<PAGE>  1
                   SECURITIES AND EXCHANGE COMMISSION
                         WASHINGTON, D.C.  20549


                                FORM 10-Q

           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                 THE SECURITIES AND EXCHANGE ACT OF 1934

              FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998


                     Commission file number 1-12055


                    PARACELSUS HEALTHCARE CORPORATION
         (Exact name of registrant as specified in its charter)


                CALIFORNIA                              95-3565943
       (State or other jurisdiction of                 (IRS Employer
        incorporation or organization)               Identification No.)

              515 W. GREENS ROAD, SUITE 800, HOUSTON, TEXAS
                (Address of principal executive offices)

         77067                              (281) 774-5100
       (Zip Code)               (Registrant's telephone number, including
                                              area code)


Securities registered pursuant to Section 12(b) of the Act:

COMMON STOCK, NO STATED VALUE                   NEW YORK STOCK EXCHANGE
-----------------------------             ------------------------------      
         (Title of Class)                (Name of each exchange on which
                                                 registered)

Indicate  by  check mark whether the registrant (1) has filed all reports
required to be  filed  by  Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding  12  months  (or for such shorter period
that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.

                          Yes[X]       No[   ]

As  of  May  8,  1998,  there were outstanding 55,093,417 shares  of  the 
Registrant's Common Stock, no stated value.






<PAGE>  2

                    PARACELSUS HEALTHCARE CORPORATION
                                FORM 10-Q
                     FOR THE QUARTERLY PERIOD ENDED
                             MARCH 31, 1998

                                  INDEX

<TABLE>
<CAPTION>
                                                             PAGE REFERENCE
                                                               FORM 10-Q
<S>           <C>               	   					        <C>
FORWARD-LOOKING STATEMENTS                                          3

   PART I.    FINANCIAL INFORMATION

     Item 1.  Financial Statements-- (Unaudited)

              Condensed Consolidated Balance Sheets--                                  
                March 31, 1998 and December 31, 1997                4

              Consolidated Statements of Operations--
                Three Months Ended March 31, 1998 and 1997          5

              Condensed Consolidated Statements of Cash Flows--         
                Three Months Ended March 31, 1998 and 1997          6  

              Notes to Interim Condensed Consolidated
                Financial Statements                                7

     Item 2.  Management's Discussion and Analysis of Financial    10             
                Condition and Results of Operations

PART II.      OTHER INFORMATION                                    15

              SIGNATURE                                            16
</TABLE>
















<PAGE>  3

FORWARD-LOOKING STATEMENTS

     Certain  statements  in   this   Form   10-Q   are  "forward-looking
statements" made pursuant to the safe harbor provisions  of  the  Private
Securities  Litigation  Reform  Act  of  1995. Forward-looking statements
involve a number of risks and uncertainties.  Factors which may cause the
Company's  actual results in future periods  to  differ  materially  from
forecast results  include,  but  are  not  limited  to:  the  outcome  of
litigation  pending  against  the Company and certain affiliated persons;
general economic and business conditions,  both  nationally  and  in  the
regions  in  which  the  Company operates; industry capacity; demographic
changes; existing government  regulations  and changes in, or the failure
to  comply  with  government  regulations;  legislative   proposals   for
healthcare  reform;  the  ability  to  enter  into  managed care provider
arrangements  on  acceptable  terms;  changes  in Medicare  and  Medicaid
reimbursement levels; revisions to amounts recorded for losses associated
with  the  impairment  of assets; liabilities and other  claims  asserted
against the Company; competition;  the  loss of any significant customer;
changes  in  business strategy, divestiture  or  development  plans;  the
ability to attract  and retain qualified personnel, including physicians;
fluctuations  in  interest   rates   on   the   Company's  variable  rate
indebtedness; and the availability and terms of capital  to  fund working
capital  requirements  and  the  expansion  of  the  Company's  business,
including the acquisition of additional facilities.





























