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A three-layer neural network (NN) with novel adaptive architecture has been developed. The hidden layer of the network consists of slabs of single neuron models, where neurons within a slab-but not between slabs- have the same type of activation function. The network activation functions in all three layers have adaptable parameters. The network was trained using a biologically inspired, guided-annealing learning rule on a variety of medical data. Good training/testing classification performance was obtained on all data sets tested. The performance achieved was comparable to that of SVM classifiers. It was shown that the adaptive network architecture, inspired from the modular organization often encountered in the mammalian cerebral cortex, can benefit classification performance.