FORM 10-Q

                    SECURITIES AND EXCHANGE COMMISSION
                           Washington, DC 20549

      {X}  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                     SECURITIES EXCHANGE ACT OF 1934


               For the quarterly period ended June 30, 1999
                                    OR
      { } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                     SECURITIES EXCHANGE ACT OF 1934

           For the Transition period from ________ to ________

                      Commission file number 0-15846

                         First Health Group Corp.
                   (formerly HealthCare COMPARE Corp.)
          (Exact name of registrant as specified in its charter)

             Delaware                          36-3307583
  (State or other jurisdiction of  (IRS Employer Identification Number)
   incorporation or organization)

           3200 Highland Avenue, Downers Grove, Illinois 60515
            (Address of principal executive offices, Zip Code)

                              (630) 241-7900
             (Registrant's phone number, including area code)

                        __________________________
           (Former name, former address and former fiscal year,
                      if changed since last report)

  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 ________

  Indicate the  number of  shares outstanding  of each  of the  issuer's
  classes of common stock, as of the latest practicable date.

  The number of shares of Common Stock, par value $.01 per share,
  outstanding on August 10, 1999, was 49,891,473.

<PAGE>

              First Health Group Corp. and Subsidiaries

                               INDEX


  Part I.    Financial Information                                 Page Number
                                                                   -----------
        Item 1.  Financial Statements

        Consolidated Balance Sheets - Assets at  June 30, 1999
          and December 31, 1998 ......................                   3

        Consolidated Balance Sheets - Liabilities and Stockholders'
          Equity at June 30, 1999 and December 31, 1998                  4

        Consolidated Statements of Operations for the three months
          ended June 30, 1999 and 1998 ...............                   5

        Consolidated Statements of Operations for the six months
          ended June 30, 1999 and 1998 ...............                   6

        Consolidated Statements of Comprehensive Income for the
          three months ended June 30, 1999 and 1998 ..                   7

        Consolidated Statements of Comprehensive Income for the
          six months ended June 30, 1999 and 1998 ....                   7

        Consolidated Statements of Cash Flows for the six months
          ended June 30, 1999 and 1998 ...............                  8-9

        Notes to Consolidated Financial Statements ...                 10-12

        Item 2.  Management's Discussion and Analysis of Financial
             Condition and Results of Operations .....                 13-22

        Item 3.  Quantitative and Qualitative Disclosures About
             Market Risk .............................                   23

  Part II.  Other Information

        Item 4.  Submission of Matters to a Vote of Security Holders     24

        Item 6.  Exhibits and Reports on Form 8-K ....                   24

  Signatures..........................................                   25

<PAGE>
<TABLE>
  PART 1.  Financial Information
  First Health Group Corp. and Subsidiaries
  CONSOLIDATED BALANCE SHEETS
  (Unaudited)


  ASSETS                                   June 30, 1999  December 31, 1998
                                             -----------    -----------
  <S>                                       <C>            <C>
  Current Assets:
    Cash and cash equivalents .....         $ 24,292,000   $ 50,264,000
    Short-term investments ........              120,000        961,000
    Accounts receivable, less allowances for
       doubtful accounts of $11,060,000
       and $11,151,000, respectively          69,154,000     63,582,000
    Reinsurance recoverable .......           55,901,000     57,466,000
    Deferred income taxes .........           18,415,000     18,415,000
    Other current assets ..........            9,364,000     10,874,000
                                             -----------    -----------
    Total current assets ..........          177,246,000    201,562,000

  Long-Term Investments:
    Marketable securities .........           77,229,000    125,120,000
    Other .........................           28,724,000     23,431,000
                                             -----------    -----------
                                             105,953,000    148,551,000
                                             -----------    -----------
  Property and Equipment:
    Land, buildings and improvements          64,313,000     59,228,000
    Computer equipment and software          101,997,000     80,944,000
    Office furniture and equipment            12,548,000     13,617,000
                                             -----------    -----------
                                             178,858,000    153,789,000
    Less accumulated depreciation and
       amortization................          (62,469,000)   (49,805,000)
                                             -----------    -----------
    Net property and equipment ....          116,389,000    103,984,000
                                             -----------    -----------

  Goodwill.........................           93,104,000    100,151,000
  Other Assets.....................            4,871,000      3,631,000
                                             -----------    -----------
                                            $497,563,000   $557,879,000
                                             ===========    ===========

              See Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>

  First Health Group Corp. and Subsidiaries
  CONSOLIDATED BALANCE SHEETS
  (Unaudited)


  LIABILITIES AND STOCKHOLDERS' EQUITY

                                            June 30, 1999 December 31, 1998
                                             -----------    ------------
  <S>                                      <C>             <C>
  Current Liabilities:
    Accounts payable ..............        $  48,087,000   $  52,408,000
    Treasury stock purchase payable                   --      25,000,000
    Accrued expenses ..............           28,067,000      33,545,000
    Income taxes payable ..........            2,947,000       2,611,000
    Claims reserves ...............           67,952,000      72,589,000
                                             -----------    ------------
    Total current liabilities .....          147,053,000     186,153,000

  Long-Term Debt...................          235,000,000     225,000,000
  Other Non-Current Liabilities....            7,962,000       8,599,000
                                             -----------    ------------
    Total liabilities .............          390,015,000     419,752,000
                                             -----------    ------------
  Commitments and Contingencies....               --              --

  Stockholders' Equity:
    Common stock ..................              767,000         765,000
    Additional paid-in capital ....          183,271,000     182,842,000
    Retained earnings .............          418,673,000     384,143,000
    Accumulated comprehensive income          (3,540,000)     (3,099,000)
    Treasury stock, at cost .......         (491,623,000)   (426,524,000)
                                             -----------    ------------
    Total stockholders' equity ....          107,548,000     138,127,000
                                             -----------    ------------
                                           $ 497,563,000   $ 557,879,000
                                             ===========    ============

              See Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>

  First Health Group Corp. and Subsidiaries
  CONSOLIDATED STATEMENTS OF OPERATIONS
  (Unaudited)

                                            Three Months Ended June 30,
                                               1999           1998
                                            -----------    -----------
  <S>                                      <C>            <C>
  Revenues............................     $115,430,000   $126,742,000
                                            -----------    -----------
  Operating expenses:
    Cost of services .................       54,532,000     55,893,000
    Selling and marketing ............       11,450,000     12,416,000
    General and administrative .......        9,352,000     10,568,000
    Healthcare benefits ..............        2,746,000      4,478,000
    Depreciation and amortization ....        7,302,000      6,412,000
                                            -----------    -----------
                                             85,382,000     89,767,000
                                            -----------    -----------
  Income from operations..............       30,048,000     36,975,000

