27105) filed with the SEC on July 31, 1997)

     10.14  Employment Agreement dated April 21, 1997, between the Registrant and Daniel J. Thomas
            (incorporated by reference to Exhibit 10.12 to the Registrant's Registration Statement on Form
            S-4 (File No. 333-27105) filed with the SEC on July 31, 1997)

     10.15  Employment Agreement dated April 21, 1997, between the Registrant and W. Thomas Fogarty
            (incorporated by reference to Exhibit 10.13 to the Registrant's Registration Statement on Form
            S-4 (File No. 333-27105) filed with the SEC on July 31, 1997)

     10.16  Employment Agreement dated April 21, 1997, between the Registrant and James M. Greenwood
            (incorporated by reference to Exhibit 10.15 to the Registrant's Registration Statement on Form
            S-4 (File No. 333-27105) filed with the SEC on July 31, 1997)

    +10.17  Indemnification Agreement dated September 17, 1997, between the Registrant and Donald J. Larson
            (identical agreements were executed between the Registrant and each of the following: Joseph F.
            Peace, Richard A. Parr II, Daniel J. Thomas, James M. Greenwood, W. Tom Fogarty, Kenneth
            Loffredo, Mitchell T. Rabkin, George H. Conrades, Robert A. Ortenzio, Lois E. Silverman, Paul B.
            Queally, John K. Carlyle, Robert W. O'Leary)

     10.18  Termination Agreement dated as of May 15, 1997, between the Registrant and Lois E. Silverman
            (incorporated by reference to Exhibit 10.17 to the Registrant's Registration Statement on Form
            S-4 (File No. 333-27105) filed with the SEC on July 31, 1997)

     10.19  Termination Agreement dated as of May 15, 1997, between the Registrant and Richard D. Rehm
            (incorporated by reference to Exhibit 10.18 to the Registrant's Registration Statement on Form
            S-4 (File No. 333-27105) filed with the SEC on July 31, 1997)

     10.20  Agreement of Acceptance dated as of July 29, 1997, among the Registrant, Donald J. Larson and
            Lois E. Silverman (incorporated by reference to Exhibit 10.19 to the Registrant's Registration
            Statement on Form S-4 (File No. 333-27105) filed with the SEC on July 31, 1997)

     10.21  Software License Agreement dated February 10, 1995 between CRA and CompReview, Inc. (confidential
            treatment granted) (incorporation by reference to CRA's Registration Statement on Form S-1 (File
            No. 33-90426) filed with the SEC on March 17, 1995)

     10.22  Lease Agreement dated January 1, 1994 between the Registrant and Colonial Realty Trust for office
            space located at 168 U.S. Route 1, Falmouth, ME 04105 (incorporated by reference to Exhibit 10.10
            to CRA's Registration Statement on Form S-1 (File No. 33-90426) filed with the SEC on March 17,
            1995)

     10.23  Lease Agreement dated January 1, 1994 between the Registrant and Colonial Realty Trust for office
            space located at 46 Austin Street, Newtonville, MA 02160 (incorporated by reference to Exhibit
            10.11 to CRA's Registration Statement on Form S-1 (File No. 33-90426) filed with the SEC on March
            17, 1995)
</TABLE>

                                       37
<PAGE>
<TABLE>
<C>         <S>                                                                                                <C>
     10.24  Lease Agreement dated January 1, 1994 between the Registrant and Colonial Realty Trust for office
            space located at 312 Union Wharf, Boston, MA 02109 (incorporated by reference to Exhibit 10.17 to
            CRA's Registration Statement on Form S-1 (File No. 33-90426) filed with the SEC on March 17,
            1995)

     10.25  Lease Agreement dated January 1, 1994 between the Registrant and Colonial Realty Trust for office
            space located at 565 Turnpike Street, North Andover, MA 01845 (incorporated by reference to
            Exhibit 10.18 to CRA's Registration Statement on Form S-1 (File No. 33-90426) filed with the SEC
            on March 17, 1995)

     10.26  Lease Agreement dated January 1, 1994 between the Registrant and Colonial Realty Trust for office
            space located at 15A Riverway Place, Bedford, NH 03110 (incorporated by reference to Exhibit
            10.19 to CRA's Registration Statement on Form S-1 (File No. 33-90426) filed with the SEC on March
            17, 1995)

