EXHIBIT 10.22


                             EMPLOYMENT AGREEMENT
                             --------------------

      THIS EMPLOYMENT AGREEMENT is made and entered into as of the 1st day of
 January, 2002, by  and between  James C.  Smith (the  "Employee") and  First
 Health Group Corp., a Delaware corporation (the "Company").

      IN CONSIDERATION of the mutual promises set forth below, and other good
 and valuable consideration, the receipt and sufficiency of which are  hereby
 acknowledged, the parties hereby agree as follows:

      1.   Employment.   The Company  hereby employs  the Employee,  and  the
 Employee hereby  accepts employment  with the  Company, upon  the terms  and
 subject to the conditions hereinafter set forth.

      2.   Duties.   The Employee is hereby employed by the Company and shall
 render his services  at the  principal business  offices of  the Company  in
 Downers Grove, Illinois,  unless otherwise agreed  by him and  the Board  of
 Directors of the Company or the Chief Executive Officer.  The Employee shall
 have such authority and shall perform  such duties as are customary for  the
 office to which he  has been appointed, including  director and Chairman  of
 the Board.  Employee  shall otherwise report to  and receive direction  from
 the Chief Executive Officer or Board of Directors and Employee shall  report
 on his  activities in  the  manner established  between  him and  the  Chief
 Executive Officer.  He shall not otherwise devote time to the active pursuit
 of any other  business enterprise,  nor shall he  have any  interest in  any
 business enterprise which  is competitive with  or adverse  to the  Company,
 whether as an  employee, officer, director,  consultant, creditor,  security
 holder or otherwise (except to the extent permitted in Paragraph 8  hereof).
 The foregoing notwithstanding, the Employee shall  be entitled to belong  to
 and participate in professional organizations and to engage in  professional
 activities in furtherance of the Company's business.

      3.   Term.   The term  of Employee's  employment under  this  Agreement
 shall commence on January 1, 2002  and shall terminate on December 31,  2004
 unless otherwise terminated in accordance with the terms hereof.

      4.   Compensation.    As   compensation  for   the  services   rendered
 hereunder, the Employee shall be entitled to receive the following:

           a.   Year 2002  Salary.   Effective the  date of  this  Agreement,
      Employee shall receive an annual salary of $900,000.

           b.   Year 2003 Salary.  Effective January 1, 2003, Employee  shall
      receive an annual salary of $700,000.

           c.   Year 2004 Salary.  Effective January 1, 2004, Employee  shall
      receive an  annual salary  of  $400,000.   Salary  will be  payable  in
      installments at such times and in such manner as may from time to  time
      be in effect  for executives of  the Company, but  not less often  than
      monthly.

      5.   Benefits During the Term  of this Agreement.   In addition to  the
           compensation to be paid  to the Employee  pursuant to Paragraph  4
           hereof, the  Employee  shall be  entitled  to participate  in  all
           employee benefit programs currently  maintained by the Company  as
           such programs may  be modified from  time to  time, including  the
           health benefit, 401(k) and stock  purchase programs and each  such
           other program or policy  established by the  Company from time  to
           time during  the term  of this  Agreement  for its  employees  and
           executives generally (to the extent that  it is more favorable  to
           the Employee than an existing program covering the same  benefit).
           As part of  Employees participation and  subject to any  necessary
           approvals, the  Company shall  grant to  the Employee  options  to
           purchase shares of Common Stock of  the Company, each such  option
           to be on the terms and subject to the conditions of the respective
           stock option agreements to be entered into between the Company and
           the Employee.  Such grants  of options shall recognize  Employee's
           responsibilities as Chairman of the Board.

      6.   Benefits After the  Term of this  Agreement.   The Company  hereby
 confirms the existence of the grant of health benefits to Employee after the
 term of  this  Agreement as  first  set  forth in  that  certain  Employment
 Agreement, dated as of  July 1, 1993 between  Employee and the Company  (the
 "1993 Employment Agreement").

