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                                                                   EXHIBIT 10.17

                              FIRST AMENDMENT TO
                         PARAGON HEALTH NETWORK, INC.
                         1997 LONG-TERM INCENTIVE PLAN
                                        
     THIS FIRST AMENDMENT is made on the     day of         , 1998, by Paragon
                                         ---        --------
Health Network, Inc., a Delaware corporation (the "Corporation").

                                 INTRODUCTION
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     WHEREAS, the Corporation adopted the Paragon Health Network, Inc. 1997
Long-Term Incentive Plan (the "Plan"), effective November 4, 1997;

     WHEREAS, the stockholders of the Corporation approved the Plan at the
          Meeting of Stockholders held on                , 199  ;
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     WHEREAS, the Corporation has entered into an Agreement and Plan of Merger,
dated April 13, 1998 with Mariner Health Group, Inc. ("Mariner") and Paragon
Acquisition Sub, Inc. ("Sub"), pursuant to which Mariner will merge with and
into Sub with Mariner surviving as a wholly-owned subsidiary of the Corporation
(the "Merger");

     WHEREAS, in connection with the Merger, the Corporation intends to issue
options to certain of the directors and officers of Mariner, and after the
issuance of such options, the Corporation will have insufficient shares of
common stock, par value $.01 per share, of the Corporation ("Common Stock")
available under the Plan to continue to utilize the Plan as a component of
compensation for qualified officers, key employees and consultants; and

     WHEREAS, the Corporation desires to amend the Plan to increase the number
of shares of Common Stock authorized for issuance under the Plan from 6,000,000
(adjusted to reflect a three-for-one stock split that occurred on December 30,
1997, whereby the number of shares of Common Stock available for issuance under
the Plan was increased from 2,000,000 to 6,000,000 pursuant to Section 6.7 of
the Plan) to 10,000,000 shares.


                                   AMENDMENT
                                   ---------

     NOW, THEREFORE, effective July 31, 1998 and subject to approval by the
holders of Common Stock, the first sentence of Section 1.5 of the Plan is hereby
amended and modified by as follows:

          "Subject to adjustment as provided in Section 6.7, 10,000,000 
          shares of Common Stock shall be available under this Plan, 
          reduced by the sum of the aggregate number of shares of Common 
          Stock which become subject to outstanding options, including
          Director Options, outstanding Free-Standing SARs, outstanding
          Stock Awards and outstanding Performance Shares."
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     Except as specifically provided for herein, the Plan shall remain in full
force and effect as prior to this First Amendment.

     IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be executed as of the day and year first above written.


                                               PARAGON HEALTH NETWORK, INC.
                              
                              
                                               By:
                                                   -------------------------
                              
                                               Title:
                                                      ----------------------

ATTEST:


By:
    -------------------------

Title:
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          [CORPORATE SEAL]


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