     10.27  Lease Agreement dated January 1, 1994 between the Registrant and Colonial Realty Trust for office
            space located at 509 Stillwells Corner Road, Freehold, NJ 07728 (incorporated by reference to
            Exhibit 10.20 to CRA's Registration Statement on Form S-1 (File No. 33-90426) filed with the SEC
            on March 17, 1995)

     10.28  Lease Agreement dated January 1, 1994 between the Registrant and Colonial Realty Trust for office
            space located at 732 Thimble Shoals Blvd., Newport News, VA 23606 (incorporated by reference to
            Exhibit 10.21 to CRA's Registration Statement on Form S-1 (File No. 33-90426) filed with the SEC
            on March 17, 1995)

     10.29  Lease Agreement dated January 1, 1994 between the Registrant and Colonial Realty Trust for office
            space located at 10132 Colvin Run Road, Suite A, Great Falls, VA 22066 (incorporated by reference
            to Exhibit 10.22 to CRA's Registration Statement on Form S-1 (File No. 33-90426) filed with the
            SEC on March 17, 1995)

     10.30  Occupational Medicine Center Management and Consulting Agreement dated December 31, 1993, between
            Concentra Health Services, Inc. (formerly OccuCenters, Inc.) ("CHS") and Occupational Health
            Centers of Southwest, P.A., a Texas professional association (incorporated by reference to
            Exhibit 10.6 to OccuSystems' Annual Report on Form 10-K (File No. 0-24440) filed with the SEC on
            March 29, 1996)

     10.31  Occupational Medicine Center Management and Consulting Agreement dated December 31, 1993, between
            CHS and Occupational Health Centers of Southwest, P.A., a Arizona professional association
            (incorporated by reference to Exhibit 10.7 to OccuSystems' Annual Report on Form 10-K (File No.
            0-24440) filed with the SEC on March 29, 1996)

     10.32  Occupational Medicine Center Management and Consulting Agreement dated December 31, 1993, between
            CHS and Occupational Health Centers of New Jersey, a New Jersey professional association
            (incorporated by reference to Exhibit 10.8 to OccuSystems' Registration Statement on Form S-1
            (File No. 33-01660) filed with the SEC on March 28, 1996)

     10.33  Warrant Agreement dated January 3, 1995 between OccuSystems and Creditanstalt-Bankverein
            (incorporation by reference to Exhibit 10.13 to OccuSystems' Registration Statement on Form S-1
            (File No. 33-01660) filed with the SEC on March 28, 1996)

    +11.1   Statement regarding calculation of shares used in determining earnings per share and pro forma
            earnings per share.

    +13.1   Excerpts from the Company's 1997 Annual Report to Stockholders.

    +21.1   List of Subsidiaries.

     23.1   Consent of Arthur Andersen LLP.
</TABLE>

                                       38
<PAGE>
<TABLE>
<C>         <S>                                                                                                <C>
    +27.1   Financial Data Schedule

    +27.2   Financial Data Schedule

    +27.3   Financial Data Schedule
</TABLE>

------------------------

+   Filed herewith.

                                       39
<PAGE>
                                                        SUPPLEMENTAL SCHEDULE II

                          CONCENTRA MANAGED CARE, INC.
                        ALLOWANCE FOR DOUBTFUL ACCOUNTS
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997

<TABLE>
<CAPTION>
                                           BALANCE       ADDITIONS     ADDITIONS                      BALANCE
                                           AT THE       CHARGED TO      ACQUIRED     DEDUCTIONS       AT THE
                                          BEGINNING      COSTS AND      THROUGH         FROM          END OF
                                         OF THE YEAR     EXPENSES     ACQUISITIONS    RESERVES       THE YEAR
                                        -------------  -------------  ------------  -------------  -------------
<S>                                     <C>            <C>            <C>           <C>            <C>
Allowance for Doubtful Accounts:
    1995..............................  $   3,643,000  $   4,499,000  $  2,259,000  $   2,984,000  $   7,417,000
    1996..............................      7,417,000      6,619,000     5,089,000      7,897,000     11,228,000
    1997..............................     11,228,000     18,121,000     6,951,000     19,039,000     17,261,000
</TABLE>

                                      S-1