  Other (income) expense:
    Interest expense .................        3,584,000      3,161,000
    Interest income ..................       (1,809,000)    (5,581,000)
                                            -----------    -----------
  Income before income taxes..........       28,273,000     39,395,000
  Income taxes........................      (11,323,000)   (16,073,000)
                                            -----------    -----------
  Net income..........................    $  16,950,000  $  23,322,000
                                            ===========    ===========

Weighted average shares outstanding-basic    50,426,000     63,095,000
                                            ===========    ===========
Net income per common share-basic.          $       .34    $       .37
                                            ===========    ===========
Weighted average shares outstanding-diluted  50,787,000     64,195,000
                                            ===========    ===========
Net income per common share-diluted         $       .33    $       .36
                                            ===========    ===========

            See Notes to Consolidated Financial Statements

</TABLE>
<PAGE>
<TABLE>

  First Health Group Corp. and Subsidiaries
  CONSOLIDATED STATEMENTS OF OPERATIONS
  (Unaudited)


                                            Six Months Ended June 30,
                                               1999           1998
                                            -----------    -----------
  <S>                                      <C>            <C>
  Revenues............................     $232,791,000   $254,500,000
                                            -----------    -----------
  Operating expenses:
    Cost of services .................      110,228,000    112,706,000
    Selling and marketing ............       23,192,000     25,253,000
    General and administrative .......       18,872,000     21,688,000
    Healthcare benefits ..............        4,995,000      8,571,000
    Depreciation and amortization ....       14,348,000     12,338,000
                                            -----------    -----------
                                            171,635,000    180,556,000
                                            -----------    -----------
  Income from operations..............       61,156,000     73,944,000

  Other (income) expense:
    Interest expense .................        6,995,000      6,345,000
    Interest income ..................       (3,416,000)   (10,842,000)
                                            -----------    -----------
  Income before income taxes..........       57,577,000     78,441,000

  Income taxes........................      (23,047,000)   (32,016,000)
                                            -----------    -----------
  Net income..........................    $  34,530,000  $  46,425,000
                                            ===========    ===========

Weighted average shares outstanding-basic    51,632,000     63,355,000
                                            ===========    ===========
Net income per common share-basic.         $        .67  $         .73
                                            ===========    ===========
Weighted average shares outstanding-diluted  51,999,000     64,603,000
                                            ===========    ===========
Net income per common share-diluted         $       .66  $         .72
                                            ===========    ===========


              See Notes to Consolidated Financial Statements

</TABLE>
<PAGE>
<TABLE>

  First Health Group Corp. and Subsidiaries
  CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
  (Unaudited)

                                               Three Months Ended June 30,
                                                  1999             1998
                                                ----------     ----------
  <S>                                          <C>            <C>
  Net income..........................         $16,950,000    $23,322,000
                                                ----------     ----------
  Unrealized losses on securities, before tax     (113,000)    (2,689,000)
  Income tax benefit related to items of other
    comprehensive income..............              45,000      1,097,000
                                                ----------     ----------
  Other comprehensive loss............             (68,000)    (1,592,000)
                                                ----------     ----------
  Comprehensive income................         $16,882,000    $21,730,000
                                                ==========     ==========




                                                Six Months Ended June 30,
                                                  1999           1998
                                                ----------     ----------
  Net income..........................         $34,530,000    $46,425,000
                                                ----------     ----------
  Unrealized losses on securities, before tax     (735,000)    (3,929,000)
  Income tax benefit related to items of other
    comprehensive income..............             294,000      1,603,000
                                                ----------     ----------
  Other comprehensive loss............            (441,000)    (2,326,000)
                                                ----------     ----------
  Comprehensive income................         $34,089,000    $44,099,000
                                                ==========     ==========

              See Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>

  First Health Group Corp. and Subsidiaries
  CONSOLIDATED STATEMENTS OF CASH FLOWS
  (Unaudited)

                                                 Six Months Ended June 30,
                                                      1999         1998
                                                 ------------   ------------
  <S>                                           <C>            <C>
  Cash flows from operating activities:
    Cash received from customers .........      $ 229,151,000  $ 260,509,000
    Cash paid to suppliers and employees .       (159,381,000)  (172,223,000)
    Healthcare benefits paid .............         (6,984,000)    (4,432,000)
    Interest income received .............          4,021,000      8,483,000
    Interest expense paid ................         (6,834,000)    (4,303,000)
    Income taxes paid, net ...............        (22,252,000)   (31,279,000)
                                                 ------------   ------------
    Net cash provided by operating activities      37,721,000     56,755,000
                                                 ------------   ------------
  Cash flows from investing activities:
    Purchases of investments .............        (50,688,000)  (187,574,000)
    Sales of investments .................         93,401,000    181,671,000
    Acquisition of businesses, net of cash
     acquired                                              --       (173,000)
    Purchase of property and equipment ...        (25,735,000)   (24,128,000)
                                                 ------------   ------------
    Net cash provided by (used in) investing
     activities                                    16,978,000    (30,204,000)
                                                 ------------   ------------
  Cash flows from financing activities:
    Exercises of put options on common stock       (4,429,000)            --
    Purchase of treasury stock ...........        (90,099,000)   (50,376,000)
    Proceeds from issuance of common stock          2,847,000     19,036,000
    Proceeds from sale of put options on
     common stock                                   1,010,000             --
    Proceeds from issuance of long-term debt       10,000,000             --
                                                 ------------   ------------
    Net cash used in financing activities         (80,671,000)   (31,340,000)
                                                 ------------   ------------

  Net decrease in cash and cash equivalents       (25,972,000)    (4,789,000)
  Cash and cash equivalents, beginning of period   50,264,000     77,836,000
                                                 ------------   ------------
  Cash and cash equivalents, end of period      $  24,292,000  $  73,047,000
                                                 ============   ============
  Supplemental cash flow data:
    Acquisition of businesses:
      Cost in excess of net assets acquired     $          --  $     173,000
                                                 ============   ============

              See Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>

  First Health Group Corp. and Subsidiaries
  CONSOLIDATED STATEMENTS OF CASH FLOWS
  (Unaudited)

                                                  Six Months Ended June 30,
                                                    1999          1998
                                                 ------------   ------------
  <S>                                           <C>           <C>
  Reconciliation of Net Income to Net
   Cash Provided by Operating Activities:

