Exhibit 2.09
                 FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
                     WESTERN NEUROLOGIC RESIDENTIAL CENTERS

         This Amendment is made and entered into this ___ day of December,  1996
by and between Western Neurologic  Residential Centers, a California corporation
("Seller")  and  Regency  Rehab  Hospitals,   Inc.,  a  California   corporation
("Purchaser").

                                    RECITALS

         A. Seller and Purchaser are parties to that Purchase and Sale Agreement
dated November 19, 1996 (the "Meridian  Purchase  Agreement")  pursuant to which
Seller agreed to sell to Purchaser and Purchaser  agreed to purchase from Seller
certain  assets  related  to  the  ownership  and  operation  by  Seller  of six
congregate living facilities in California.

         B. After  execution  of the  Meridian  Purchase  Agreement,  Seller and
Purchaser  determined  that there is one home health care license held by Seller
(the "HHA License")  which should be included in the description of the Seller's
Assets contained in the Meridian Purchase Agreement.

         C.       The Meridian Purchase  Agreement  provides that it may be 
amended by written instrument signed
by Seller and Purchaser.

         D.       Purchaser  and Seller are  interested in amending the Meridian
Purchase  Agreement to include
the HHA License in the Seller's Assets.

         NOW,  THEREFORE,  in  consideration  of the foregoing  premises and the
mutual  covenants  of the  parties  set forth  herein,  IT IS  HEREBY  AGREED AS
FOLLOWS:

                                    AGREEMENT

         1.       Section 1.01(f) is hereby deleted in its entirety and the 
following inserted instead:

         (f) All patient  medical  records,  employment  records,  medical staff
         rosters  and files  and other  intangible  personal  property  owned by
         Seller  relating to the  Facilities  and all rights of Seller in and to
         (i) those  contracts  and  commitments  relating to the  Facilities  as
         listed on Exhibit  1.01(f),  true and correct copies of which contracts
         have been  provided to Purchaser by Seller as of the date hereof;  (ii)
         the permits and license used or held for use by Seller in the operation
         of the Facilities,  including,  but not limited to, the two home health
         licenses held by Seller and  described in Exhibit  6.06,  and (iii) any
         and all warranties issued to Seller in connection with the construction
         of the Sacramento Addition (the "Records and Rights").

         2.       Exhibit 6.06 is hereby deleted in its entirety and the revised
Exhibit 6.06 which is attached
to this Amendment is inserted in lieu thereof.

         3. Except as  specifically  set forth  herein,  the  Meridian  Purchase
Agreement shall remain in full force and effect as originally executed by Seller
and Purchaser.

         4. This Amendment may be executed in counterparts,  each of which shall
be deemed to be an original,  but all of which taken together  shall  constitute
but one and the same instrument.

         IN WITNESS WHEREOF, the parties hereby execute this Amendment as of the
day and year first set forth above.

                                          WESTERN NEUROLOGIC RESIDENTIAL CENTERS


                                          By:       ___________________________
                                          Its:     ____________________________


                          REGENCY REHAB HOSPITALS, INC.


                                          By:      ____________________________
                                          Its:     ____________________________