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 September 30, 2002

                                      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.
            (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) 737-7900
               ------------------------------------------------
               (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 November 6, 2002, was 101,439,115.

<PAGE>

                  First Health Group Corp. and Subsidiaries

                                  INDEX


 Part I.  Financial Information                                   Page Number
                                                                  -----------
       Item 1.  Financial Statements (Unaudited)

       Consolidated Balance Sheets - Assets at September 30, 2002
         and December 31, 2001 ...................................     3

       Consolidated Balance Sheets - Liabilities and Stockholders'
         Equity at September 30, 2002 and December 31, 2001 ......     4

       Consolidated Statements of Operations for the three months
         ended September 30, 2002 and 2001 .......................     5

       Consolidated Statements of Operations for the nine months
         ended September 30, 2002 and 2001 .......................     6

       Consolidated Statements of Comprehensive Income for the
         three months ended September 30, 2002 and 2001 ..........     7

       Consolidated Statements of Comprehensive Income for the
         nine months ended September 30, 2002 and 2001 ...........     7

       Consolidated Statements of Cash Flows for the nine months
         ended September 30, 2002 and 2001 .......................    8-9

       Notes to Consolidated Financial Statements ................   10-15


       Item 2.  Management's Discussion and Analysis of Financial
                  Condition and Results of Operations ............   16-23

       Item 3.  Quantitative and Qualitative Disclosures About
                  Market Risk ....................................    24

       Item 4.  Controls and Procedures ..........................    24


 Part II.  Other Information

       Item 6.  Exhibits and Reports on Form 8-K .................    25

 Signatures.......................................................    26

<PAGE>

 PART I.  Financial Information
 First Health Group Corp. and Subsidiaries
 CONSOLIDATED BALANCE SHEETS
 (in thousands) (Unaudited)
 ----------------------------------------------------------------------------

 ASSETS                                       September 30,    December 31,
                                                   2002            2001
                                                ----------      ----------
 Current Assets:

   Cash and cash equivalents ..............    $    21,615     $    14,001
   Short-term investments ........                   1,354           2,381
   Accounts receivable, less allowances for
      doubtful accounts of $14,662
      and $14,327 respectively.............         78,965          78,793
   Deferred income taxes ..................         25,587          27,429
   Other current assets ...................         23,747          27,715
                                                ----------      ----------
   Total current assets ...................        151,268         150,319

 Long-Term Investments:

   Marketable securities ..................         68,955          65,766
   Other ..................................         61,534          55,205
                                                ----------      ----------
                                                   130,489         120,971
                                                ----------      ----------
 Property and Equipment:

   Land, buildings and improvements .......         96,335          87,468
   Computer equipment and software ........        207,548         180,152
   Office furniture and equipment .........         26,627          20,282
                                                ----------      ----------
                                                   330,510         287,902
   Less accumulated depreciation and
      amortization.........................       (140,582)       (105,393)
                                                ----------      ----------
   Net property and equipment .............        189,928         182,509
                                                ----------      ----------

 Goodwill..................................        276,371         255,855

 Intangible assets, less accumulated
   amortization of $3,495 and $955,
   respectively............................         55,132          42,859

 Reinsurance recoverable...................         25,201          26,140

 Other Assets..............................          4,365           2,081
                                                ----------      ----------
                                               $   832,754     $   780,734
                                                ==========      ==========

                See Notes to Consolidated Financial Statements

<PAGE>

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

 LIABILITIES AND STOCKHOLDERS' EQUITY
                                              September 30,    December 31,
                                                   2002            2001
                                                ----------      ----------
 Current Liabilities:

   Accounts payable ......................     $    41,664     $    33,257
   Accrued expenses ......................          58,425          66,384
   Current maturities of long-term debt...              --         197,500
   Claims reserves .......................          13,432          12,308
   Income taxes payable ..................          29,726              --
                                                ----------      ----------
   Total current liabilities .............         143,247         309,449