  Net Income...............................     $  34,530,000  $  46,425,000
                                                 ------------   ------------
  Adjustments to Reconcile Net Income to Net
   Cash Provided by Operating Activities:
      Depreciation and amortization .......        14,348,000     12,338,000
      Change in provision for uncollectible
       receivables                                    (91,000)      (130,000)
      Tax benefit from stock options exercised        453,000      5,156,000
      Unrealized holding loss on marketable
       securities                                     294,000      1,603,000
      (Gain) loss on investment sales .....           688,000     (2,088,000)
      Other, net ..........................           326,000       (420,000)

      Changes in Assets and Liabilities:
      Accounts receivable .................        (5,481,000)     3,303,000
      Other current assets ................         1,510,000     (6,376,000)
      Reinsurance recoverable .............         1,565,000     75,667,000
      Accounts payable and accrued expenses        (9,799,000)    (6,940,000)
      Claims reserves .....................        (4,637,000)   (71,867,000)
      Income taxes payable ................           336,000             --
      Non-current assets and liabilities ..         3,679,000         84,000
                                                 ------------   ------------

    Total adjustments .....................         3,191,000     10,330,000
                                                 ------------   ------------

    Net cash provided by operating activities   $  37,721,000  $  56,755,000
                                                 ============   ============

              See Notes to Consolidated Financial Statements
</TABLE>
<PAGE>

First Health Group Corp. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

  1.  The unaudited financial statements herein have been prepared  by
      the  Company  pursuant to  the  rules  and  regulations  of  the
      Securities and  Exchange Commission.   The accompanying  interim
      financial statements  have been prepared  under the  presumption
      that  users of  the interim  financial information  have  either
      read or have access to the audited financial statements  for the
      latest  fiscal  year ended  December  31,  1998.    Accordingly,
      footnote  disclosures which  would substantially  duplicate  the
      disclosures  contained   in  the  December   31,  1998   audited
      financial  statements  have  been  omitted  from  these  interim
      financial  statements.     Certain   information  and   footnote
      disclosures normally included  in financial statements  prepared
      in  accordance with  generally  accepted  accounting  principles
      have  been condensed  or  omitted  pursuant to  such  rules  and
      regulations.     Although   the   Company  believes   that   the
      disclosures are adequate to  make the information presented  not
      misleading,  it  is  suggested  that  these  interim   financial
      statements be read in conjunction with the  financial statements
      and the notes  thereto included in  the Company's latest  Annual
      Report on Form 10-K.

  2.  On May 19, 1998, the  Company's Board of Directors authorized  a
      2-for-1  common  stock  split  in  the  form  of  a  100%  stock
      distribution.   The distribution was  made on June  23, 1998  to
      stockholders  of record  on June  2,  1998.   Historical  common
      share amounts, per share  amounts and stock option data for  all
      periods presented  have been  restated to  give effect  to  this
      100% stock distribution.

  3.  The Company's  investments in  marketable securities  which  are
      classified as available  for sale had a  net unrealized loss  in
      market value of $441,000, net of deferred income taxes,  for the
      six months ended June 30, 1999.   The net unrealized loss as  of
      June 30, 1999, included as a component of  stockholders' equity,
      was  $3,540,000, net  of deferred  income  taxes.   The  Company
      liquidated its $12,561,000  investment in a limited  partnership
      during 1998.  The Company received proceeds of  $13,131,000 from
      the sale and expects  to receive additional funds in 1999  after
      the completion  of the audit  of the partnership.   The  Company
      has four  separate investments  in another  limited  partnership
      which invests  in equipment  which is leased  to third  parties.
      The total investment as of  June 30, 1999 was $25.8 million  and
      is accounted  for on the  equity method since  the Company  owns
      between a  20% and 25%  interest in each  particular tranche  of
      the  limited partnership.   This  investment total  includes  an
      additional $4.6 million invested in the second quarter  of 1999.
      The Company's  proportionate share of  the partnership's  income
      was $705,000  and $455,000  for the  six months  ended June  30,
      1999  and  1998,  respectively,  and  is  included  in  interest
      income.
<PAGE>
  4.  The Company's Board of Directors has approved the  repurchase of
      up to  15 million  shares of  the Company's  outstanding  common
      stock under its  current authorization.   Purchases may be  made
      from time  to time,  depending on  market conditions  and  other
      relevant factors.   During  the first  six months  of 1999,  the
      Company  repurchased  3,824,000  shares  for  a  total  cost  of
      approximately  $65.1  million.   Such  shares  are  recorded  as
      treasury shares, at cost, and can be used for  general corporate
      purposes.   As  of  June  30, 1999,  approximately  9.5  million
      shares  remain available  for  repurchase  under  the  Company's
      current  repurchase authorization.

      In connection  with its  stock repurchase  program, the  Company
      has outstanding put options  which obligate the Company, at  the
      election of the  option holders, to  repurchase up to  2,250,000
      shares of common stock  at prices ranging from $14.50 to  $15.50
      per share.  The outstanding put options expire on  various dates
      between September 23,  1999 and December 20,  1999.  During  the
      six months ended June 30,  1999,  977,000 (out of the  3,824,000
      shares repurchased) shares  were put to the  Company at a  total
      cost of  $22,891,000.   These shares were  recorded as  treasury
      shares, at  cost, in  the Company's  financial statements.    In
      addition,  the  Company  settled  573,000  puts  by   delivering
      $4,429,000 in cash to the option holders.

 5.  Weighted  average   shares  outstanding  increased  for   diluted
     earnings  per share  by  361,000 and  1,100,000 and  367,000  and
     1,248,000, respectively, for the three and six months  ended June
     30, 1999  and 1998 due to the effect  of stock options.   Diluted
     net  income per share  decreased by  $.01 for all  four of  these
     periods of 1998 and 1997 due to the effect of stock options.

 6.  Effective  January  1, 1998,  the  Company adopted  Statement  of
     Financial Accounting Standards No. 130,  "Reporting Comprehensive
     Income."   Comprehensive income is  a measurement of all  changes
     in stockholders'  equity that result from transactions and  other
     economic events  other than transactions with stockholders.   For
     the  Company,  these changes  consist  of changes  in  unrealized
     gains  and losses from  its investment portfolio.   This  amount,
     net of related taxes, is presented as other  comprehensive income
     and  is added  to  net income  resulting in  total  comprehensive
     income.   Other comprehensive  income was a  loss of $68,000  and
     $1,592,000  for the three  months ended June  30, 1999 and  1998,
     respectively, net  of related taxes.  Other comprehensive  income
     was a  loss of $441,000 and $2,326,000  for the six months  ended
     June  30, 1999  and  1998, respectively,  net of  related  taxes.
     Total   comprehensive   income  amounted   to   $16,882,000   and
     $21,730,000  and $34,089,000  and $44,099,000 for  the three  and
     six months ended June 30, 1999 and 1998, respectively.

