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                                                                  EXHIBIT 10.5

January 29, 1998



Mr. Jeffrey Bairstow
1206 Natchez Road
Franklin, TN 37069

Re: Offer of Employment

Dear Jeff:

On behalf of Managed Health Network ("MHN"), I would like to confirm our
offer to you for the exempt position of President and Chief Operating Officer
of Managed Health Network, located in San Rafael, CA, and Senior Vice
President, Specialty Services Division, reporting to Gary Velasquez. In this
position, you will earn a monthly salary of $20,834.00. Associates are paid
on a biweekly basis with 26 pay periods per year. Performance of each of the
Company's associates is generally reviewed on an annual basis and any
adjustment to salary is ordinarily made upon the completion of such
performance review. You will be provided a car allowance of $1,000/month,
subject to normal payroll deductions. Additionally, a sign-on bonus of
$75,000 (subject to taxes) will be paid to you within the first thirty days
of employment. The intent of the sign-on bonus is to help offset the
additional expense of buying a home in the Bay Area.

In addition, you will be eligible to participate in the Company's Executive
Incentive Plan, under which plan bonus payments are dependent upon Company
and individual performance measures. You will be eligible to participate in
the plan beginning in 1998, with a target bonus opportunity of 40% of your
base pay. Any bonus payout for 1998 will be prorated based on your hire date.
You must be actively employed and on the Company payroll at the time the
bonus is paid. Bonus calculations are based on the base salary in effect on
December 31st of the respective fiscal year. It is understood that the
Company in its sole discretion will award bonus amounts, if any, as it deems
appropriate consistent with the guidelines of the Plan.

The Company's management will recommend to its Compensation and Stock Option
Committee (hereinafter "Committee") that you be granted stock options in an
amount of 15,000 shares in the 1997-1998 plan year. It will be recommended
that the strike price for the shares underlying the option be set to reflect
the stock price at the close of business on the first day of employment. It
will be within the sole discretion of the Committee to determine whether the
recommendation to grant you 15,000 shares will be approved. It is understood
that any recommendations for any subsequent plan years made by the Company's
management will be made consistent with your performance and comparable to
peer managers of the Company at the time option recommendations are presented
to the Committee. Stock option shares vest on a one-third/year basis with all
shares vesting after three years of the date of original grant. At all times,
all stock option grants remain within the sole discretion of the Committee.

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PAGE TWO
OFFER LTR/JEFFREY BAIRSTOW
1/29/98

In addition to the foregoing, and subject to any prerequisite length of
employment and your continued employment with the Company, you will be
eligible for consideration to receive and/or participate in Company-offered
benefits if you meet certain criteria. You will receive, at orientation and
under separate cover, information about Company benefits programs, including
group medical, dental, vision, life insurance, short-term and long-term
disability insurance, 401(k), Company-recognized holidays, the employee stock
purchase plan, tuition reimbursement and participation in our deferred
compensation program. In our 401(k) plan, the Company will match your
contribution at $0.50 for every dollar contributed up to six percent (6%).
The Company's Paid Time Off ("PTO") benefit will be provided to you for
illness, vacation, and personal time off. You will accrue PTO at a rate of 23
days per year between your date of hire and 120 months of service, and 25
days per year thereafter. In case of a conflict between this summary and the
official documents, the official documents will always govern. In addition,
the Company reserves the right to change, amend, or terminate the benefits
plans at any time, with or without notice.

Please contact Janet Paraventi-Holt to schedule your orientation. Enclosed
are payroll and I-9 forms as well as the documentation required to complete
the I-9 forms. We are required to verify you eligibility to work in the
United States within three days of your start date. (A list of appropriate
documentation can be found on the reverse side on the I-9 form).

The Company will provide you with an option of benefits targeted to assist
you in relocating to the San Rafael, California area. Attached you will find
a copy of the Relocation Guideline that applies to your position. Relocation
policy to be modified per verbal agreement to stipulate weekly return trips
to Tennessee as well as extension of temporary living accommodations and sale
of old residence to 12/31/98 - with best efforts to move within the
stipulated 6-month period. (Modify section 3.6.1, 3.6.2 and 3.8 - per
attached policy sheets). Should you voluntarily leave the Company within one
year from your date of hire for any reason, you will be responsible for
reimbursing the Company within five business days of the date of your
termination of your employment 50% of the total relocation expenses paid on
your behalf.