      7.   Reimbursement of  Expenses.   The Company,  promptly upon  receipt
 from the Employee of appropriate documentation, shall reimburse the Employee
 for all of his reasonable business expenses, including, without  limitation,
 travel expenses, necessarily and  appropriately incurred in the  performance
 of his duties hereunder.

      8.   Confidentiality and Competition.

           a.   In consideration of the  substantial benefits to be  provided
 hereunder to the  Employee by the  Company, and in  recognition of the  fact
 that the  Employee occupies  a position  of trust  and confidence  with  the
 Company, the  Employee  acknowledges  that  he  has  provided,  created  and
 acquired and  hereafter  will  provide,  create  and  acquire  valuable  and
 confidential information of  a special and  unique nature  relating to  such
 matters as  the  Company's  trade  secrets,  systems,  procedures,  manuals,
 confidential reports,  employee  rosters, client  lists,  software  systems,
 products, business  and financial  methods  and practices,  plans,  pricing,
 selling techniques,  special methods  and processes  involved in  designing,
 assembling and operating computer programs previously and currently used  by
 the Company and the application thereof  to managed care programs and  other
 related electronic  data  processing information  respecting  the  Company's
 existing businesses and services and those developed during the term of this
 Agreement, as well as credit and financial data relative to the Company  and
 its clients,  and  the particular  business  requirements of  the  Company's
 clients, including the methods used and  preferred by the Company's  clients
 and fees paid by such clients.  In addition, the Employee has developed  and
 may further develop on  behalf of the Company  a personal acquaintance  with
 the Company's clients, which acquaintances may constitute the Company's only
 contact with  such clients.   For  purposes of  this Paragraph  8, the  term
 "Company" shall mean First  Health Group Corp. and  each company which is  a
 subsidiary thereof and any partnership or joint venture in which the Company
 or any such subsidiary owns an equity  interest at any time during the  term
 of this Agreement.   In view of  the foregoing and  in consideration of  the
 remuneration to be paid to the Employee hereunder, the Employee acknowledges
 and agrees that  it is reasonable  and necessary for  the protection of  the
 goodwill and business of  the Company that he  make the covenants  contained
 herein regarding his conduct during and subsequent to his employment by  the
 Company and that the Company will suffer irreparable injury if the  Employee
 were to engage in  any conduct prohibited hereby.   The Employee  represents
 that his experience  and/or abilities are  such that the  observance of  the
 aforementioned covenants will not cause the Employee any undue hardship, nor
 will it  unreasonably  interfere  with the  Employee's  ability  to  earn  a
 livelihood.  The Employee and the  Company further agree that the  covenants
 contained in  this  Paragraph  8  shall each  be  construed  as  a  separate
 agreement independent of any  other provisions of  this Agreement, and  that
 the existence of any claim  or cause of action  by the Employee against  the
 Company, whether  predicated  on  this Agreement  or  otherwise,  shall  not
 constitute a  defense to  the enforcement  by the  Company of  any of  these
 covenants.  In the event a  court of competent jurisdiction determines  that
 any  provision  of  this  Paragraph  8  is  unreasonable  as  to   duration,
 substantive extent or  geographic scope, the  provision will nonetheless  be
 enforced to the fullest extent reasonable.

           b.   The Employee, while in  the employ of the  Company or at  any
 time thereafter, will not directly or indirectly communicate or divulge,  or
 use for the benefit of himself or of any other person, firm, association  or
 corporation, any  of  the  Company's trade  secrets  or  other  confidential
 information, including,  without limitation,  the information  described  in
 Paragraph 8a, which trade secrets and confidential information were or  will
 be communicated to or otherwise learned  or acquired by the Employee in  the
 course of his  employment with  the Company,  except that  the Employee  may
 disclose such matters to the extent that the disclosure thereof is required:
 (i) in  the  course  of  his employment  with  the  Company,  provided  such
 disclosure is made exclusively for the benefit of the Company, or (ii) by  a
 court, governmental agency of competent jurisdiction or grand jury.

