EXHIBIT 10.16

                             GUARANTY FEE AGREEMENT
                             ----------------------


     THIS GUARANTY FEE AGREEMENT (this "Agreement") is entered into as of the
____ day of ________, 1996, by and between VENCOR, INC. ("Vencor") and ATRIA
COMMUNITIES, INC. ("Atria").

                                   RECITALS:

     A.  Atria intends to enter into loan and credit agreements to provide
financing to Atria including, but not limited to, a certain Revolving Credit
Facility between Atria and National City Bank of Kentucky and PNC Bank, National
Association as agents for the lending banks (the "Banks") providing for
revolving credit up to a maximum amount of $200,000.00 (the "Atria Facility").

     B.  As a condition to the making of loans under the Atria Facility, the
Banks have required a partial guaranty of the Atria Facility by Vencor, which
guaranty Vencor is willing to provide.

     C.  Vencor and Atria anticipate that other lenders and lending institutions
may likewise from time to time require guarantys of debt or obligations of Atria
by Vencor.

     D.  Vencor considers its partial guaranty of the Atria Facility to be in
its best interest and to be of value to Vencor.

     E.  Vencor shall make any determination of future or additional guarantees
from time to time in its sole discretion.


                              OPERATIVE PROVISIONS

     For and in consideration of the recitals and other good and valuable
consideration, the receipt of which is acknowledged, Vencor and Atria agree as
follows:

     1.  Guaranty Fee.  Atria shall pay to Vencor a fee equal to one and one-
half percent (1 1/2%) of the average outstanding sum of (i) the outstanding
principal balance of all debts or obligations of Atria which are guaranteed by
Vencor plus (ii) the aggregate outstanding principal amount of all issued and
outstanding letters of credit issued pursuant to any portion of any loan or
credit facility of Atria which has been guaranteed by Vencor (collectively, the
"Guaranteed Obligations").  The term "average" as used herein shall mean the
quotient derived by dividing (II) the total of all Guaranteed Obligations as of
the first day of each calendar quarter plus (ii) the total of such Guaranteed
Obligations on the last day of that calendar quarter by (iii) two.

     2.  Due Date Of Fee.  The fee provided for herein shall be payable
quarterly in arrears, the first of such payments being due on the first day of
the first of January, April, July or October following the date of this
Agreement and subsequent payments being due and payable on the first day of each
calendar quarter (based upon the months just named) thereafter as long as there
shall be any Guaranteed Obligations outstanding.

     3.  Binding Effect.  This Agreement shall bind and inure to the benefit of
Vencor and Atria and their respective successors and assigns.

     4.  Partial Invalidity.  No invalidity, irregularity or unenforceability of
any portion of the Guaranteed Obligations shall affect, impair or be a defense
to the obligations of Atria under this Agreement until such time as such
invalidity, irregularity or unenforceability shall have been finally and
unappealably determined by a court of competent jurisdiction.

     5.  Representations and Warranties.  Each party hereto represents and
warrants to the other that it is duly organized and existing under the laws of
the state of its incorporation, that the execution, delivery 

 
and performance of this Agreement are within its corporate powers, have been
duly authorized, are not in contravention of law or the terms of its charter or
bylaws or of any indenture agreement or undertaking to which it is a party or by
which it is bound and that the execution of this Agreement is in furtherance of
the business purposes of such party.

     6.  Governing Laws.  This Agreement and all rights and obligations
hereunder including matters of construction, validity and performance shall be
governed by the internal laws of the Commonwealth of Kentucky.


     IN WITNESS WHEREOF, Vencor and Atria have executed this Agreement as of the
____ day of August, 1996.


                                            VENCOR, INC.

                                            By:
                                                -------------------------------

                                            Title:
                                                   ----------------------------


                                            ATRIA COMMUNITIES, INC.


                                            By:
                                                -------------------------------

                                            Title:
                                                   ----------------------------

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