EXHIBIT 10(H)
 
 
                      NATIONAL MEDICAL ENTERPRISES, INC.
                             2700 COLORADO AVENUE
                        SANTA MONICA, CALIFORNIA 90404
 
                                 May 26, 1993
 
 
Mr. Jeffrey C. Barbakow
559 C San Ysidro Road
Santa Barbara, California 93108
 
Dear Jeff:
 
    The purpose of this letter is to set forth the terms of your compensation
as President and Chief Executive Officer of National Medical Enterprises
("NME") which have been approved by the Compensation and Stock Option
Committee (the "Committee").
 
    1.  Your employment as President and Chief Executive Officer of NME will
        commence on June 1, 1993.
 
    2.  Your initial annual base salary will be $850,000. Your base salary
        will be reviewed by the Committee on an annual basis when the base
        salaries for other senior executive officers are reviewed.
 
    3.  You will be eligible to participate in the annual and long-term cash
        incentive plans which are in effect from time to time for the other
        senior executive officers of NME. The plans which are currently in
        effect are the Annual Incentive Plan ("AIP") and the Long-Term
        Incentive Plan ("LTIP").
 
    4.  You will be eligible to participate in pension and welfare plans and
        to receive other fringe benefits and perquisites on the same terms as
        other senior executive officers of NME.
 
    5.  You will receive a grant of a non-qualified stock option for
        2,000,000 shares of NME common stock on June 1, 1993. The grant will
        be made under NME's 1991 Stock Incentive Plan and will be in the form
        attached hereto as Exhibit "A." The stock option will have the
        following principal terms:
 
        (i)     The stock option will be granted when you become an
                employee of NME on June 1, 1993.
 
        (ii)    The exercise price will be the closing NME market price on
                the New York Stock Exchange on June 1, 1993.
 
        (iii)   The stock option will have a term of ten years.
 
 
Mr. Jeffrey C. Barbakow
May 26, 1993
Page 2
 
        (iv)    The stock option will vest at the rate of one-third (1/3) per
                year on June 1, 1994, 1995 and 1996, subject to acceleration as
                provided in Exhibit "A."
 
        The Committee does not presently anticipate that it will make any
        other stock option grants to you before June 1, 1996.
 
    6.  You will devote your full time and attention to the performance of
        your duties as President and Chief Executive Officer of NME during
        normal working hours.
 
    7.  You have not requested and will not have a formal employment
        agreement. You will serve at the will of the Board of Directors of
        NME. In the event of termination of your employment, the only
        severance benefits which you will be entitled to receive are
        (i) any additional vesting of your stock option pursuant to the terms
        set forth in Exhibit "A," (ii) any other severance benefits which may
        be approved by the Committee or Board of Directors of NME in its
        discretion, and (iii) any benefits to which you may be entitled under
        the terms of NME pension and welfare plans (other than severance plans)
        in which you are then participating.
 
    On behalf of the Committee, I want to express our appreciation for the
manner in which you have negotiated the terms of your employment. We are
delighted that you have agreed to serve as President and Chief Executive
Officer of NME.
 
                                       Sincerely,
 
                                       PETER DE WETTER
 
                                       Peter de Wetter
                                       Chairman of Compensation and
                                       Stock Option Committee
 
rgt
c: Alan R. Ewalt