<PAGE>  4
PART I.   FINANCIAL INFORMATION
ITEM 1.   FINANCIAL STATEMENTS

                      PARACELSUS HEALTHCARE CORPORATION
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                               ($ in 000's)
<TABLE>
<CAPTION>
                                                MARCH 31,      DECEMBER 31,
                                                   1998            1997
                                                (Unaudited)      (Note 1)
                                                 ---------      ----------    
<S>                                             <C>             <C>
ASSETS
Current assets:
    Cash and cash equivalents                   $   14,117      $  28,173
    Restricted cash                                  6,636          6,457
    Accounts receivable, net                        70,702         70,675
    Deferred income taxes                           25,906         25,818
    Other current assets                            43,892         42,884
                                                 ---------       -------- 
        Total current assets                       161,253        174,007
                                                   
Property and equipment                             442,991        438,792
Less: Accumulated depreciation and amortization   (136,589)      (130,728)
                                                  --------       --------    
                                                   306,402        308,064

Goodwill                                           113,463        114,404
Other assets                                       138,345        138,349
                                                  --------       --------    
        Total assets                            $  719,463     $  734,824
                                                  ========       ========    
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable                            $   45,034     $   46,722
    Accrued liabilities and other                   70,060         83,698
    Current maturities of long-term debt             6,495          6,209
                                                  --------       --------
        Total current liabilities                  121,589        136,629

Long-term debt                                     490,856        491,914
Other long-term liabilities                         64,565         64,278
Stockholders' Equity:
    Common stock                                   224,475        224,475
    Additional paid-in capital                         390            390
    Unrealized gains on marketable securities           12             12
    Accumulated deficit                           (182,424)      (182,874)
                                                  --------       --------    
        Total stockholders' equity                  42,453         42,003
                                                  --------       --------
Total Liabilities and Stockholders' Equity      $  719,463     $  734,824
                                                  ========       ========    
</TABLE>
                                      See accompanying notes.
<PAGE> 5
                    PARACELSUS HEALTHCARE CORPORATION
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                   ($ in 000's, except per share data)
                               (Unaudited)
<TABLE>
<CAPTION>
                                                       THREE MONTHS ENDED
                                                            MARCH 31,
                                                      -------------------   
                                                        1998         1997
                                                      --------    --------
<S>                                                  <C>         <C>
Net revenue                                          $ 160,410   $ 168,490
Costs and expenses:
  Salaries and benefits                                 65,430      69,012
  Other operating expenses                              65,478      66,432
  Provision for bad debts                                9,692      10,164
  Interest                                              12,379      10,855
  Depreciation and amortization                          8,188       7,704
  Equity in earnings of Dakota Heartland Health System  (3,085)     (2,559)
                                                      --------    --------
        Total costs and expenses                       158,082     161,608
Income before minority interest, income taxes and
  extraordinary charge                                   2,328       6,882
Minority interests                                         (61)       (341)
                                                      --------    --------
Income before income taxes and extraordinary charge      2,267       6,541
Provision for income taxes                                 642       1,373
                                                      --------    --------
Income before extraordinary charge                       1,625       5,168
Extraordinary charge on extinguishment of debt, net     (1,175)          -
                                                      --------    --------
Net income                                           $     450   $   5,168
                                                      ========    ========

Earnings (loss) per share - basic and assuming
  dilution:
   Income before extraordinary charge                $    0.03   $    0.09
   Extraordinary charge on extinguishment of debt        (0.02)          -
                                                      --------    --------
Net income per share                                 $    0.01   $    0.09
                                                      ========    ========

</TABLE>

                                      See accompanying notes.








<PAGE> 6
                    PARACELSUS HEALTHCARE CORPORATION
             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                               ($ in 000's)
                                (Unaudited)

<TABLE>
<CAPTION>
                                                    Three Months Ended
                                                         March 31,
                                                  ---------------------
                                                     1998        1997
                                                  --------      -------
<S>                                              <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                       $     450     $  5,168
Non-cash expenses and changes in operating assets
 and liabilities                                    (7,951)     (15,817)
                                                  --------      -------
Net cash used in operating activities               (7,501)     (10,649)
                                                  --------      -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of marketable securities                           -        19,284
Additions to property and equipment, net            (3,836)      (5,200)
Decrease (increase) in other assets, net             2,037       (3,420)
                                                  --------      -------
Net cash provided by (used in) investing
   activities                                       (1,799)      10,664
                                                  --------      -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of debt, net                               (772)        (343)
Deferred financing costs                            (3,984)          --
                                                  --------      -------
Net cash used in financing activities               (4,756)        (343)
                                                  --------      -------
Decrease in cash and cash equivalents              (14,056)        (328)
Cash and cash equivalents at beginning of period    28,173       17,771
                                                  --------      -------
Cash and cash equivalents at end of period       $  14,117     $ 17,443
                                                  ========      =======

  Supplemental Cash Flow Information:
   Interest paid                                 $  20,877     $ 19,124
   Income taxes paid                             $      49     $    198
</TABLE>

                         See accompanying notes.








