MATRIA HEALTHCARE INC
EMPLOYMENT LETTER
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>EMPLOYMENT LETTER
<TEXT>


May 16, 2000



Mr. Jeffrey D. Koepsell
3270 Wood Branch Drive
Alpharetta, GA  30004


Dear Jeff:

It is my pleasure to confirm our offer to you for the position of Executive Vice
President and Chief  Operating  Officer,  on behalf of Matria  Healthcare,  Inc.
("Matria" or  "Company"),  which  employment  is to commence on or about May 16,
2000. In this position you will report directly to me.

Your  initial  base salary will be  $11,538.46  (gross  before  deductions)  per
biweekly  pay  period.   Future  salary   adjustments   and  assignment  of  job
responsibilities  shall be based upon  individual and Company  performance.  You
also will be eligible to participate in the applicable  annual Matria Management
Incentive  Plan (MIP) with an annual  target bonus amount equal to fifty percent
(50%) of the  base  salary  paid to you in  accordance  with  the  terms of such
program in effect from time to time.

In accordance with Company policy,  you will receive 1) an automobile  allowance
in the amount of $900.00 per month or 2) a  Company-leased  vehicle with a lease
capitalized cost of $52,600.

The Company will make a  recommendation  to the Company's Stock Option Committee
that you be granted a stock option to purchase  90,000  shares of Matria  Common
Stock. Such stock option will be subject to the standard terms and conditions of
the Company's applicable stock option plan.

If your  employment  with the Company is  terminated  by the Company for reasons
other than "for cause", you will be eligible for twelve (12) months of severance
pay and  benefits to  commence  on the  effective  date of such  termination  of
employment.  Should such  termination  of employment for reasons other than "for
cause" be effective  within  twenty-four (24) months of your date of employment,
your status with the Company will be established as  "consultant" to the Company
for the period commencing on the effective date of termination of employment and
ending on the twenty-fourth (24th) month anniversary of your date of employment.
The remuneration  during this period of "consultant"  status to the Company will
be established  at the sole  discretion of the Company and will be deducted from
the severance pay described above. The hours to be devoted during this period of
"consultant" status will be established by mutual agreement. As used above, "for
cause" shall mean the Company's  termination of your  employment on the basis of
criminal or civil fraud on your part involving a material amount of funds of the
Company.

Immediately upon  employment,  you will be eligible to begin accrual of vacation
benefits  at the accrual  rate of 1.666 days per month (20 days per  annum).  In
addition,  immediately  upon employment an earned vacation  balance of seven (7)
days will be established.


<PAGE>


Jeffrey Koepsell
May 16, 2000
Page 2

Following your first  anniversary with the Company,  you will become eligible to
participate in the applicable Matria Executive Life Insurance Program.

You will be eligible to  participate  in the  customary  medical,  dental,  life
insurance  and  long-term  disability  benefits  offered to other  employees  in
similar positions the first pay period following thirty (30) days of employment.
A summary of these benefits is enclosed.  More detailed  enrollment  information
will be sent to you  shortly  after  you  begin  employment.  You  will  also be
reimbursed  for the cost of COBRA  benefits from your previous  employer for the
first month of employment.

If you  accept  this  offer,  you may  receive  copies of Company  policies  and
procedures  in effect  from  time to time and agree to abide by same,  realizing
that changes can occur at any time and that such policies and procedures are not
to be construed as a contract of  employment.  You will also be  reimbursed  for
your reasonable business expenses in accordance with policy.

This  offer is  contingent  upon  your  signing  the  Company's  Confidentiality
Agreement and  Non-Competition  Agreement attached hereto.  Please indicate your
acceptance  to the terms  stated  herein by  signing  the  acceptance  below and
returning  this  letter,  along  with  an  executed  original  of  the  attached
Agreements to me in the enclosed self-addressed  envelope.  Please retain a copy
of the fully executed Agreements for your records.

Jeff,  we look forward to your joining the Matria team. We are excited about the
potential and expertise you bring to our  organization.  We are confident  these
arrangements  will be  satisfactory  to you and look forward to  receiving  your
acceptance  of our offer of  employment.  Please do not  hesitate  to contact me
should you have any questions.

Sincerely,

/s/ Donald R. Millard

Donald R. Millard
President and Chief Executive Officer

cc:      Pete Petit
         Thornton Kuntz

                                   ACCEPTANCE

I have read and understand the foregoing which constitutes the complete,  entire
and exclusive statement of the agreement between the Company and the undersigned
and supersedes all prior or contemporaneous proposals, promises, understandings,
representations,  conditions, oral or written, relating to the subject matter of
this  agreement.  I accept  employment  at will with the Company  subject to the
terms and conditions contained herein.

/s/Jeffrey D. Koepsell                               May 16, 2000
Jeffrey D. Koepsell                                  Date
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