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                                                                   EXHIBIT 10.69

                                                                [EXECUTION COPY]




             AMENDMENT NO. 3 TO CREDIT AGREEMENT

          AMENDMENT dated as of February 12, 1996 among BEVERLY HEALTH &
REHABILITATION SERVICES, INC., a California corporation (the "Borrower"),
BEVERLY ENTERPRISES, INC., a Delaware corporation (the "Guarantor"), the BANKS
listed on the signature pages hereof (the "Banks") and MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Agent and Issuing Bank.


                                 WITNESSETH :


          WHEREAS, the parties hereto have heretofore entered into a Credit
Agreement dated as of November 1, 1994 (as amended, the "Credit Agreement");
and

          WHEREAS, the parties hereto desire to amend the Credit Agreement as
hereinafter provided;

          NOW, THEREFORE, the parties hereto agree as follows:

          SECTION 1.  Definitions; References.  Unless otherwise specifically
defined herein, each term used herein which is defined in the Credit Agreement
shall have the meaning assigned to such term in the Credit Agreement.  Each
reference to "hereof", "hereunder", "herein" and "hereby" and each other
similar reference and each reference to "this Agreement" and each other similar
reference contained in the Credit Agreement shall from and after the date
hereof refer to the Credit Agreement as amended hereby.

          SECTION 2.  Amendment of Section 5.13(a) of the Credit Agreement.
Section 5.13(a) of the Credit Agreement is hereby amended by restating clause
(xv) in its entirety as follows:

          "(xv)  Debt in respect of the Guarantor's $180,000,000 Senior Notes
     due 2006 issued in the first quarter of 1996; provided that not less than
     $170,000,000 of the proceeds of such Debt are used to repay (or reimburse
     the Borrower for repaying after the date hereof) Term Loans, Revolving
     Loans and Debt





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     permitted under clause (viii) of this subsection (a) with respect to the
     LTCB Financing Documents and the Nippon Financing Documents; and".


          SECTION 3.  Governing Law.  This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.

          SECTION 4.  Counterparts; Effectiveness.  This Amendment may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument.  This Amendment shall become effective as of the date hereof when
the Agent shall have received duly executed counterparts hereof signed by the
Borrower, the Guarantor and the Required Banks (or, in the case of any party as
to which an executed counterpart shall not have been received, the Agent shall
have received telegraphic, telex or other written confirmation from such party
of execution of a counterpart hereof by such party).

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.



                                        THE BORROWER                   
                                                                       
                                        BEVERLY HEALTH & REHABILITATION
                                        SERVICES, INC.                 
                                                                       
                                                                       
                                                                       
                                        By                             
                                           Title:                      
                                                                       
                                                                       
                                                                       
                                        THE GUARANTOR                  
                                                                       
                                        BEVERLY ENTERPRISES, INC.      
                                                                       
                                                                       
                                                                       
                                        By                             
                                          Title:                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
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                                         BANKS                         
                                                                       
                                         MORGAN GUARANTY TRUST COMPANY 
                                            OF NEW YORK                
                                                                       
                                                                       
                                                                       
                                         By                            
                                           Title:                      
                                                                       
                                                                       
                                         CHEMICAL BANK                 
                                                                       
                                                                       
                                                                       
                                         By                            
                                            Title:                     
                                                                       
                                                                       
                                                                       
                                         THE BANK OF NEW YORK          
                                                                       
                                                                       
                                                                       
                                                                       
                                         By                            
                                            Title:                     
                                                                       
                                                                       
                                                                       
                                         THE LONG-TERM CREDIT BANK OF  
                                            JAPAN, LTD.,               
                                            LOS ANGELES AGENCY         
                                                                       
                                                                       
                                                                       
                                                                       
                                         By                            
                                            Title:                     
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                      3
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                                         NATIONSBANK OF TEXAS, N.A.    
                                                                       
                                                                       
                                                                       
                                                                       
                                         By                            
                                            Title:  Vice President     
                                                    Michael B. Hobbs   
                                                                       
                                                                       
                                         PNC BANK, NATIONAL ASSOCIATION
                                                                       
                                                                       
                                         By                            
                                            Title:                     
                                                                       
                                                                       
                                                                       
                                         BANK OF AMERICA               
                                                                       
                                                                       
                                                                       
                                         By                            
                                              Title:                   
                                                                       
                                                                       
                                                                       
                                         BANK OF MONTREAL              
                                                                       
                                                                       
                                                                       
                                         By                            
                                              Title:                   
                                                                       
                                                                       
                                                                       
                                         THE BANK OF NOVA SCOTIA       
                                                                       
                                                                       
                                                                       
                                                                       
                                         By                            
                                              Title:                   
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                      4
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                                         BHF-BANK AKTIENGESELLSCHAFT   
                                                                       
                                                                       
                                                                       
                                         By                            
                                             Title:                    
                                                                       
                                                                       
                                                                       
                                                                       
                                         THE NIPPON CREDIT BANK, LTD.  
                                                                       
                                                                       
                                                                       
                                                                       
                                         By                            
                                              Title:                   
                                                                       
                                                                       
                                                                       
                                         BANK OF HAWAII                
                                                                       
                                                                       
                                                                       
                                         By                            
                                              Title:                   
                                                                       
                                                                       
                                                                       
                                         AGENT AND ISSUING BANK        
                                                                       
                                         MORGAN GUARANTY TRUST         
                                         COMPANY OF NEW YORK,          
                                         as Agent and Issuing          
                                         Bank                          
                                                                       
                                                                       
                                                                       
                                                                       
                                         By                            
                                              Title:                   
                                                                       




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