<PAGE>  7
                      PARACELSUS HEALTHCARE CORPORATION

      NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               (Unaudited)

                             March 31, 1998

NOTE 1.    ORGANIZATION AND BASIS OF PRESENTATION

ORGANIZATION  -  Paracelsus  Healthcare  Corporation (the "Company")  was
incorporated in November 1980 for the principal  purpose  of  owning  and
operating  acute  care  and  related  healthcare  businesses  in selected
markets.    The  Company  presently  operates  26  hospitals  with  2,667
licensed beds  in  9 states (including two psychiatric hospitals with 113
licensed beds), of which  20 are owned, including one through a 50% owned
partnership interest, and six are leased.

BASIS OF PRESENTATION - The accompanying unaudited condensed consolidated
financial statements of the Company have been prepared in accordance with
generally   accepted  accounting   principles   for   interim   financial
information and  with the instructions to Form 10-Q. Accordingly, they do
not include all of  the  information  and  notes  required  by  generally
accepted  accounting  principles for annual financial statements. In  the
opinion of management,  all  adjustments  considered necessary for a fair
presentation have been included. The balance  sheet at December 31, 1997,
has been derived from the audited financial statements  at  that date but
does  not  include  all  of  the  information  and footnotes required  by
generally   accepted   accounting   principles  for  complete   financial
statements. The Company's business is  seasonal  in nature and subject to
general  economic  conditions  and other factors. Accordingly,  operating
results for the three months ending  March  31, 1998, are not necessarily
indicative  of  the  results that may be expected  for  the  year  ending
December  31,  1998.  These   financial  statements  should  be  read  in
conjunction with the audited consolidated  financial statements and notes
thereto for the year ended December 31, 1997,  included  in the Company's
1997 Form 10-K.

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make  estimates and
assumptions  that  affect  the reported amounts of assets and liabilities
and disclosure of  contingent  assets  and liabilities at the date of the
financial statements and  the reported amounts  of  revenues and expenses
during  the  reporting  period.  Actual results could differ  from  those
estimates.










<PAGE>  8

EARNINGS PER SHARE - The  following  table  sets forth the computation of
basic  and  diluted  earnings  per  share  before  extraordinary  charge
(dollars in thousands, except per share amounts). Per  share  amounts for
the  quarter  ended March 31, 1997 have been restated in accordance  with
Statement  of Financial  Accounting  Standards  No.  128,  "Earnings  per
Share":

<TABLE>
<CAPTION>
                                               THREE MONTHS   THREE MONTHS
                                                   ENDED          ENDED
                                                  MARCH 31,      MARCH 31,
                                                    1998           1997
<S>                                             <C>          <C>
Numerator (a):
   Income before extraordinary charge           $   1,625    $ 5,168
                                                  =======     =======
Denominator:
   Denominator for basic earnings per share -
     weighted-average shares                       55,093     54,813
   Effect of dilutive securities:
     Employee stock options                         2,446      2,855
                                                  -------     ------  
   Dilutive potential common shares                 2,446      2,855
                                                  -------     ------ 
   Denominator for diluted earnings per share -
     adjusted weighted-average shares after
     assumed conversion                            57,539     57,668
                                                  =======     ======
   Basic earnings per share before 
     extraordinary charge                        $   0.03    $  0.09
                                                  =======     ======   
   Diluted earnings per share before
     extraordinary charge                        $   0.03    $  0.09
                                                  =======     ======   
</TABLE>
______________________
(a)   Amount  is  used  for  both  basic  and  diluted earnings per share
computations since there is no earnings effect related  to  the  dilutive
securities.

Options to purchase 4,988,288 shares of the Company's common stock at a 
weighted average exercise price of $7.37 per share were outstanding during 
the first quarter ended March 31, 1998, but were not included in the 
computation of diluted EPS because the options' exercise price was greater
than the average market price of the common stock.