 Long-Term Debt...........................         104,000              --
 Claims Reserves - Non-Current............          25,201          26,140
 Deferred Taxes...........................          89,053          84,828
 Other Non-Current Liabilities............          25,697          21,018
                                                ----------      ----------
   Total liabilities .....................         387,198         441,435
                                                ----------      ----------
 Commitments and Contingencies............              --              --

 Stockholders' Equity:

   Common stock ..........................           1,340           1,313
   Additional paid-in capital ............         298,181         255,489
   Retained earnings .....................         483,550         386,309
   Stock option loan receivable ..........          (1,688)         (1,776)
   Accumulated comprehensive gain ........             428             161
   Treasury stock, at cost ...............        (336,255)       (302,197)
                                                ----------      ----------
   Total stockholders' equity ............         445,556         339,299
                                                ----------      ----------
                                               $   832,754     $   780,734
                                                ==========      ==========

                See Notes to Consolidated Financial Statements

<PAGE>

 First Health Group Corp. and Subsidiaries
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except per share amounts) (Unaudited)
 ----------------------------------------------------------------------------

                                             Three Months Ended September 30,
                                                --------------------------
                                                    2002            2001
                                                ----------      ----------
 Revenues.............................         $   204,928     $   152,207
                                                ----------      ----------
 Operating expenses:

   Cost of services ..................              93,481          66,818
   Selling and marketing .............              21,438          15,150
   General and administrative ........              15,805          10,764
   Healthcare benefits ...............               3,883           3,121
   Depreciation and amortization .....              14,821          12,076
                                                ----------      ----------
                                                   149,428         107,929
                                                ----------      ----------

 Income from operations...............              55,500          44,278

 Other (income) expense:

   Interest expense ..................               1,411           1,694
   Interest income ...................              (1,917)         (1,727)
                                                ----------      ----------
 Income before income taxes...........              56,006          44,311

 Income taxes.........................             (22,263)        (17,947)
                                                ----------      ----------
 Net income...........................         $    33,743     $    26,364
                                                ==========      ==========
 Weighted average shares
   outstanding - basic................             101,526          99,280
                                                ==========      ==========
 Net income per common share - basic..         $       .33     $       .27
                                                ==========      ==========
 Weighted average shares
   outstanding - diluted..............             104,972         103,946
                                                ==========      ==========
 Net income per common share - diluted         $       .32     $       .25
                                                ==========      ==========

                See Notes to Consolidated Financial Statements

<PAGE>

 First Health Group Corp. and Subsidiaries
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except per share amounts) (Unaudited)
 ----------------------------------------------------------------------------

                                              Nine Months Ended September 30,
                                                --------------------------
                                                    2002            2001
                                                ----------      ----------
 Revenues.............................         $   550,212     $   428,140
                                                ----------      ----------
 Operating expenses:

   Cost of services ..................             241,522         186,993
   Selling and marketing .............              56,271          41,327
   General and administrative ........              39,162          27,756
   Healthcare benefits ...............              11,567          10,220
   Depreciation and amortization .....              41,149          33,963
                                                ----------      ----------
                                                   389,671         300,259
                                                ----------      ----------

 Income from operations...............             160,541         127,881

 Other (income) expense:

   Interest expense ..................               4,230           5,284
   Interest income ...................              (5,089)         (5,292)
                                                ----------      ----------
 Income before income taxes...........             161,400         127,889

 Income taxes.........................             (64,159)        (51,796)
                                                ----------      ----------
 Net income...........................         $    97,241     $    76,093
                                                ==========      ==========
 Weighted average shares
   outstanding - basic................             100,972          97,908
                                                ==========      ==========
 Net income per common share - basic..         $       .96     $       .78
                                                ==========      ==========
 Weighted average shares
   outstanding - diluted..............             104,693         102,660
                                                ==========      ==========
 Net income per common share - diluted         $       .93     $       .74
                                                ==========      ==========

