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                                                                   Exhibit 10.54

                       WORKING CAPITAL ASSURANCE AGREEMENT
                                 (MEDINA, OHIO)

         THIS AGREEMENT is made as of the 31st day of December, 1997, by and
between BALANCED CARE CORPORATION, a Delaware corporation, with a principal
place of business at 5021 Louise Drive, Suite 200, Mechanicsburg, PA 17055
("BCC") and Medina ALF, Inc., a Florida corporation, with a principal place of
business at 1675 Palm Beach Lakes Blvd., West Palm Beach, FL 33401 (the
"Lessor").

                              W I T N E S S E T H:

         WHEREAS, the Lessor and Senior Care Operators of Ohio, LLC, a Delaware
limited liability company (the "Lessee") have agreed to enter into that certain
Lease Agreement, of even date herewith, relating to certain premises located in
Medina, Ohio (the "Lease") and all capitalized terms used herein and not
otherwise defined herein shall have the same meanings as ascribed to such terms
in the Lease; and

         WHEREAS, pursuant to a Shortfall Funding Agreement dated of even date
herewith (the "Shortfall Agreement") between Lessee, the Members (as defined in
the Shortfall Agreement) and BCC, Lessee has caused to be issued and delivered
to Lessor a standby letter of credit in the amount of $750,000 (the "LC") naming
Lessor as beneficiary, which shall be used to fund operational losses
anticipated in connection with the Facility; and

         WHEREAS, BCC has agreed that, in the event that Lessor for any reason
whatsoever is unable to obtain funds pursuant to the LC, or if the LC has been
depleted, BCC will unconditionally fund operational losses to the Lessee
pursuant to the Shortfall Agreement; and

         WHEREAS, as additional security for the obligations of Lessee under the
Lease (the "Lease Obligations"), the Lessor has requested the execution and
delivery of this Agreement.

         NOW THEREFORE, for good and valuable consideration paid by each of the
parties hereto to the other, the receipt and sufficiency of which is hereby
acknowledged and in consideration of the covenants and agreements set forth
herein, the parties hereto agree as follows:

         1. (a) BCC unconditionally agrees to loan to the Lessee sufficient
funds, by means of working capital loans (collectively, the "Working Capital
Loans"), to pay and satisfy the amount by which the Lessee's cash requirements
to meet its obligations (including, without limitation, operating expenses, debt
service and the obligations of Lessee under the Lease) due and payable during
any month exceed the gross revenues received by the Lessee during such month
(the 




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"Shortfall"). Working Capital Loans from BCC to Lessee shall be made without
regard to any default, breach of condition, bankruptcy of Lessee or failure to
satisfy any condition or obligation under the Shortfall Agreement. BCC shall,
without further direction, advance to the Lessee an amount equal to the
Shortfall within three (3) days after demand by Lessor or Lessee in the form of
Working Capital Loans so that the Lessee is able to meet all of its working
capital obligations (including, without limitation, the obligations of Lessee
under the Lease) when due. BCC acknowledges that the covenants and agreements
made hereunder by BCC are being made to induce the Lessor to enter into and
accept the Lease and enable the Lessee to fulfill its working capital
obligations, including, without limitation, the obligations of Lessee under the
Lease. Accordingly, it is expressly intended by BCC that the covenants and
agreements by BCC hereunder may be relied upon and enforced by the Lessor. In
furtherance of the foregoing, Lessor shall have the right to directly request
from BCC any advance needed to satisfy such Shortfalls, and upon such request
the same shall be funded by BCC.

            (b) The obligations of BCC contained herein are absolute and
unconditional obligations to Lessor, and no provision herein or any other
agreement to which BCC is a party (including without limitation the Shortfall
Agreement) shall be construed to the contrary. Without limiting the generality
of the foregoing, should any conflict exist between the provisions of the
Shortfall Agreement and the provisions of this Agreement, the provisions of this
Agreement shall control.