COMPREHENSIVE INCOME - Effective January 1, 1998, the Company has adopted
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income".  SFAS 130 establishes standards for reporting and disclosure  of
comprehensive  income  and  its  components  in the financial statements;
however,  the  adoption  of  this  pronouncement had  no  impact  on  the
Company's  net  income  or  stockholders'   equity.   SFAS  130  requires
<PAGE>  9

unrealized   gains   or   losses   on  the  Company's  available-for-sale
securities,  which  prior  to  adoption   were   reported  separately  in
stockholders' equity to be included in other comprehensive income. During
the  first  quarters ended March 31, 1998 and 1997,  total  comprehensive
income amounted to $450,000 and $5.0 million, respectively.

NOTE 2.    LONG-TERM DEBT

     On March  30, 1998, the Company entered into an Amended and Restated
Credit Agreement  (the "Restated Credit Agreement"), which provided for a
$180.0 million five-year  Reducing Revolving Credit Facility (the "$180.0
million Facility") and $75.0  million in Term Loan Facilities (the "$75.0
million Facilities")(collectively,  the  "Facilities"),  consisting  of a
five-year  $25.0 million Term Loan Facility ("Tranche A Facility") and  a
six-year $50.0  million  Term  Loan Facility ("Tranche B Facility").  The
$180.0 million Facility is available  for (i) general corporate purposes,
including  funding  working  capital needs,  Permitted  Acquisitions  and
capital expenditures, (ii) issuance  of  letters  of  credit  up to $25.0
million  and  (iii) replacing existing indebtedness of the Company  under
its prior Credit  Facility.   The  $75.0 million Facilities are available
for replacing existing indebtedness of the Company under its prior Credit
Facility and initial Permitted Acquisition advances.

     During  the  first  quarter  ended  March  31,  1998,   the  Company
recognized  an  extraordinary  charge   for  the  write-off  of  deferred
financing  costs  of  $1.2  million,  net of tax  benefits  of  $817,000,
relating to the senior credit facility  in  existence  prior to March 30,
1998.

NOTE  3.    CONTINGENCIES

     On  March  9,  1998,  the  U.S.  Securities and Exchange  Commission
entered  a  formal  order  authorizing  a private  investigation,  IN  RE
PARACELSUS HEALTHCARE CORP., FW-2067.  Pursuant  to the formal order, the
staff  of  the  SEC's  Fort  Worth  District Office is investigating  the
accounting and financial reporting issues  that  were  the subject of the
internal inquiry described in the Company's 1996 Form 10-K filed in April
1997.  The Company is cooperating with the staff of the SEC.

     The  Company  is  a  party to pending litigation in connection  with
several stockholder related matters.  See "Item 2 - Pending Litigation."












<PAGE> 10
ITEM 2.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
            CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

     "Same  hospitals"  as  used   in  the  following  discussion,  where
appropriate, consist of acute care hospitals owned throughout the periods
for which comparative operating results are presented.  Operating results
of the Company's psychiatric hospitals have been segregated from those of
the acute care hospitals and are reflected  under  the caption "Loss from
operations   of   discontinued   operations,  net"  in  the  Consolidated
Statements of Operations.

RESULTS OF OPERATIONS - QUARTER ENDED MARCH 31, 1998
COMPARED WITH QUARTER ENDED MARCH 31, 1997

     Net revenue for the quarter ended March 31, 1998 was $160.4 million,
a decrease of $8.1 million, or 4.8%,  from  $168.5  million  for the same
period of 1997.  The $8.1 million decrease was primarily attributable  to
a  $3.8  million  decrease  as  a  result  of management's closure of PHC
Regional  Hospital  and Medical Center ("PHC Regional  Hospital")  and  
certain under performing operating units, and a decline in utilization and
reimbursement  rates  for  home  health  and  other healthcare operations 
related to the enactment of the Balanced Budget  Act  of  1997 (the  "1997
Budget Act").  Net revenue of the Company's Tennessee market hospitals, 
which  have significant home health operations, decreased $4.0 million from 
$16.5  million  in  1997  to  $12.5  million  in  1998.  The reductions  in  
net  revenue  associated  with  the enactment of the 1997 Budget Act are 
likely to continue throughout 1998.