     In  1998,  the  Company  also  adopted  Statement   of  Financial
     Accounting Standards  No. 131, "Disclosures About Segments of  an
     Enterprise  and  Related  Information" ("SFAS  No.  131").    The
     Company  has determined it currently  operates in one  reportable
     segment as defined by SFAS No. 131.
<PAGE>
     Effective  January  1, 1999,  the  Company adopted  Statement  of
     Position  98-1,  ("SOP  98-1"),  "Accounting  for  the  Costs  of
     Computer Software Developed  or Obtained for Internal Use."   The
     Company  now capitalizes  certain  internal payroll  and  payroll
     related  costs  during the  application  development stage  of  a
     software  project.   The  effect  of  adopting SOP  98-1  on  the
     Company's  first  quarter  results of  operations  and  financial
     position  for  the  six  months  ended  June  30,  1999  was  not
     material.

 7.  The  Company and its subsidiaries  are subject to various  claims
     arising  in the ordinary  course of business  and are parties  to
     various legal proceedings which constitute  litigation incidental
     to  the business of  the Company  and its subsidiaries.   In  the
     opinion  of   the  Company's  management,  only  one  matter   is
     potentially material  to the business or the financial  condition
     of the  Company.  On August  6, 1998, amended counterclaims  were
     asserted against the  Company in a lawsuit pending in the  United
     States  District Court  for the  Northern District  of  Illinois.
     The  Company had initiated  a lawsuit against  United Payors  and
     United  Providers ("UP &  UP"), a network  of hospital and  other
     medical  providers,  on  April  26,  1996  asserting  claims  for
     trademark infringement  and state law claims for deceptive  trade
     practices,  fraud  and  deceptive  business  practices   and  for
     intentional interference with contracts.

     The Company  alleges that UP & UP  has employed and continues  to
     employ false  and misleading statements and practices  concerning
     the  nature of  its  own services  and relationships  with  payor
     clients,  as well  as the nature  of the  Company's services  and
     relationships  with  its  payor  clients,  among   other  related
     subjects.  Specifically, the Company alleges that UP &  UP misled
     hospitals  to believe  that the  benefits of  joining UP  &  UP's
     network would principally include the likelihood of  an increased
     market share of  patient visits by mandatory commitments from  UP
     &  UP's payor clients  to implement financial  incentives and  to
     otherwise influence its clients' covered beneficiaries  to select
     a  provider in UP &  UP's network.   The Company further  alleges
     that UP & UP representatives made false  representations claiming
     an affiliation or association with the Company's  own proprietary
     network, The AFFORDABLE Medical Networks.

     In  answering  the   Company's  lawsuit,  UP  &  UP  denied   the
     allegations  and  asserted  defenses.   UP  &  UP  also  asserted
     counterclaims seeking damages for alleged "false  advertising" by
     the  Company, unfair competition  and deceptive trade  practices,
     defamation,  commercial  disparagement,  and   seeking  equitable
     cancellation of  the Company's service mark "AFFORDABLE."   Among
     other  specific  allegations,  UP  &  UP  alleges   that  various
     statements made  by the Company concerning the  acts of UP &  UP,
     which  are the  subject of  the claims  summarized above,  and  a
     mailing by  the Company attaching a  letter from the Director  of
     the  Office  of  Personnel  Management  in  which  UP  &   UP  is
     identified  as  a  "silent  or  non-directed  preferred  provider
     organization"  constitute   defamation  per  se  and   commercial
     disparagement and deceptive trade practices.
<PAGE>
     The  Company  replied to  UP  & UP's  counterclaims  denying  the
     allegations, and asserting defenses.  The action at this  time is
     proceeding  through   the  discovery  phase.    The  Company   is
     prosecuting  and defending  its interests  vigorously.   At  this
     time,  the Company does not  believe that the counterclaims  will
     have  a  probable  material  adverse  effect  on   the  Company's
     financial position or future operating results.

  First Health Group Corp. and Subsidiaries

  Item 2.
  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
  AND RESULTS OF OPERATIONS
  (Unaudited)


  Forward-Looking Information

    This Management's Discussion  and Analysis of Financial  Condition
  and  Results  of  Operations  may  include  certain  forward-looking
  statements, within the meaning of Section 27A of the Securities  Act
  of 1933, as amended, and Section 21E of the Securities Exchange  Act
  of 1934, as amended, including (without limitation) statements  with
  respect to anticipated future  operating and financial  performance,
  growth and acquisition opportunities and other similar forecasts and
  statements of expectation.  Words such as "expects",  "anticipates",
  "intends", "plans",  "believes", "seeks",  "estimates" and  "should"
  and variations of these words and similar expressions, are  intended
  to  identify  these  forward-looking  statements.    Forward-looking
  statements made  by the  Company and  its  management are  based  on
  estimates, projections, beliefs and assumptions of management at the
  time  of  such   statements  and  are   not  guarantees  of   future
  performance.  The  Company disclaims  any obligations  to update  or
  revise any  forward-looking statement  based  on the  occurrence  of
  future events, the receipt of new information or otherwise.

    Actual  future  performance,  outcomes  and  results   may  differ
  materially from those expressed  in forward-looking statements  made
  by the Company and its management as a result of a number  of risks,
  uncertainties and  assumptions.   Representative examples  of  these
  factors include (without limitation)  general industry and  economic
  conditions; interest  rate  trends;  cost  of  capital  and  capital
  requirements; competition  from other  managed care  companies;  the
  ability to expand the Company's group health, workers'  compensation
  and  risk  businesses;  shifts  in  customer  demands;  the   timely
  completion of modifications to ensure that the Company's systems are
  Year  2000  compliant;  changes  in  operating  expenses,  including
  employee wages,  benefits and  medical inflation;  governmental  and
  public policy changes and the continued availability of financing in
  the amounts  and at  the terms  necessary to  support the  Company's
  future business.  In addition, if  the Company does not continue  to
  successfully integrate  FHC (as  defined  below) into  its  existing
  business, successfully implement new contracts and programs, achieve
  the growth that is anticipated as a result of the Company's strategy
  of focusing on  larger multi-sited national  employers, realize  the
  anticipated benefits of certain technology enhancements, and control
  healthcare benefit expenses, the Company may not achieve its planned
  1999 financial results (discussed below).
<PAGE>
  Recent Developments

    On July  20, 1999,  the Company  announced it had  entered into  a
  contract with  CNA to  provide PPO  services  to the  Mail  Handlers
  Benefit Plan, one  of the  largest federal  employee health  benefit
  plans with over 400,000  members and 1  million participants.   When
  fully implemented, the contract could represent one of the Company's
  largest.