           c.   During the term of his employment with the Company and for  a
 period of three years thereafter, the Employee will not contact, directly or
 indirectly, with a view towards selling  any product or service  competitive
 with any product or  service sold (or  proposed to be  sold) by the  Company
 during  the  Employee's   employment,  any  person,   firm  association   or
 corporation (i) to  which the  Company has  provided its  services, or  (ii)
 which  the  Employee   or,  to  his   knowledge,  any   other  employee   or
 representative of the  Company has solicited,  contacted or otherwise  dealt
 with on behalf of the Company, nor  will he directly or indirectly make  any
 such contact,  for the  benefit or  on  behalf of  any other  person,  firm,
 association or  corporation  or  in any  manner  assist  any  person,  firm,
 association or corporation to make any such contact.

           d.   During the term of  his employment by the  Company and for  a
 period of  three  years  thereafter,  the  Employee  will  not  directly  or
 indirectly acquire any interest in any corporation, firm or business  (other
 than the Company) which is engaged in any business in the United States  the
 same as,  similar to  or competitive  with the  business of  the Company  as
 conducted at  any  time during  the  Employee's employment,  whether  as  an
 employee, sole proprietor,  director, officer,  consultant, equity  security
 holder or otherwise  (except that he  may own up  to 2%  of the  outstanding
 shares of  capital stock  of any  corporation  whose stock  is listed  on  a
 national securities exchange or is  traded in the over-the-counter  market),
 nor will  the Employee  directly  or indirectly  have  any interest  in  any
 corporation, firm or business which is engaged in a business adverse to  the
 Company's business  (except that  he may  own up  to 2%  of the  outstanding
 shares of  capital stock  of any  corporation  whose stock  is listed  on  a
 national securities exchange or is traded in the over-the-counter market).

           e.   During the term of  his employment by the  Company and for  a
 period of three  years thereafter, neither  the Employee nor  any entity  by
 which the Employee is employed or otherwise associated with will directly or
 indirectly employ, retain the services of or induce or attempt to induce, in
 any manner whatsoever,  any present  or future  employee of  the Company  to
 leave the employ of the Company and/or to seek or accept employment with the
 Employee or any other person, firm, association or corporation.

           f.   In the event of a breach or threatened or intended breach  of
 this Agreement and  the foregoing covenants  by the  Employee, the  Employee
 acknowledges that  the  Company  will suffer  irreparable  injury  and  that
 determination  of  the  exact  amount  of  the  Company's  damages  will  be
 difficult, if not impossible, and agrees that the Company shall be entitled,
 in addition to remedies otherwise  available to it at  law or in equity,  to
 injunctions, both  preliminary  and  permanent and  without  bond  therefor,
 enjoining or restraining such breach or  threatened or intended breach,  and
 the Employee hereby consents to the issuance thereof forthwith by any  court
 of competent jurisdiction.

      9.   Termination of Employment.

           a.   Incapacity.   If,  during the  term  of this  Agreement,  the
 Employee should be prevented from performing his duties by reason of illness
 or physical or  mental disability (hereinafter  referred to collectively  as
 "Incapacity") for  a continuous  period  of between  90  and 180  days,  the
 Employee shall receive one-half his per diem Base Salary for each day during
 such time  period  that he  fails,  due to  his  Incapacity, to  render  the
 services contemplated hereunder.  If during the term of this Agreement,  the
 Employee should  be  prevented  from performing  his  duties  by  reason  of
 Incapacity for a continuous  period greater than 180  days, the Company  may
 terminate the  Employee's  employment  hereunder by  giving  written  notice
 thereof to  the Employee,  effective on  the date  set forth  in the  notice
 (which date shall  be not less  than 15 business  days after  the notice  is
 given).