     The  Company's  "same  hospitals"  experienced a  6.4%  decrease  in
inpatient admissions from 17,619 in 1997 to 16,493 in 1998.  Patient days
decreased 7.1% from 84,885 in 1997 to 78,877 in 1998.  Such decreases are
primarily attributable to reduced volumes  in  certain LA metro hospitals
and management's decision to close under performing  operating  units.
Outpatient visits in "same hospitals" decreased 16.3%  from  428,911  in  
1997  to  358,839  in 1998 primarily  as  a  result  of a 30.3% decline in 
home health visits.  This decrease was due primarily  to the cancellation 
of a third party contract to  provide  home health services  at  one  of  
the  Company's  Tennessee hospitals and  from  stricter  utilization  
standards  resulting from new regulations effective October 1, 1997.  
Excluding home health, outpatient visits in "same hospitals" increased 7.9% 
from 157,103 in 1997 to 169,463 in 1998.

     Operating expenses (salaries and benefits, other operating  expenses
and  provision  for bad debts) decreased $5.0 million from $145.6 million
in 1997 to $140.6  million  in  1998.   Expressed  as a percentage of net
revenue, operating expenses increased from 86.4% in 1997 to 87.7% in 1998
and  operating  margin decreased from 13.6% to 12.3%.   The  increase  in
operating expenses  as  a  percent  of net revenue is due to a decline in
volumes  at  certain  LA  metro  hospitals   and   the   impact   of  the
aforementioned  reductions  in  reimbursement rates under the 1997 Budget
Act,  particularly  with  respect  to   the   Company's  home  healthcare
businesses  in  Tennessee.   Excluding PHC Regional  Hospital,  LA  metro
<PAGE>  11
hospitals and the Tennessee market  hospitals,  operating  expenses  as a
percentage  of net revenue decreased from 87.1% in 1997 to 86.2% in 1998.
Such decrease  was due to continued improvement in operating margins as a
result of (i) management's  efforts to control costs, (ii) efficiency and
productivity  gains  resulting   from  the  implementation  of  operating
standards  and  benchmarks  on a hospital  department  level,  and  (iii)
management's closing of under performing  operating  units and eliminating
or reducing unprofitable services.

     Interest expense increased $1.5 million from $10.9  million  in 1997
to $12.4 million in 1998, primarily due to approximately $1.3 million  of
interest  charges  in  1997  taken  against  a  loss  contract previously
established in December 1996 with respect to the now closed  PHC Regional
Hospital.   Such  amount  represented  interest charges on borrowings  to
finance the acquisition of PHC Regional Hospital.

     Depreciation and amortization increased 6.3% to $8.2 million in 1998
from  $7.7  million  for  the  same period of  1997.   Such  increase  is
primarily due to depreciation on  capital  expenditures  since  March 31,
1997.

     Income  before  income taxes and extraordinary charge included  $3.1
million and $2.6 million  attributable  to  the  Company's  equity in the
earnings  of Dakota Heartland Health System for the quarters ended  March
31, 1998 and 1997, respectively.

     The Company's  effective  ongoing  tax  rate was 28.3% for the three
months ended  March  31,  1998,  as  compared to 21.0% for the comparable
period  in  1997.   The  reduced tax rates for  1998  and  1997  resulted
primarily from reductions  in  the  valuation  allowance  related  to the
recognition  of  previously  devalued  tax  assets  of  $673,000 and $1.7
million, respectively.

     Net  income  for the quarter ended March 31, 1998 was  $450,000,  or
$0.01 per diluted share, compared to net income of $5.2 million, or $0.09
per diluted share,  for  the  same  period  of 1997.  The 1998 net income
includes  an  extraordinary  charge on extinguishment  of  debt  of  $1.2
million (net of tax benefits of  $817,000),  or  $0.02 per diluted share.
Weighted   average  common  and  common  equivalent  shares   outstanding
decreased from 57.7 million in 1997 to 57.5 million in 1998.