    In  connection  with  the acquisition  in  1997  of  FIRST  HEALTH
  Strategies, Inc. and FIRST HEALTH Services Corporation (collectively
  "FHC"), the Company recorded a charge to earnings of $80 million for
  purchased  in-process  research   and  development   which  is   not
  deductible  for  income  tax  purposes.    In-process  research  and
  development  relates  to  the   next  generation  of  FHC's   claims
  processing system software which  had not yet  reached the stage  of
  technological  feasibility  and  had  no  alternative  future   use;
  therefore, the  ultimate  revenue  generating  capability  of  these
  projects was  uncertain.    The research  and  development  acquired
  needed  additional  development  efforts,  estimated  to  cost   $15
  million, to become commercially viable.  Such modifications  include
  the enhancement of  various modules to  perform claims  adjudication
  reporting, imaging  and  correspondence,  and  are  expected  to  be
  completed by the end of 1999.  Use of this technology is expected to
  ultimately decrease claims processing costs by up to 20% per claim.

    At  the date  of  acquisition, management  estimated  the  Company
  would spend  approximately  $10 million  in  additional  development
  expenditures  to  make  the   purchased  research  and   development
  commercially viable.    The increase  in  development costs  to  $15
  million is due  to enhancements beyond  those originally planned  by
  the Company.

  Results of Operations

    Revenues  for  the  three and  six  months  ended  June  30,  1999
  decreased $11,312,000 (9%) and $21,709,000 (9%), respectively,  from
  the  same  periods  last  year.    The  Company's  revenues  consist
  primarily of  fees  for  services  provided  under  contracts  on  a
  percentage of savings basis (PPO and fee schedule services) or on  a
  predetermined contractual basis (claims administration and  clinical
  management services).  The Company also derives revenues based on  a
  fixed  monthly  charge  for  each  participant,  excluding   covered
  dependents, in  a client-sponsored  health care  plan or  on a  per-
  transaction basis.  As a result  of the Company's insurance  company
  acquisitions, revenues also include premium revenue.
<PAGE>
    The following  table sets  forth information with  respect to  the
  sources of  the Company's  revenues for  the  three months  and  six
  months ended June 30, 1999 and 1998, respectively:
<TABLE>
                                               Sources of Revenue
                                                ($ in thousands)
                                           Three Months Ended June 30,
                                    1999          %      1998          %
                                   -------      ----    -------      ----
   <S>                            <C>           <C>   <C>            <C>
   Sources of Revenue:
     PPO Services                 $ 55,969       48%   $ 55,947       44%
     Claims Administration          39,790       34      45,981       36
     Clinical Management Services    8,693        8      11,771       10
     Fee Schedule Services           8,546        7       7,688        6
     Premiums, Net                   1,760        2       4,757        4
     Service                           672        1         598       --
                                   -------      ----    -------      ----
   Total Revenue                  $115,430      100%   $126,742      100%
                                   =======      ===     =======      ===

                                             Sources of Revenue
                                              ($ in thousands)
                                          Six Months Ended June 30,

                                    1999          %      1998          %
                                   -------      ----    -------      ----
   <S>                            <C>           <C>   <C>            <C>
   Sources of Revenue:
     PPO Services                 $110,030       47%   $112,602       44%
     Claims Administration          82,794       36      93,225       37
     Clinical Management Services   17,430        7      22,971        9
     Fee Schedule Services          17,175        7      15,054        6
     Premiums, Net                   3,957        2       9,317        3
     Service                         1,405        1       1,331        1
                                   -------      ----    -------      ----
   Total Revenue                  $232,791      100%   $254,500      100%
                                   =======      ====    =======      ====
</TABLE>
<PAGE>
    Revenue  for  the  three  months  and  six  ended  June  30,  1999
  decreased 9% and 9%, respectively, from the same periods of  1998 as
  the Company has lost a number of traditional First Health Strategies
  clients who  utilized both  claims administration  services and  PPO
  services (see "FHC  Acquisition Status")  and, to  a lesser  extent,
  some traditional HealthCare COMPARE clients.  The  decrease reflects
  the Company's focus on larger multi-sited national employers  in the
  group health area which resulted in the planned reduction in revenue
  for accounts which  did not  fit this niche.   PPO  revenue for  the
  three months ended June 30, 1999 was relatively flat compared to the
  same period last year.   PPO revenue for  the six months ended  June
  30, 1999  decreased $2,572,000  from the  same period  in 1998.  The
  decrease year-to-date  is primarily  due to  a loss  of business  as
  discussed  under  "FHC  Acquisition   Status"  and  "The   Company's
  Traditional Business".    Claims  administration  revenue  decreased
  $6,191,000 (13%) and $10,431,000 (11%), respectively, from  the same
  periods last year for the same reasons.  Revenue from  clinical cost
  management services decreased $3,078,000 (26%) and $5,541,000 (24%),
  respectively, for the  three months  and six months  ended June  30,
  1999 from the comparable periods in 1998.  The decrease in the first
  and second quarters is  also due to the  loss of business  mentioned
  above.  Revenue from fee schedule services increased  $858,000 (11%)
  and $2,121,000 (14%), respectively,  from the comparable periods  in
  1998 due primarily to new  contracts and expanded contract  activity
  with several existing clients.  Premium revenue decreased $2,997,000
  (63%) and $5,360,000 (58%), respectively,  for the three months  and
  six months ended June 30, 1999  from the comparable periods in  1998
  due primarily to the  loss of several clients  as a result of  price
  increases implemented by the Company.

    Cost of  services decreased  $1,361,000 (2%)  and $2,478,000  (2%)
  for  the  three  months  and  six   months  ended  June  30,   1999,
  respectively, from the comparable periods of 1998.  Cost of services
  consists primarily  of  salaries  and related  costs  for  personnel
  involved in claims  administration, PPO administration,  development
  and expansion,  utilization management  programs, fee  schedule  and
  other cost  management and  administrative services  offered by  the
  Company.  To a  lesser extent, cost  of services includes  telephone
  expenses, facility expenses and  information processing costs.   The
  decrease in cost  of services for  the three months  and six  months
  ended June 30, 1999 is due primarily to the cost  reduction measures
  the  Company  has  initiated  during  the  integration  of  the  FHC
  business.  These  costs have not  decreased as much  as revenue  due
  primarily to additional expenditures incurred to  remediate software
  for Year 2000 compliance in the Company's Services business.

    Selling and  marketing costs for the  three months and six  months
  ended June 30,  1999 decreased  $966,000 (8%)  and $2,061,000  (8%),
  respectively, from the comparable periods of 1998.  The  decrease in
  the first and second quarters is due primarily to  the consolidation
  of  FHC  sales  activities   into  the  traditional  Company   sales
  activities.