During the first year of employment, commencing on February 23, 1998 and
ending on February 23, 1999, the Company will provide you with reasonable
protection in the event of the termination of your employment without
"cause". Under the terms of this agreement, "cause" is defined as failure to
perform your duties, other than a failure resulting from complete or partial
incapacity due to physical or mental illness or impairment; gross misconduct
or fraud; or, conviction of, or a plea of "guilty" or "no contest" to a
felony. In the event that your employment is terminated involuntarily, and
without cause, and you agree and sign the Company's standard Confidential and
General Release Agreement, you will be provided a severance package totaling
six (6) months of base salary in effect at the date of your termination.
Payment of the severance package will be made on a salary continuation basis
until the sum of six (6) months of base salary is paid in full. During this
period of severance payment, the Company will pay the premium to provide you
and your dependents medical and dental coverage under COBRA if you elect to
continue your benefits under COBRA. Following one year of employment,
severance benefits, if any, will be paid under the terms and conditions of
the prevailing company severance program in effect at that time.

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PAGE THREE
OFFER LTR/JEFFREY BAIRSTOW
1/29/98

You agree, through the signing of this letter, that your employment with the
company is at the mutual consent of each employee and the Company and is an
"at-will" employment relationship. Nothing is this letter is intended to
guarantee your continued employment with the Company or employment for any
specific length of time. While the Company hopes that your employment
relationship will be mutually beneficial and rewarding, both you and the
Company retain the right to terminate the employment relationship at will, at
any time, with or without cause. The at-will nature of your employment with
the Company cannot be modified or superseded except by a written agreement,
signed by you and the President of the Specialty Division, that clearly and
expressly specifies the intent to modify the at-will relationship. In
accepting employment with the Company, you acknowledge that no Company
representative has made any oral or written promise or representation
contrary to this paragraph. Furthermore, you acknowledge that this paragraph
represents the only agreement between you and the Company concerning the
duration of your employment and the at-will nature of the employment
relationship.

During your employment with the Company, you will have access to and become
acquainted with certain proprietary and confidential information and
practices ("Confidential Information"). Confidential Information includes all
information that is not generally known to the Company's competitors and the
public, and that has or could have commercial value to the Company's
business. It includes, but is not limited to, customer information, customer
lists, and pricing methodology.

In accepting employment with the Company, you acknowledge and agree that all
documents, memoranda, reports, files, correspondence, lists and other written
electronic and graphic records affecting or relating to the Company's
business that you may prepare, use, observe, possess or control (including,
but not limited to, any materials containing Confidential Information) shall
be and remain the Company's sole property, and you agree not to make use of or
disclose to any third party any such material, Confidential or otherwise,
except for the benefit of the Company and in the course of your employment
with the Company. If your employment is terminated (voluntary or otherwise),
you agree to deliver to the Company within five business days of termination
all written and/or graphic records affecting or relating to the Company's
business, including but not limited to material containing Confidential
Information.

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PAGE FOUR
OFFER LTR/JEFFREY BAIRSTOW
1/29/98

You have agreed and certify that you have no other agreement, relationship,
or committment to any other person or entity that conflicts with your
obligations to the Company under this offer letter. If you are unable to so
certify, all such agreement(s) must be identified here:

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

You agree not to use or disclose any Confidential Information or trade secrets
of others, including all prior employees in your work at the Company. Should
a situation arise in which you believe that your job duties may lead to the
use of disclosure of confidential information or trade secrets of another,
you agree to notify Janet Paraventi-Holt, Debra Taylor, or Dan Smithson in
the Human Resources Department of the situation immediately. You represent
and warrant that you returned all property and confidential information
belonging to all prior employers.

Finally, this letter sets forth all the terms of this offer of employment. It
supersedes all previous and contemporaneous oral and written communications
and representations. To confirm your acceptance of these terms, please sign,
date and return a copy of this letter, in the enclosed self addressed
envelope. An additional copy of the offer letter is enclosed for your files.

Jeff, we look forward to your return to the company. Should you have any
questions, prior to or during your employment, please feel free to contact me
at (916) 631-5122.

Sincerely,

/s/ GARY VELASQUEZ
-----------------------------
Gary Velasquez
President & COO of Government Operations
and Specialty Services Division

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PAGE FIVE
OFFER LTR/JEFFREY BAIRSTOW
1/29/98

I HEREBY ACCEPT AND AGREE TO THE TERMS OF THIS OFFER OF EMPLOYMENT AS
OUTLINED ABOVE.


   /s/ JEFFREY J. BAIRSTOW                                  2/2/98
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         SIGNATURE                                          DATE



Enclosures:  Relocation Guideline
             I-9 Information
             W-4 Form