           For purposes hereof, a continuous  period of Incapacity shall  not
 be deemed interrupted until the Employee returns to substantially full  time
 work for a period of at least 30 days.

           b.   Death.  In the event of the Employee's death during the  term
 of this  Agreement,  the Employee's  employment  hereunder shall  be  deemed
 terminated as of the date of the Employee's death.

           c.   Cause.    This  Agreement   and  the  Employee's   employment
 hereunder may be terminated at any time by  the Company for cause.  As  used
 herein "cause" shall mean (i) theft,  embezzlement or fraud by the  Employee
 or the Employee's involvement in any other scheme or conspiracy pursuant  to
 which the Company has lost or could reasonably be expected to lose assets to
 the Employee or to others calculated by the Employee to receive such assets,
 (ii) incapacity on  the job  by reason of  the use  or abuse  of alcohol  or
 drugs, (iii) commission of  a felony or a  crime involving moral  turpitude,
 (iv) gross  insubordination, (v)  unexplained and  continuous absences  from
 work, (vi) material breach of the Employee of any of the provisions of  this
 Agreement which is not cured within 30 business days after the Company gives
 written notice thereof to the Employee specifying the nature of such breach,
 (vii) refusal to act in accordance with a lawful and duly adopted resolution
 of the Board of Directors, (viii) intentional, knowing, or grossly negligent
 violation of the Federal Securities laws,  Delaware law or any other law  or
 regulation applicable to the Company or the Board of Directors.

           d.   Termination of Employment  by the Company.   The Company  may
 terminate the Employee's employment for any reason deemed sufficient by  the
 Company.

           As used in this Paragraph 9, unless otherwise specified, the  term
 "days" refers to calendar days.

      10.  Effect of Termination of Employment.

           a.   Incapacity.  If termination  of employment results or  occurs
 due to Incapacity under Paragraph 9a, the  Company shall pay or cause to  be
 paid in  a lump  sum (i)  such amounts,  if any,  as the  Employee shall  be
 entitled to under the Company's disability policy and program applicable  to
 the Employee, (ii) subject to the limitations set forth in the last sentence
 of Paragraph 6a hereof, payment in  respect of all unused Flexible Time  Off
 (FTO),  to  the  extent  the  Employee   has  not  prior  thereto   received
 compensation in lieu thereof, (iii) the  Employee's interest in all  Company
 retirement and  investment  plans, to  the  extent such  plans  permit  such
 interest to be distributed and (iv)  payment in respect of all  compensation
 earned to date but not theretofore paid.

           b.   Death.  If termination  of employment occurs  as a result  of
 the Employee's death, the Company shall pay to the Employee's estate a  lump
 sum payment equal  to (i)  such amounts as  the Employee's  estate shall  be
 entitled to receive under  the terms of retirement  and investment plans  of
 the Company, to the extent such plans  permit such amounts to be paid,  (ii)
 subject to the  limitation set forth  in the last  sentence of Paragraph  6a
 hereof, payment in respect of all unused FTO, to the extent the Employee has
 not prior thereto received compensation in  lieu thereof, and (iii)  payment
 in respect of all compensation earned to date but not theretofore paid.

           c.   Cause.  If  the Employee's  employment is  terminated by  the
 Company for  cause, Employee  shall be  entitled to  all earned  but  unpaid
 compensation, provided, however,  the Company  shall be  entitled to  offset
 therefrom any amounts lost by the  Company as a result of Employee's  action
 giving rise to such cause.

           d.   Voluntary Termination.   If  the Employee  shall  voluntarily
 terminate his employment hereunder, the Company shall be obligated to pay or
 cause to be  paid in a  lump sum (i)  payment in respect  of the  Employee's
 interest in all Company retirement and investment plans, to the extent  such
 plans permit such payment  to be made, (ii)  subject to the limitations  set
 forth in the last sentence of Paragraph 6a hereof, payment in respect of all
 unused paid vacation time, to the extent the Employee has not prior  thereto
 received compensation in lieu thereof.