    General  and administrative  costs for  the three  months and  six
  months ended June 30, 1999 decreased $1,216,000 (12%) and $2,816,000
  (13%), respectively,  from the  comparable periods  of  1998.   This
  decrease is primarily attributable  to the elimination of  duplicate
  functions within the Company subsequent to the acquisition of FHC.
<PAGE>
    Healthcare benefits represent medical losses incurred  by insureds
  of the Company's insurance  entities.  The loss  ratio (losses as  a
  percent of premiums) was 156% and 126%, respectively, for  the three
  months and six months ended June  30, 1999 compared to 94% and  92%,
  respectively, for  the comparable  periods of  1998.   The  increase
  relates to  medical  losses  incurred by  the  Company's  stop  loss
  insurance business.  A portion of these losses, however,  related to
  claims runout for terminated clients.

    Depreciation and  amortization expenses  increased $890,000  (14%)
  and $2,010,000 (16%),  respectively, for  the three  months and  six
  months ended June 30, 1999 from  the comparable periods of 1998  due
  primarily to purchases of computer hardware and software.

    Interest income  for the three  months and six  months ended  June
  30,  1999   decreased  $3,772,000   (68%)  and   $7,426,000   (68%),
  respectively, from the same periods in 1998 due to the  54% decrease
  in cash  equivalents and  investments since  June  30, 1998.    Cash
  equivalents and investments have decreased primarily as a  result of
  approximately $244 million in repurchases of common stock since June
  30, 1998.

    Interest expense increased $423,000 (13%) and  $650,000 (10%) from
  the comparable periods of 1998 due to a $35 million increase  in the
  amount of  debt outstanding  under  the Company's  revolving  credit
  agreement since June 30, 1998.  The interest rate is currently about
  6.5% per annum.

    Net income  for the  three months  and six months  ended June  30,
  1999,   decreased   $6,372,000   (27%)   and   $11,895,000    (26%),
  respectively, from the comparable periods of 1998.  This decrease is
  due primarily to the planned reductions  in revenue the Company  has
  experienced,  lesser  amounts  of  interest  income  due   to  share
  repurchases, as well as expenses not being reduced as quickly as the
  revenue declined.

    Diluted net income per common for the three months  and six months
  ended June  30,  1999  decreased  8%    to  $.33  and  8%  to  $.66,
  respectively, per share from  the comparable periods  of 1998.   The
  decrease in net income  per common share  was favorably impacted  by
  the 3.8 million shares of Company common stock repurchased and added
  to treasury during  the first  six months of  1999.   For the  three
  months and six  months ended  June 30, 1999,  diluted common  shares
  outstanding decreased 21% and 20%, respectively, from the comparable
  periods of 1998.
<PAGE>
  Liquidity and Capital Resources

    The Company  had $30,193,000 in working  capital at June 30,  1999
  compared with working capital of  $15,409,000 at December 31,  1998.
  Through the  first  six months  of  the year,  operating  activities
  provided  $37,721,000  of  cash.    Investment  activities  provided
  $16,978,000  of  cash  representing  net  sales  of  investments  of
  $42,713,000  less  purchases   of  fixed   assets  of   $25,735,000.
  Financing  activities   used   $80,671,000  of   cash   representing
  $90,099,000 ($25,000,000 which was payable at December 31,  1998 for
  transactions settled in  1999) in  purchases of  treasury stock  (of
  which $67,208,000 was purchased on the open market with  the balance
  being purchased through the exercise of put options),  and exercises
  of put options in cash of $4,429,000 partially offset  by $2,847,000
  in proceeds from issuance of  common stock, $10,000,000 in  issuance
  of long-term debt and $1,010,000 in sales of put options.

    On  July  1,  1997,  the  Company  entered  into  a  $200  million
  revolving credit  agreement  (the  "Agreement")  to  facilitate  the
  acquisition of FHC.  In August,  1997, the Agreement was amended  to
  increase available borrowings to $350 million.  As of June 30, 1999,
  $235 million was outstanding under this facility.

    The  Company   believes  that  its   working  capital,   long-term
  investments,  credit  facility  and   cash  generated  from   future
  operations will  be sufficient  to  fund the  Company's  anticipated
  operations and expansion plans.

  FHC Acquisition Status

    The  majority of  the  integration  of the  acquisition  has  been
  completed.  The Company focused FIRST HEALTH Strategies on the niche
  of serving multi-sited employers of 1,000  or more employees.  As  a
  result of this focus,  the Company has  sold several hundred  client
  contracts  that  do  not  fit   into  this  niche  which   represent
  approximately $20 million in  annual revenue.   The Company did  not
  receive material  consideration for  this sale.   Additionally,  the
  Company instituted  significant  price increases,  particularly  for
  clients that have  been paying fees  at unacceptable profit  levels.
  These actions have resulted in the  loss of a significant number  of
  clients.  Management expects these actions will result  in increased
  efficiency of its operations.

  The Company's Traditional Business

    The Company  lost some traditional group  health business in  1998
  particularly in the Federal Employee Health Benefit area.   However,
  the Company did not  encounter the loss  of any meaningful  business
  from its traditional client base in 1999.
<PAGE>
  1999 Outlook

    Currently  the Company  anticipates that  its  earnings per  share
  (EPS) in 1999 will be comparable  to 1998 with an estimated  decline
  in revenue between 5%  and 10% from 1998.   The Company  anticipates
  that its PPO,  Claims Administration, Clinical  Management and  Risk
  revenue will all experience a decline from 1998.  The  Company's Fee
  Schedule revenue is expected  to grow approximately  10% in 1999  as
  the workers' compensation business continues to grow.  These revenue
  fluctuations reflect  the  Company's  focus  on  larger  multi-sited
  national  employers  in  the  group   health  area.    The   Company
  anticipates that it will experience accelerated growth in revenue in
  the latter  part of  1999.   The Company  recently  announced a  new
  contract with the Mail Handlers Benefit  Plan that it believes  will
  provide momentum for the Company's growth into the year 2000.