                See Notes to Consolidated Financial Statements

<PAGE>

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

                                             Three Months Ended September 30,
                                                --------------------------
                                                    2002            2001
                                                ----------      ----------
 Net income..................................  $    33,743     $    26,364
                                                ----------      ----------
 Unrealized gains on securities, before tax..        1,129           1,309
 Income tax expense related to items of other
   comprehensive income......................         (399)           (464)
                                                ----------      ----------
 Other comprehensive income..................          730             845
                                                ----------      ----------
 Comprehensive income........................  $    34,473     $    27,209
                                                ==========      ==========




                                              Nine Months Ended September 30,
                                                --------------------------
                                                    2002            2001
                                                ----------      ----------
 Net income..................................  $    97,241     $    76,093
                                                ----------      ----------
 Unrealized gains on securities, before tax..          417           2,982
 Income tax expense related to items of other
   comprehensive income......................         (150)         (1,094)
                                                ----------      ----------
 Other comprehensive income..................          267           1,888
                                                ----------      ----------
 Comprehensive income........................  $    97,508     $    77,981
                                                ==========      ==========

                See Notes to Consolidated Financial Statements

<PAGE>

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

                                              Nine Months Ended September 30,
                                                --------------------------
                                                    2002            2001
                                                ----------      ----------
 Cash flows from operating activities:
   Cash received from customers ............   $   559,453     $   412,557
   Cash paid to suppliers and employees ....      (336,821)       (267,576)
   Healthcare benefits paid ................       (11,244)        (10,952)
   Interest income received ................         2,402           5,494
   Interest expense paid ...................        (3,978)         (5,448)
   Income taxes paid, net ..................       (12,106)        (22,583)
                                                ----------      ----------
   Net cash provided by operating activities       197,706         111,492
                                                ----------      ----------
 Cash flows from investing activities:
   Purchases of investments ................       (62,860)        (35,959)
   Sales of investments ....................        57,103          25,368
   Acquisitions, net of cash acquired ......       (42,959)       (198,645)
   Assets held for sale ....................           923              --
   Purchase of property and equipment ......       (42,768)        (52,225)
                                                ----------      ----------
   Net cash used in investing activities ...       (90,561)       (261,461)
                                                ----------      ----------
 Cash flows from financing activities:
   Purchase of treasury stock ..............       (33,992)             --
   Issuance of long-term debt ..............       185,000         215,000
   Repayment of long-term debt .............      (278,500)       (102,500)
   Stock option loans to employees .........        (2,272)         (1,500)
   Stock option loan repayments ............         2,360             838
   Proceeds from issuance of common stock ..        27,498          32,031
   Sale of put options on common stock .....           375              --
                                                ----------      ----------
   Net cash provided by (used in)
     financing activities ..................       (99,531)        143,869
                                                ----------      ----------
 Net increase (decrease) in cash and
   cash equivalents ........................         7,614          (6,100)
 Cash and cash equivalents,
   beginning of period .....................        14,001          23,538
                                                ----------      ----------
 Cash and cash equivalents, end of period ..   $    21,615     $    17,438
                                                ==========      ==========
 Supplemental cash flow data:
 Acquisition of businesses:
   Fair value of assets acquired,
     net of cash acquired ..................   $    10,693     $    41,893
   Goodwill ................................        24,966         166,865
   Intangible assets .......................        14,813          43,814
   Fair value of liabilities assumed .......        (7,513)        (53,927)
                                                ----------      ----------
   Net cash paid ...........................   $    42,959     $   198,645
                                                ==========      ==========

 See Notes to Consolidated Financial Statements

<PAGE>

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

                                              Nine Months Ended September 30,
                                                --------------------------
                                                    2002            2001
                                                ----------      ----------
 Reconciliation of Net Income to Net Cash
   Provided by Operating Activities:

 Net Income.................................   $    97,241     $    76,093
                                                ----------      ----------
 Adjustments to Reconcile Net Income to Net
   Cash Provided by Operating Activities:
     Depreciation and amortization ..........       41,149          33,963
     Change in provision for uncollectible
       receivables ..........................        3,335            (497)
     Tax benefit from stock options exercised       14,780          13,921
     Deferred income taxes ..................         (113)          2,726
     Other, net .............................       (1,237)         (3,483)