LIQUIDITY AND CAPITAL RESOURCES

     Net cash  used  in  operating activities for the quarter ended March
31, 1998 was $7.5 million,  compared to $10.6 million for the same period
of  1997.  The  $3.1 million  decrease  in  net  cash  used  in operating
activities was mainly attributable to non-recurring cash payments  during
1997  for accrued (i) 1996 health claims related to PHC Regional Hospital
(ii) costs and fees related to the Special Committee's investigation, and
(iii) Champion  merger  costs,  partially  offset  by the decrease in net
income.   Net cash used in investing activities was $1.8  million  during
1998, as compared  to  net cash provided by investing activities of $10.7
million  during  1997.   The   $12.5   million   decrease  was  primarily
attributable  to  the liquidation of marketable securities  held  by  the
<PAGE> 12
Company's wholly-owned  subsidiary,   Hospital  Assurance  Company  Ltd.,
during  1997, partially offset by a decrease in other assets during 1998.
Net cash  used  in  financing  activities  during  1998 was $4.8 million,
compared to $343,000 during 1997. The $4.4 million increase in cash used
was primarily attributable to deferred financing costs associated with the 
refinancing of the revolving credit facility in March 1998.

     Net working capital was $39.7 million at March 31, 1998, an increase
of $2.3 million from $37.4 million at December 31, 1997.  The  Company's
long-term  debt  as  a  percentage  of total capitalization was 92.0%  at
March 31, 1998, compared to 92.1% at December 31, 1997.

     As of  May 11, 1998, the Company  had  $95.1 million available under
its  Restated  Credit  Facility  to  fund  future  capital   expenditures
including  the  acquisition  of  its  partner's  50%  interest  in Dakota
Heartland Health System, working capital requirements and the issuance of
letters of credit. The Company anticipates that internally generated cash
flows  from  earnings,  proceeds  from  divestiture  of  non-core assets,
proceeds  from  the  sale  of  hospital  accounts  receivable  under  the
Company's  commercial  paper program, the Federal and state income  taxes
refunds, and available borrowings  under  its  Restated  Credit Agreement
will be sufficient to meet funding requirements through 1998.   There can
be  no  assurance  that  future developments in the hospital industry  or
general  economic  trends  will   not   adversely  affect  the  Company's
operations  or  its  ability  to  meet  such funding  requirements.   See
"Pending  Litigation"  of  this Item for a discussion  regarding  certain
pending litigation, the resolution  of  which  could adversely affect the
Company's liquidity and its future operating results.

OPERATING PERFORMANCE OF LA METRO HOSPITALS

     The Company recorded EBITDA of $1.1 million  on  the  LA metro acute
care hospitals for the three months ended March 31, 1998, as  compared to
EBITDA  of  $2.5 million for the comparable 1997  period.  Losses  before
interest, income  taxes,  depreciation  and amortization for the LA metro
psychiatric  hospitals,  which  were offset  against  the  disposal  loss
accrual  previously  established in  September  1996,  were  $80,000  and
$33,000 in 1998 and 1997,  respectively.  Management expects the LA metro
hospitals  to continue to generate  positive  cash  flows  through  their
estimated disposition date.

PENDING LITIGATION

     Since the Company filed its 1996 Form 10-K with  the  Commission  on
April  15,  1997,  there  have  been  two amended complaints filed in the
stockholder class and derivative  litigation described in that Form 10-K.
A Consolidated  Class  Action Complaint, captioned IN RE PARACELSUS CORP.
SECURITIES  LITIGATION,  Master  File  No.  H-96-3464,  was  filed  which
consolidates and amends several  class action complaints described in the
1996 Form 10-K. A  First Amended Derivative  Complaint  was  filed  which
amends  the  previously filed class and derivative action captioned CAVEN
V. MILLER No.  H-96-4291.  Both  complaints  now  reflect  certain  facts
disclosed  in  the  1996  Form 10-K that were not alleged in the previous
complaints.  The  class action  complaint   asserts  claims  against  the
<PAGE>  13
Company  under  sections  11  and  12(a)(2)  of  the  Securities  Act  of
1933,  and  claims  against  certain  existing  and  former officers  and
directors of the Company  under sections 11 and 15 of  the Securities Act
of  1933.  Plaintiffs  recently filed a proposed amended complaint  which
adds a claim against the  Company  under  section 10(b) of the Securities
Exchange Act of 1934.  The derivative action,  which purports to be filed
on behalf of Champion Healthcare Corporation,  asserts  various state law
claims  against the Company, certain of its existing and former  officers
and directors  or  their  affiliates,  its  outside auditor, and the lead
underwriter for various securities offerings.