  Year 2000 Matters

  General
  The Company has made significant  progress on its company-wide  Year
  2000 ("Y2K")  readiness project,  and the  project  is currently  on
  target to  have  the Company's  significant  information  technology
  ("IT") and non-IT systems Y2K ready by the end of 1999.  The Company
  defines a significant  system as one  which, if not  Y2K ready,  may
  have a  material  adverse  impact  on  its  results  of  operations,
  revenues, regulatory  compliance  or relationships  with  customers,
  vendors or others.  The Company is using both internal  and external
  resources to accomplish  its Y2K  project objectives.   The  Company
  believes that significant IT systems are either currently Y2K ready,
  will be replaced with systems designed  to be Y2K ready, or  retired
  by the end  of 1999.   As a service  provider, the Company's  non-IT
  systems consist primarily of equipment typically found in commercial
  office buildings including electrical,  fire alarm and  suppression,
  security, HVAC  and  elevator  systems, and  the  Company  does  not
  anticipate any material Y2K problems with the non-IT  systems within
  its control.  As part of its Y2K project, the Company  is assessing,
  and developing  contingency plans  to  address the  most  reasonably
  likely worst case scenarios which may  result from the failure of  a
  significant Company  or a  material third  party  system to  be  Y2K
  ready.


  Y2K Project
  The Company has instituted a corporate-wide Y2K readiness project to
  identify its IT and non-IT  systems which will require  modification
  or  replacement  and  to   establish  appropriate  remediation   and
  contingency plans to avoid an impact  on its ability to continue  to
  provide  its  services.    Current  plans  call  for  any  necessary
  modifications, replacements and testing to  support Year 2000 to  be
  completed before the end of 1999, prior to any anticipated potential
  impact on the Company's services and operations.  The  Company's Y2K
  project is  divided  into  three  major  sections:  1)  IT  Software
  Systems, 2) IT Hardware  Systems and, 3) Non-IT  Systems.  For  each
  major section, the Company has implemented the  following five-phase
  approach:
<PAGE>
    1. Inventory Phase.  Inventory of significant systems.

    2. Assessment Phase.  Assessment of the vulnerability of significant
       systems to the Y2K problem and development of correction and
       contingency plans.

    3. Modification/Replacement Phase.  Modification of computer source
       code, and software, hardware and equipment upgrade, retirement or
       replacement.

    4. Testing and Validation Phase.  Testing (both internally and with
       third parties) of all modified, upgraded or replaced components
       and interfaces.

    5. Implementation Phase.  Modified, upgraded or replaced components
       are put into operation.

       The following chart graphically depicts the approximate current
    state of completion for each phase:

<TABLE>
           Inventory  Assessment  Modification   Testing and  Implement-
             Phase      Phase    or Replacement  Validation     ation
                                     Phase          Phase       Phase
           -------     -------      -------        -------     -------
<S>         <C>         <C>          <C>            <C>         <C>
IT          100%        100%          95%            80%         73%
Software
Systems

IT          100%        100%          90%            90%         90%
Hardware
Systems

Non-IT      100%         98%          95%            80%         90%
Systems

</TABLE>

  IT Software Systems
  The Company's IT software systems are comprised of  both proprietary
  and commercial  third  party  software  applications  which  can  be
  generally be divided into three categories: 1) database  systems, 2)
  operational systems, and 3) claims administration systems.

  Database Systems.   As part  of its  ongoing efforts  to update  and
  enhance its IT  resources, the  majority of  The Company's  database
  systems currently utilize four digits to represent the year  in date
  data (i.e.,  02/02/1998).    Consequently, nearly  all  database  IT
  systems presently being used  by the Company  were created with  the
  change of  millennium  in  mind and  no  further  modifications  are
  necessary.  The  testing and  validation phases are  expected to  be
  completed by the end of the third quarter of 1999.   Concurrent with
  the completion of  testing and validation,  the remediated  database
  systems will be implemented.
<PAGE>
  Operational Systems.    The  Company has  received  assurances  from
  approximately 85% of the third party vendors that their applications
  are currently Y2K ready.  For those applications that may have a Y2K
  problem, The Company is assessing  whether it will modify,  upgrade,
  replace or retire such applications.  Also included in this category
  are several proprietary Company applications:

  MCPS.  This  application is  used to  reprice medical  bills to  the
  negotiated PPO contract rates with providers in The First  Health[R]
  Network.  The Company has completed internal testing  and validation
  and is  currently  testing  data interchanges  with  external  third
  parties.   The testing,  validation  and implementation  phases  are
  expected to be completed during the third quarter of 1999.

  PINS.     This   application  is   used  to   maintain   demographic
  information   on   providers  in   The   First   Health[R]  Network.
  Modifications to  this  application  have  been  completed  and  the
  testing, validation  and implementation  phases are  expected to  be
  completed during the third quarter of 1999.

  IMPaCT.  This application is used to provide medical review services
  to clients.  IMPaCT is in  the testing and validation phase, and  it
  is expected to be implemented during the third quarter of 1999.

  CHE.  The  Company is currently  assessing the need  to modify  data
  feed formats  into  and  out of  its  Centrally  Housed  Eligibility
  application.  Modification,  testing, validation and  implementation
  phases are  expected to  be completed  during the  third quarter  of
  1999.

  Claims Administration Systems.   The  Company utilizes  a number  of
  different systems to process health benefits claims for its clients.
  The Company completed  the modification and  testing on its  primary
  group health medical  claims processing  system - the  ACT System  -
  well ahead of schedule, and the  Y2K-ready ACT System was placed  in
  operation in  mid-April.   The ACT  System  uses the  4-digit  year,
  including  the  century,  for  all  internal  codes.    A  windowing
  technique is  used for  external interfaces  that  are not  yet  Y2K
  ready.  The  Company is  also communicating with  clients and  other
  third  parties  which  interface  with  this  system   to  establish
  schedules for testing and validation.

  The Company also licenses medical claims administration systems from
  third party vendors, which are used primarily to process  claims for
  specific clients.  The Company has received written  assurances that
  these systems  are designed  and programmed  with the  Year 2000  in
  mind, and that all updates and changes to the system continue  to be
  Year 2000 compliant.  These systems include the Company's FirstClaim
  system used to process claims for its ConfidentCare clients, and its
  ERISCO system.

  To  process  pharmacy  claims  for  clients,  The  Company  utilizes
  Company-owned proprietary  systems.   Utilizing  both  internal  and
  external resources,  modification  of  the  source  code  for  these
  systems is continuing and the modifications and testing are expected
  to be completed during the third quarter of 1999.
<PAGE>
  The Company utilizes customized  Medicaid claims processing  systems
  for its government  (Medicaid) contracts.   Utilizing both  internal
  and external  services,  modification of  the  source code  for  the
  majority of  these systems  is complete  and  the remainder  are  on
  target to  be completed  during  the third  quarter  of 1999.    The
  testing, validation and  implementation phases  are being  conducted
  consistent with the time frames  required in Company contracts  with
  the respective states and are expected to be completed by the end of
  the third quarter of 1999.