         2. Notwithstanding any provision to the contrary set forth herein,
BCC's obligation to provide the Working Capital Loans, and advance Shortfalls,
to the Lessee shall not commence until such time as the full amount to be
deposited by Lessee in the Working Capital Reserve has been depleted, by drawing
down on the LC; provided, however, should funds in the Working Capital Reserve
available through drawing down on the LC not be available to fund the working
capital needs of Lessee for any reason whatsoever, BCC shall nonetheless have
the obligation to fund Shortfalls as herein provided. When the working capital
needs of Lessee require such action, Lessor shall make demand to draw down on
the LC until fully depleted to fund such working capital needs of Lessee.

         3. (a) The Lessor shall not amend, modify or otherwise alter the Lease
or any other Lease Document (as defined in Appendix 1 to the Shortfall
Agreement) without BCC's prior written consent, in each instance, which consent
shall not be unreasonably withheld, conditioned or delayed. Notwithstanding the
previous sentence, the obligations of BCC hereunder shall not be affected by the
termination, discontinuance, release or modification of any agreement from any
endorser, surety or guarantor of the obligations of Lessee under the Lease.

            (b) In addition, the Lessor hereby covenants and agrees with BCC
that, except in connection with the exercise or any of its rights and/or
remedies under the Lease Documents, the Lessor shall not terminate the Lease
without the prior written consent of BCC, which consent shall not be
unreasonably withheld, conditioned or delayed.

         4. The obligations of BCC hereunder shall not be affected by any change
in the beneficial ownership of the Lessee or by reason of any disability of the
Lessee. This Agreement



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shall be in addition to any guaranty or other security for the Lease
Obligations, and it shall not be prejudiced or rendered unenforceable by the
invalidity of any such guaranty or security. This Agreement shall continue to be
effective or be reinstated, as the case may be, if, at any time, any payment of
the Lease Obligations is rescinded or must otherwise be returned by the Lessor
upon the insolvency, bankruptcy or reorganization of the Lessee or otherwise,
all as though such payment had not been made.

         5. Without limiting BCC's obligation to provide the Working Capital
Loans, upon the occurrence of any Default under any of the Lease Documents, BCC
shall have the right, but not the obligation, to cure such Default within any
applicable notice and grace periods provided in the Lease Documents, and, to the
extent permitted by law, enter upon the Facility, if necessary, for such purpose
and take all such actions as BCC may deem necessary or appropriate to remedy
such Default. The Lessor agrees to give written notice to BCC of any Default
under the Lease or any other Lease Document for which Lessor becomes aware;
provided, however, such notice shall only be required if Lessor is otherwise
obligated to give Lessee notice of such Default.. The Lessor agrees to accept
any remedy performed by BCC or any affiliate of BCC as if the same had been
performed by the Lessee.

         6. Any notice, request, demand, statement or consent made hereunder
shall be in writing and shall be deemed duly given if personally delivered, sent
by certified mail, return receipt requested, or sent by a nationally recognized
commercial overnight delivery service with provisions for a receipt, postage or
delivery charges prepaid, and shall be deemed given when postmarked or placed in
the possession of such mail or delivery service and addressed as follows:

IF TO BCC:                 Balanced Care Corporation
                           5021 Louise Drive, Suite 200
                           Mechanicsburg, PA  17055
                           Attn:  President

WITH COPIES TO:            Balanced Care Corporation
                           5021 Louise Drive, Suite 200
                           Mechanicsburg, PA  17055
                           Attn:  General Counsel

                           and

                           Kirkpatrick & Lockhart LLP
                           1500 Oliver Building
                           Pittsburgh, Pennsylvania  15222-2312
                           Attn:  Steven J. Adelkoff, Esq.

IF TO THE LESSOR:          Medina ALF, Inc.
                           1675 Palm Beach Lakes Boulevard
                           West Palm Beach, FL 33401



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or at such other place as any of the parties hereto may from time to time
hereafter designate to the others in writing. Any notice given to BCC or the
Lessee by the Lessor at any time shall not imply that such notice or any further
or similar notice was or is required.

         7. This Agreement shall be construed, and the rights and obligations of
the Lessor, the Lessee and BCC shall be determined, in accordance with the laws
of the State of Ohio, excluding its conflicts of laws.

