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                                                                    Exhibit 10.4


                              EXTENSION SUPPLEMENT


     EXTENSION SUPPLEMENT, dated as of August 29, 1997 (this "Supplement"),
between Northstar Health Services, Inc., a Delaware corporation (the
"Borrower"), and IBJ Schroder Bank & Trust Company (the "Agent").

                                   WITNESSETH

     WHEREAS, the Agent and the Borrower are parties to that certain Forbearance
Agreement, dated as of August 18, 1997 (as amended, supplemented or otherwise
modified prior to the date hereof, the "Forbearance Agreement"); and

     WHEREAS, the Forbearance Agreement shall by its terms terminate on the
Forbearance Termination Date referenced therein (the "Old Forbearance
Termination Date"); and

     WHEREAS, the Borrower has requested that the Old Forbearance Termination
Date be extended as contemplated by Section 4 of the Forbearance Agreement, and
the Agent is willing to agree to such extension but only on the terms and
subject to the conditions set forth herein;

     NOW, THEREFORE, in consideration of the premises and for other valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Borrower and the Agent hereby agree as follows:

     1. Definitions. Terms defined in or by reference in the Forbearance
Agreement are used herein as therein defined.

     2. Forbearance Termination Date. The Forbearance Termination Date is hereby
extended to September 30, 1997 (the "New Forbearance Termination Date").

     3. Effectiveness. This Supplement shall become effective upon receipt by
the Agent of evidence satisfactory to the Agent that this Supplement has been
executed and delivered by the Borrower and the Agent.

     4. Representations and Warranties. To induce the Agent to enter into this
Supplement, the Borrower hereby represents and warrants to the Agent and the
Lenders that, after giving effect to the extension of the Forbearance
Termination Date and the other modifications to the Forbearance Agreement
provided for herein, the representations and warranties contained in the
Forbearance Agreement will be true and correct in all material respects as if
made on and as of the date hereof and that no Forbearance Event of Default will
have occurred and be continuing.
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     5. No Other Modifications. Except as expressly modified hereby, the
Forbearance Agreement shall remain in full force and effect in accordance with
its terms, without any waiver, amendment or modification of any provision
thereof.

     6. Counterparts. This Supplement may be executed by one or more of the
parties hereto on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.

     7. Applicable Law. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.


                            [SIGNATURE PAGE FOLLOWS]


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                                                          Extension Supplement
                                                   dated as of August 29, 1997



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


                                        IBJ SCHRODER BANK & TRUST COMPANY,
                                        as Agent


                                        By
                                          ---------------------------------
                                        Name:
                                        Title:


                                        NORTHSTAR HEALTH SERVICES, INC.


                                        By /s/ THOMAS W. ZAUCHA
                                          ---------------------------------
                                        Name:  Thomas W. Zaucha
                                        Title: Chairman, President & CEO






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