     As discussed in the Company's 1997 Form 10-K,  the  Company believes
that the outcome of certain of the claims will probably be unfavorable to
the  Company.   The  Company  also  believes  that the stockholder  class
actions asserted against the Company are likely to settle rather  than to
proceed to trial, judgment, and appeal and that,  given the circumstances
of these cases, the terms of a settlement would be structured in a manner
to  avoid  causing  the  Company  to seek  protection under  the  Federal
bankruptcy reorganization laws.  In  any circumstances where the  Company
could  not structure  a  settlement of  all  claims  within its financial
resources,  it  would  vigorously   defend any attempt to  establish  the
amount of liability or to require payment  beyond  its  resources.   Many
factors   will  ultimately  affect  and  determine  the  results  of  the
litigation,   however,  and the Company can provide no assurance that the
results will not have a significant adverse effect on it.

REGULATORY MATTERS

     Healthcare reform legislation  has been proposed at both Federal and
state levels. In August 1997, the President  signed  into  law  the  1997
Budget  Act,  which projects to produce a net savings of $115 billion for
Medicare and $13  billion  for  Medicaid  over five years. The changes in
Medicare reimbursement mandated by the 1997  Budget  Act  include,  among
others,  (i)  no  increases in the rates paid to acute care hospitals for
inpatient care through  September  30, 1998,  (ii) a reduction in capital
reimbursement rate and wage index based reimbursement, (iii) a conversion
of payments for certain Medicare outpatient  services  from  a cost-based
approach, subject to certain limits, to a prospective payment  system and
(iv)  phase-in reduction in reimbursement for disproportionate share  and
bad debt.  While  such  changes  in  the  Medicare and Medicaid 
programs will generally result in lower payments to the Company, 
management believes further cost reductions will reduce the financial 
impact of such changes.  However, management  cannot  predict  the impact
future reforms may  have  on  its business, nor can there be any assurance 
that the Company will be able to mitigate  the  impact  of  any future
reforms through  additional  cost reductions.  Accordingly, such reforms 
may have a material adverse effect on the Company's results of  operations, 
financial position or liquidity. Additionally,  the  Health  Care
Financing Administration's  ("HCFA") interpretation   of   recent   
legislation impacting  home   healthcare reimbursement  could  adversely
impact  the Company's  home  healthcare business.  Depending upon final 
determination by HCFA, the Company may be required  to  significantly  
reduce  and/or ultimately   exit  its  home healthcare business.

<PAGE> 14
     On  March  9,  1998,  the  U.S.  Securities  and Exchange Commission
("SEC") entered a formal order authorizing a private investigation, IN RE
PARACELSUS HEALTHCARE CORP., FW-2067.  Pursuant to  the formal order, the
staff  of  the  SEC's  Fort  Worth  District Office is investigating  the
accounting and financial reporting issues  that  were  the subject of the
internal inquiry described in the Company's 1996 Form 10-K filed in April
1997.  The Company is cooperating with the staff of the SEC.
















































<PAGE>  15

PART II.      OTHER INFORMATION

ITEM 1.       LEGAL PROCEEDINGS

     See  Part  I  -  Item  2  "Pending  Litigation"  for  an  update  of
developments on the pending stockholders' litigation previously disclosed
in the Company's 1997 Form 10-K.

ITEM 2.       CHANGE IN SECURITIES

None.

ITEM 3.       DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5.       OTHER INFORMATION

None.

ITEM 6.       EXHIBIT AND REPORTS ON FORM 8-K

(a) Exhibits

10.6  $180 Million Reducing Revolving Credit Facility and $75 Million Term
      Loan Facilities, dated as of March 30, 1998, among Paracelsus,
      Banque Paribas, as agent, and other lenders named therein.

10.15 Change in Control Separation Pay Plan.

27    Financial Data Schedule.

 (b)  Reports on Form 8-K

       None.













<PAGE>  16

                                                      SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934,  the
Registrant  has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                              Paracelsus Healthcare Corporation
                                         (Registrant)


Dated: May 11, 1998           By: /s/ James G. VanDevender 
                                 -------------------------
                                     James G. VanDevender
                                Senior Executive Vice President,
                                   Chief Financial Officer
                                         & Director