           e.   Termination of Employment Pursuant to Paragraphs 9d.  In  the
 event that this Agreement is terminated by the Company pursuant to Paragraph
 9d hereof, the Company shall be obligated to pay or cause to be paid to  the
 Employee (i) the balance of the  Salary payments required to be paid  during
 the remaining  term of  this  Agreement, which  payments  shall be  made  at
 regular intervals in accordance with the Company's regular pay periods, (ii)
 payment in respect of the Employee's interest in all Company retirement  and
 investment plans, to the  extent that such plans  permit such payment to  be
 made, and (iii) subject to the limitations set forth in the last sentence of
 Paragraph 6a hereof,  payment in respect  of all unused  FTO, to the  extent
 Employee has  not  prior  thereto received  compensation  in  lieu  thereof.
 Payments pursuant to subsections (ii) and (iii) shall be paid in a lump sum.

           f.   Effect of Termination of Employment: Survival.  In the  event
 that the Employee's employment with  the Company terminates, this  Agreement
 shall be deemed terminated, provided, however, that the terms and conditions
 of Paragraphs 6 (to the extent provided therein), 8, 9 and 10 shall  survive
 such termination and be fully binding and enforceable.

      11.  Return of Documents.  Upon termination  of this Agreement for  any
 reason, the Employee shall deliver to  the Company any property then in  his
 possession belonging to the  Company.  For purposes  of this Agreement,  the
 parties hereto do  hereby agree that  any original or  copies of any  books,
 papers, customer lists, files, books of accounts, summaries, notes and other
 documents and data  or other  writings, tapes  or records,  relating to  the
 company or prepared  in connection with  the Employee's  performance of  his
 duties hereunder, are owned by and are the property of the Company.

      12.  Best Efforts.  The Company and the Employee each agree to use  its
 or his best  efforts to  operate the  business of  the Company  in a  manner
 designed to  maximize the  revenues and  net income  of the  Company and  to
 preserve and enhance its goodwill and other assets.

      13.  Termination of Prior Employment  Agreement.  All prior  employment
 agreements between Company and Employee are hereby terminated.

      14.  Notices.  Any notices to be given hereunder by either party to the
 other may be  effected either by  personal delivery in  writing or by  mail,
 registered or  certified, postage  prepaid, with  return receipt  requested.
 Mailed notices shall be addressed to  the respective addresses shown  below.
 Either party may change its address  for notice by giving written notice  in
 accordance with the terms of this Paragraph 14.

           a.   If to the Employee:

                James C. Smith
                First Health Group Corp.
                3200 Highland Avenue
                Downers Grove, Illinois 60515

           b.   If to the Company:

                Susan T. Smith
                General Counsel
                First Health Group Corp.
                3200 Highland Avenue
                Downers Grove, Illinois 60515

                with a copy to:

                Chairman of the Compensation Committee
                of the First Health Group Corp. Board of Directors

      15.  Acknowledgment of Reading.  The Employee acknowledges,  represents
 and warrants to the Company that he  has received a copy of this  Agreement,
 that he  has  read and  understands  this Agreement,  that  he has  had  the
 opportunity to  seek  the  advice  of  legal  counsel  before  signing  this
 Agreement and that  he has  either sought  such counsel  or has  voluntarily
 decided not to do so.

      16.  General Provisions.

           a.   Governing  Law.    This  Agreement  shall  be  governed   and
 construed in accordance with the law of the State of Illinois.

           b.   Invalid Provisions.   If any provision  of this Agreement  is
 held to be illegal, invalid, or  unenforceable under present or future  laws
 effective during the term hereof, such  provisions shall be fully  severable
 and this  Agreement shall  be construed  and enforced  as if  such  illegal,
 invalid or unenforceable provisions had never  comprised a part hereof;  and
 the remaining provisions hereof  shall remain in full  force and effect  and
 shall not be affected by the illegal, invalid or unenforceable provisions or
 by its severance herefrom.  Furthermore, in lieu of such illegal, invalid or
 unenforceable provision  as similar  in terms  to  the illegal,  invalid  or
 unenforceable provision as  may be  possible and  still be  legal, valid  or
 enforceable.

