EXHIBIT 99.5
 
                        REPORT OF INDEPENDENT AUDITORS
 
We have audited the consolidated financial statements of Fountain View, Inc.
as of December 31, 1997 and 1996, and the related consolidated statements of
income, shareholders' equity (deficit) and cash flows for each of the three
years in the period ended December 31, 1997, (included elsewhere in this
Registration Statement). Our audits also included the financial statement
schedule listed in item 21(b) of this Registration Statement. This schedule is
the responsibility of the Company's management. Our responsibility is to
express an opinion on this schedule based on our audits.
 
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
 
                                          /s/ ERNST & YOUNG LLP
 
Los Angeles, California
March 11, 1998