         8. This Agreement and BCC's obligations hereunder shall automatically
terminate upon the purchase by BCC or an affiliate of BCC of all of the issued
and outstanding equity of the Lessee or substantially all of the assets of
Lessee; provided, however, such purchases may only be made in accordance with
the terms and conditions of the Lease and other Lease Documents.

         9. The Lessor covenants and agrees with BCC that the Lessor shall not
consent to any assignment of the Lessee's interest under the Lease (except to
BCC or an affiliate of BCC) or any transfer of substantially all of the Lessee's
assets or any transfer of the issued and outstanding equity of the Lessee
without the prior written consent of BCC, which consent BCC may withhold in its
sole and absolute discretion. In addition, in the event that, in violation of
the terms of the Lease, (a) the Lessee attempts to assign its interest in the
Lease (or transfer substantially all of its assets), (b) the current holders of
the issued and outstanding equity of the Lessee attempt to transfer any such
equity or (c) if any of the events described in Section 25.1.3 of the Lease
occurs with respect to Lessee, the Lessor covenants and agrees with BCC that,
subject to applicable law, the Lessor shall use reasonable efforts to terminate
the Lease (in accordance with the terms thereof) and shall enter into a new
lease of the Property with BCC (or any of its wholly-owned subsidiaries,
provided, that BCC executes and delivers a guaranty of any such lease, in form
and substance acceptable to Lessor), in form and substance acceptable to the
Lessor; provided, however, that any such lease shall be substantially similar to
the Lease. In connection with the execution and delivery of any such lease,
(y) the new lessee shall execute and deliver any additional documents that the
Lessor may request, in form and substance similar to the Lease Documents and
(z) BCC shall deliver to the Lessor such evidence as Lessor shall request, in
form and substance acceptable to the Lessor, that the new lease and all other
documents executed and delivered in connection therewith have been duly
authorized, executed and delivered and are enforceable. BCC agrees to pay upon 3
days after written demand all of the costs and expenses reasonably incurred by
the Lessor (including, without limitation, attorneys' fees and expenses) in
connection with the performance of the Lessor's obligations under this 
Section 11.

         10. (a) Financial Information. Lessor reserves the right to reasonably
require financial information (including tax returns, detailed cash flow
information and contingent liability information) of BCC at such times as Lessor
shall deem reasonably necessary, and BCC shall promptly provide such information
to Lessor in a form reasonably satisfactory to Lessor.

             (b) Entire Agreement. This Agreement contains the entire
understanding among the parties hereto with respect to its subject matter and
supersedes any prior understandings or agreements between the parties with
respect to such subject matter.



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                  (c) Amendments. This Agreement may be modified or amended only
by a written instrument executed by the Lessor, the Lessee and BCC.

                  (d) Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the substance of the
transactions contemplated hereby is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.

                  (e) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of which
together shall constitute but a single instrument.

                  (f) Future Cooperation. Each party covenants and agrees to
take such further action and execute such further documents as may be necessary
or appropriate to carry out the intention of this Agreement.

                  (g) Successors and Assigns. This Agreement shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns.

                  (h) Third Party Beneficiary. The parties hereto intend and
agree that Lessor shall be deemed a third party beneficiary of the Shortfall
Agreement with respect to the obligation of BCC to provide Working Capital Loans
to Lessee; and in that regard, Lessor shall be permitted to enforce against BCC
such provisions in the Shortfall Agreement requiring BCC to advance such Working
Capital Loans to Lessee; provided, however, Lessor shall have no obligations
whatsoever under, or liability with respect to, the Shortfall Agreement.


                           [SIGNATURE PAGES TO FOLLOW]



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         EXECUTED as a sealed instrument as of the date first written above.

WITNESS:                                    BCC:

                                            BALANCED CARE CORPORATION, a
                                            Delaware corporation


                                            By:  /s/ Brian L. Barth
-------------------------------------            -------------------------------
Name:                                            Name:  Brian L. Barth
                                                 Title: Vice President




WITNESS:                                    LESSOR:

                                            Medina ALF, Inc.



                                            By:  /s/ Michael A. Tozzi
-------------------------------------            -------------------------------
Name:                                            Name:  Michael A. Tozzi
                                                 Title: Director, Sr. Housing





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