AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
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     This Amendment No. 1 to Employment  Agreement (the "Amendment") is made and
entered into this 12th day of January,  1999, by and between  Concentra  Managed
Care,  Inc.,  a  Delaware  corporation  (the  "Company"),  and  Joseph F.  Pesce
("Executive").

                                   WITNESSETH:

     WHEREAS,  the Company and Executive have entered into a certain  Employment
Agreement, dated as of April 21, 1997 (the "Employment Agreement"); and

     WHEREAS,  the Company and Executive now desire to enter into this Amendment
for the purpose of making certain amendments to the Employment  Agreement deemed
necessary and desirable and in the best  interests of the Company and Executive,
all as more fully described herein; and

     WHEREAS,  the  members  of the  Option and  Compensation  Committee  of the
Company's Board of Directors have heretofore approved the execution and delivery
of this Amendment;

     NOW, THEREFORE,  in consideration of the foregoing and the mutual covenants
and agreements  contained herein and for other good and valuable  consideration,
the receipt and  sufficiency of which are hereby  acknowledged,  the Company and
Executive hereby agree as follows:

     1. Termination by Executive. Subsection 5(d) of the Employment Agreement is
hereby amended to read in its entirety as follows:

                  "(d)  Termination  by Executive.  Subject to the provisions of
         Section 7(c), and at his option, Executive may terminate his employment
         hereunder (1) for Good Reason and/or for Additional  Reason,  or (2) if
         his health should become impaired to an extent that makes the continued
         performance of his duties hereunder hazardous to his physical or mental
         health or his life.

                  For purposes of this Agreement, the termination of Executive's
         employment  hereunder by Executive because of the occurrence of any one
         or more of the  following  events shall be deemed to have  occurred for
         "Good Reason":

                  (A)      a   material   change  in  the  nature  or  scope  of
                           Executive's authorities,  status, powers,  functions,
                           duties, responsibilities,  or reporting relationships
                           that is  determined  by Executive in good faith to be
                           adverse to those existing before such change;


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                  (B)      any removal by the Company of Executive  from, or any
                           failure  to  reelect   Executive  to,  the  positions
                           indicated  in Section 1 hereof  except in  connection
                           with termination of Executive's  employment for Cause
                           or disability;

                  (C)      a reduction in  Executive's  Base Salary or any other
                           failure  by the  Company  to  comply  with  Section 3
                           hereof  that  is  not  consented  to or  approved  by
                           Executive;

                  (D)      the relocation of  Executive's  office at which he is
                           to perform his duties and responsibilities  hereunder
                           to a location  outside of the Boston,  Massachusetts,
                           metropolitan area, or a materially adverse alteration
                           in the office  space  within  which  Executive  is to
                           perform his duties and responsibilities  hereunder or
                           in  the   secretarial  and   administrative   support
                           provided to Executive; or

                  (E)      a  failure  by  the  Company  or  any  subsidiary  or
                           affiliate  of the  Company  to comply  with any other
                           material  term or  provision  hereof  or of any other
                           written  agreement  between Executive and the Company
                           or any such subsidiary or affiliate.

                  For purposes of this Agreement, the termination of Executive's
         employment  hereunder by Executive because of the occurrence of any one
         or more of the following  events within one (1) year following a Change
         in Control  (as  defined  in the  Concentra  Managed  Care,  Inc.  1997
         Long-Term Incentive Plan) of the Company which takes place on or before
         December 31,  1999,  shall be deemed to have  occurred for  "Additional
         Reason":

                  (A)      the removal of  Executive  from the position of Chief
                           Financial  Officer or a material change in the nature
                           or scope of any of Executive's  authorities,  status,
                           powers,  functions,  duties, or responsibilities that
                           is generally an essential  function of such  position
                           and which is determined by Executive in good faith to
                           be adverse to those existing before such change;

                  (B)      a reduction in  Executive's  Base Salary or any other
                           failure  by the  Company  to  comply  with  Section 3
                           hereof  that  is  not  consented  to or  approved  by
                           Executive;

                  (C)      the relocation of  Executive's  office at which he is
                           to perform his duties and responsibilities  hereunder
                           to a location  outside of the Boston,  Massachusetts,
                           metropolitan


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                           area,  or a  materially  adverse  alteration  in  the
                           office space within which Executive is to perform his
                           duties  and  responsibilities  hereunder  or  in  the
                           secretarial and  administrative  support  provided to
                           Executive; or

                  (D)      a  failure  by  the  Company  or  any  subsidiary  or
                           affiliate  of the  Company  to comply  with any other
                           material  term or  provision  hereof  or of any other
                           written  agreement  between Executive and the Company
                           or any such subsidiary or affiliate."