  Additionally, the  Company has  an  agreement with  Electronic  Data
  Systems ("EDS")  for access  to certain  EDS systems  to enable  the
  Company and  EDS  to  provide  certain  workers'  compensation  bill
  repricing services to  Company clients.   The  Company has  received
  assurances from EDS that it is taking appropriate measures to ensure
  its systems will not be interrupted  by a Y2K problem.  The  Company
  and EDS have  completed internal modifications  and testing and  are
  working together to establish  testing and validation schedules with
  clients.   The testing,  validation and  implementation phases  have
  been completed with approximately 95% of the Company's clients.

  IT Hardware Systems
  The Company has  completed the inventory  and assessment phases  for
  its IT  hardware systems.   The  testing phase  is on  target to  be
  completed by the end of the third quarter of 1999.  The  majority of
  the effort in the implementation phase relates to an upgrade  of the
  desktop environment, a process  which is approximately 90%  complete
  and on target to  be completed by  the end of  the third quarter  of
  1999.

  Non-IT Systems
  The Company's  non-IT systems  are  primarily comprised  of  systems
  typically  found   in   commercial   office   buildings   including,
  electrical, fire alarm and suppression, security, HVAC  and elevator
  systems.  The inventory and assessment phases for non-IT systems are
  almost complete with only a few  small office sites remaining.   The
  Company is on target to  complete its modification, replacement  and
  testing phases during the  third quarter of 1999.   The Company  has
  also received  written  assurances from  the  vast majority  of  its
  significant vendors  and suppliers  that the  Y2K  problem will  not
  materially adversely  effect their  ability to  continue to  provide
  supplies or services, and continues to seek written  assurances from
  the remainder.  The Company utilizes systems from Lucent  and Nortel
  for  its  primary   telecommunication  systems   and  has   received
  assurances that  their systems  are  Y2K-ready.   Additionally,  the
  majority of the Company's communication  traffic is carried by  AT&T
  and Sprint  and  the  Company has  received  assurances  that  their
  systems are  Y2K-ready.   The  Company  also continues  to  evaluate
  responses from owners/landlords of  office spaces which the  Company
  leases and  from significant  vendors/suppliers to  determine  their
  Year 2000 readiness.  To date, no responses have indicated  that any
  facilities or vendors/suppliers will have a Year 2000  problem which
  would have a material adverse effect on the Company.
<PAGE>
  Costs
  The Company estimates the total cost of its Y2K readiness project to
  be approximately $16,000,000 which will be funded  through operating
  cash flows.  Of the total project cost, approximately  $6,000,000 is
  attributable to the purchase of new hardware and software which will
  be capitalized.  The remaining  $10,000,000, which will be  expensed
  as incurred,  is not  expected  to have  a  material effect  on  the
  results of  operations.   As  of  June  30, 1999,  the  Company  has
  incurred approximately $14,000,000 (88%) of its total estimated Year
  2000 costs.   The  Company expects  to receive  reimbursement of  at
  least 40% of the costs directly from a number of its clients  due to
  the nature  of the  contractual  arrangements with  these  entities.
  Year 2000  remediation  costs  represent approximately  15%  of  the
  Company's total  IT  budget  and  no  material  projects  have  been
  deferred due to the Company's Year 2000 efforts.

  Contingency Plans
  The Company's IT  systems interface with  numerous clients,  medical
  service providers and regulatory agencies, and failure to  correct a
  material  Y2K  problem  could  interrupt  business   activities  and
  operations and materially adversely affect the Company's  results of
  operations, revenues,  regulatory compliance  or relationships  with
  customers, vendors or others.  Not only must the Company ensure that
  its own  IT and  non-IT systems  are  Y2K ready,  but it  also  must
  ascertain that the systems  of third parties  with whom the  Company
  interfaces are both Y2K  ready and that their  solutions to the  Y2K
  problem are compatible with  those of the Company.   As the  Company
  assesses the Y2K readiness of its IT and non-IT systems, contingency
  plans are also being developed to address the most reasonably likely
  worst case  scenarios  which  may  result  from  the  failure  of  a
  significant Company or material third party system to be  Y2K ready.
  Contingency plans will continue to be modified and developed  as the
  Company progresses in its Y2K readiness project.

    New Accounting Pronouncements
    In  June 1998,  the Financial  Accounting  Standards Board  issued
  Statement of Financial Accounting Standards No. 133, "Accounting for
  Derivative Instruments  and Hedging  Activities" ("SFAS  No.  133").
  SFAS No. 133 requires that all derivative instruments be measured at
  fair value.  This statement also requires changes in the  fair value
  of derivatives to  be recorded  each period in  current earnings  or
  comprehensive  income  depending   on  the  intended   use  of   the
  derivatives.  This statement is effective for all fiscal quarters of
  fiscal years beginning after  June 15, 2000.   The Company does  not
  expect SFAS No.  133 to  have a material  effect on  its results  of
  operations and financial position.

  Item 3.   Quantitative and Qualitative Disclosures About Market Risk

       The  Company's  market  risk  exposure  at  June  30,  1999  is
  consistent with  the types  of market  risk and  amount of  exposure
  presented in its 1998 Annual Report on Form 10-K.
<PAGE>
  PART II

  Item 4.   Submission of Matters to a Vote of Security Holders

       At the annual meeting of stockholders  of the Company on May  18,
  1999, all directors  of the Company  were re-elected.   The number  of
  votes cast for and withheld for each director were as follows:

<TABLE>
                                     For         Withheld
                                  ----------   -----------
            <S>                   <C>          <C>
            Michael J. Boskin     48,268,857      93,746
            Daniel S. Brunner     48,271,765      90,838
            Robert S. Colman      48,271,965      90,638
            Ronald H. Galowich    48,271,265      91,338
            Harold S. Handelsman  48,268,957      93,746
            Burton W. Kanter      47,682,223     680,380
            Don Logan             48,268,457      94,146
            Thomas J. Pritzker    48,271,565      91,038
            David E. Simon        45,767,052   2,595,551
            James C. Smith        48,271,588      91,015

</TABLE>

  Item 6.   Exhibits and Reports on Form 8-K

       Exhibits:

       (a)  Exhibit 11 - Computation of Basic Earnings Per Common Share

       (b)  Exhibit 11 - Computation of Diluted Earnings Per Common Share

       Reports on Form 8-K:

            None


<PAGE>
                             SIGNATURES

  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.

                                 First Health Group Corp.

  Dated:    August 10, 1999      /s/James C. Smith
                                 ----------------------
                                 James C. Smith
                                 President and Chief Executive Officer


  Dated:    August 10, 1999      /s/Joseph E. Whitters
                                 ----------------------
                                 Joseph E. Whitters
                                 Chief Financial Officer
                                 (Principal Financial and Accounting Officer)