           c.   Entire Agreement.  This  Agreement and the Option  Agreements
 set forth  the entire  understanding  of the  parties  with respect  to  the
 matters specified herein.  No other terms, conditions or warranties, and  no
 amendments or modifications hereto, shall be binding unless made in  writing
 and signed by the parties hereto.

           d.   Binding Effect:    Assignment and  Assumption  of  Agreement.
 This Agreement shall  be binding upon  the parties hereto  and inure to  the
 benefit of such parties, their respective heirs, representatives, successors
 and permitted assigns.  This Agreement  may not be assigned by the  Employee
 nor may it be assigned by the Company without the Employee's consent.

           e.   Waiver.  The waiver by either  party hereto of any breach  of
 any term or condition  of this Agreement shall  not be deemed to  constitute
 the waiver of any other breach  of the same or  any other term or  condition
 hereof.

           f.   Titles.    Title  of  the  paragraphs  herein  are  used  for
 convenience only and shall not be used for interpretation or construction of
 any word, clause, paragraph, or provision of this Agreement.

           g.   Counterparts.  This Agreement may be executed in one or  more
 counterparts, each of which shall be  deemed an original but which  together
 shall constitute one and the same Agreement.

      IN WITNESS WHEREOF,  the Company and  the Employee  have executed  this
 Agreement as of the date and year first written above.

                                    COMPANY:

                                    FIRST HEALTH GROUP CORP.


                                    By:
                                        -------------------------------------
                                        Edward L. Wristen
                                        President and Chief Executive Officer


                                    EMPLOYEE:


                                        -------------------------------------
                                        JAMES C. SMITH

<PAGE>




                            FIRST AMENDMENT TO THE
                             EMPLOYMENT AGREEMENT
                     DATED AS OF JANUARY 1, 2002, BETWEEN
                 FIRST HEALTH GROUP CORP. AND JAMES C. SMITH


 THIS AMENDMENT is effective as of the 17th day of September, 2002, by and
 between First Health Group Corp. ("First Health") and James C. Smith (the
 "Employee").

 WHEREAS, First Health and Employee have previously entered into a certain
 EMPLOYMENT AGREEMENT, dated as of January 1, 2002, under which First Health
 will employ Employee (the "Agreement"); and

 WHEREAS, First Health and Employee desire to amend the Agreement to
 memorialize the parties' agreement to extend the term of the Agreement from
 December 31, 2004 until December 31, 2007 at the annual salary of $500,000
 for the additional three year period.

 NOW, THEREFORE, in consideration of the mutual covenants set forth herein
 and in the Agreement, the receipt and sufficiency of which are hereby
 acknowledged, the parties agree as follows:

   1. Paragraph 3 of the Agreement will be deleted and replace in its
      entirety by the following:

      The term of Employee's employment under this Agreement shall commence
      on January 1, 2002 and shall terminate on December 31, 2007 unless
      otherwise terminated in accordance with the terms hereof.

   2. Paragraph 4 of the Agreement will have the following, additional sub-
      paragraph:

           d.   Years 2005 through 2007 Salary.  Effective January 1, 2005,
           Employee shall receive an annual salary of $500,000.  Salary will
           be payable in installments at such times and in such manner as may
           from time to time be in effect for executives of the Company, but
           less often than monthly.

    3.      The parties ratify and affirm the Agreement and agree that it is
      valid as amended herein.  This Amendment will prevail over any conflict
      with the Agreement.


 IN WITNESS WHEREOF the duly authorized representatives of the parties have
 executed this Amendment effective on the day and year first written above.


 Employee:                             First Health Group Corp.

 _________________________________     By:   _____________________________
 Name:  James C. Smith                       Chief Executive Officer and
                                             President

 Date: ___________________________     Date: _____________________________