         2. Compensation Upon Termination or Failure to Renew.  Section 6 of the
Employment Agreement is hereby amended by adding the following subsection (f) at
the end of such Section 6:

                  "(f)  Additional  Reason.  If Executive  shall  terminate  his
         employment for Additional Reason, as well as for Good Reason,  then, in
         addition to and not in lieu of any other amounts payable by the Company
         to Executive  whether  pursuant to Section 6(d) or otherwise  (it being
         the intention of the parties that,  upon the  occurrence of an event or
         events  described in the  definition or "Good  Reason" and  "Additional
         Reason" in Section 5(d),  Executive may  terminate  this  Agreement for
         Good Reason and for  Additional  Reason),  then the  Company  shall pay
         Executive  as  additional  severance  pay,  on or before  the fifth day
         following  the  Date  of  Termination,  a lump  sum in  cash  equal  to
         Executive's  full  annual Base Salary at the rate in effect at the time
         the  Notice  of  Termination  is given  (for a total  of two (2)  times
         Executive's  full annual Base Salary when combined with amounts payable
         pursuant to Section 6(d)(B)).

                  In addition,  (x) the Company  shall make payments of premiums
         as necessary to cause  Executive  and  Executive's  spouse and children
         under age twenty-five (25) to continue to be covered by the medical and
         dental  insurance as in effect at and as of the Date of Termination (or
         to provide as similar coverage as possible for the same premiums if the
         continuation of existing coverage is not permitted) for one (1) year in
         addition to the one (1) year  provided  for under  Section  6(d) (for a
         total of two (2) years) after the Date of Termination,  in each case to
         the extent such coverage is available."

         3. Other Provisions Relating to Termination.  Subsections 7(b) and 7(c)
of the  Employment  Agreement  are hereby  amended to read in their  entirety as
follows:

                  "(b) Date of  Termination.  For  purposes  of this  Agreement,
         "Date of  Termination"  shall mean:  (1) if  Executive's  employment is
         terminated  by his  death,  the date of his death;  (2) if  Executive's


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         employment  is terminated  because of a disability  pursuant to Section
         5(b),  then  thirty  (30) days  after  Notice of  Termination  is given
         (provided that Executive  shall not have returned to the performance of
         his duties on a full-time  basis  during such thirty (30) day  period);
         (3) if Executive's employment is terminated by the Company for Cause or
         by  Executive  for Good  Reason  and/or for  Additional  Reason,  then,
         subject to Sections 7(c) and 7(d),  the date specified in the Notice of
         Termination;  (4) if the Company  gives  Executive  notice  pursuant to
         Section 1 prior to any  anniversary of the date hereof that the Term of
         this Agreement  shall not be  automatically  extended for an additional
         year on any  such  anniversary  date,  the  date  upon  which  the Term
         expires; and (5) if Executive's  employment is terminated for any other
         reason, the date on which a Notice of Termination is given.

                  (c) Good Reason and/or Additional Reason.  Upon the occurrence
         of an event  described in clauses (A) through (E) of the  definition of
         "Good Reason" in Section 5(d),  and/or upon the  occurrence of an event
         described in clauses (A) through (D) of the  definition of  "Additional
         Reason"  in  Section  5(d),  Executive  may  terminate  his  employment
         hereunder  for Good Reason and/or  Additional  Reason,  as  applicable,
         within one hundred  eighty (180) days  thereafter by giving a Notice of
         Termination  to the  Company  to  that  effect.  If the  effect  of the
         occurrence  of the event giving rise to Good Reason  and/or  Additional
         Reason  under  Section  5(d) may be cured,  the Company  shall have the
         opportunity  to cure any such  effect for a period of thirty  (30) days
         following receipt of Executive's Notice of Termination.  If the Company
         fails to cure any such effect,  the  termination for Good Reason and/or
         Additional  Reason  shall  become  effective  on the date  specified in
         Executive's  Notice of  Termination.  If  Executive  does not give such
         Notice of Termination  to the Company,  then this Agreement will remain
         in  effect;  provided,  however,  that  the  failure  of  Executive  to
         terminate this Agreement for Good Reason and/or Additional Reason shall
         not be deemed a waiver of Executive's right to terminate his employment
         for Good  Reason  and/or  Additional  Reason upon the  occurrence  of a
         subsequent event described in Section 5(d) in accordance with the terms
         of this Agreement."

         4. No Change.  Except as  expressly  modified  hereby,  the  Employment
Agreement shall continue in effect unchanged.



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         IN WITNESS  WHEREOF,  the  Company and  Executive  have  executed  this
Amendment on and as of the date first set forth above.

                                    THE  COMPANY:

                                    CONCENTRA  MANAGED  CARE,  INC.

                                    By:___________________________
                                           Daniel J. Thomas
                                           President and Chief Executive Officer



                                    EXECUTIVE:

                                    _______________________________
                                           Joseph F. Pesce












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