     Changes in Assets and Liabilities:
      (net of effects of acquired businesses)
     Accounts receivable ....................        4,631         (16,995)
     Other current assets ...................       (2,644)          3,383
     Reinsurance recoverable ................          939             895
     Accounts payable and accrued expenses ..        7,386          (9,620)
     Claims reserves ........................          185            (394)
     Income taxes payable ...................       29,659          10,477
     Non-current assets and liabilities .....        2,395           1,023
                                                ----------      ----------
   Total adjustments ........................      100,465          35,399
                                                ----------      ----------
   Net cash provided by operating activities.  $   197,706     $   111,492
                                                ==========      ==========

                See Notes to Consolidated Financial Statements

<PAGE>

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

 1.  The  unaudited  consolidated  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, 2001.  Accordingly,  footnote disclosures which would  substantially
     duplicate the disclosures  contained in  the December  31, 2001  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 accounting
     principles generally accepted in  the United States of America have been
     condensed  or  omitted  pursuant to such rules and  regulations.  In our
     opinion, the accompanying  unaudited consolidated  financial  statements
     contain  all  adjustments necessary  for  a fair presentation.  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 August 16, 2001, the Company completed  the acquisition of all of the
     outstanding shares  of capital stock  of CCN Managed  Care, Inc. ("CCN")
     and  Preferred  Works,  Inc.  ("PW"  and together  with  CCN,  the  "CCN
     Companies")  from  HCA-The  Healthcare  Company  and VH  Holdings,  Inc.
     (collectively, the  "Sellers") for a  purchase price of  $195 million in
     cash, plus  a working  capital adjustment  which increased  the purchase
     price to approximately $198 million.  The acquisition was accounted  for
     by  the  purchase  method  of  accounting in  accordance with  Statement
     of Financial  Accounting  Standards  No.  141  ("SFAS  141"),  "Business
     Combinations".  The allocation of the  purchase price to  the fair value
     of assets acquired and liabilities assumed is as follows:

     (in thousands)
     --------------
     Purchase price                                      $195,000
     Working capital adjustment                             3,514
     Transaction costs                                      2,000
                                                          -------
    Total estimated purchase price                       $200,514
                                                          -------

     Purchase price has been allocated as follows:
     Fair value of assets acquired                       $ 33,797
     Assets held for sale                                   9,965
     Goodwill                                             166,865
     Intangible assets acquired                            43,814
     Liabilities assumed                                  (27,233)
     Liability for restructuring and integration costs    (26,694)
                                                          -------
                                                         $200,514
                                                          -------

     In conjunction with the acquisition, the Company recorded as part of the
     purchase price a $41.1 million reserve for restructuring and integration
     costs  as part  of  an overall  plan  to reduce  operating  expenses and
     integrate the  business of  the  acquired companies.   During  the third
     quarter of 2002, the Company reduced the reserve by $14.4 million.  This
     reserve  reduction  is  due  primarily  to  revisions  in  the  cost  of
     facilities  integration and  the  expected cost  of  contract  losses as
     discussed below.   The  specific actions  included in  the restructuring
     plan are  expected to  be substantially complete  by December  31, 2002.
     Components of the purchase reserve are as follows:

                                       Accrual               2002     Accrual
                              Total    Balance              Amount    Balance
     (in thousands)          Charges   1/01/02     Adj.    Incurred   9/30/02
     --------------          -------   -------  ---------  --------   -------
     Severance & benefits    $13,712   $ 6,031  $     --   $(3,931)    $2,100
     Facilities integration   10,370     9,528    (4,685)   (3,493)     1,350
     Contract losses          10,000     9,750    (9,257)     (243)       250
     Other reserves            7,031     7,028      (481)     (297)     6,250
                             -------   -------  ---------  --------   -------
     Total                   $41,113   $32,337  $(14,423)  $(7,964)    $9,950
                             =======   =======  =========  ========   =======

     The restructuring plan includes  the reduction of employees from various
     offices within the  United States.   The Company expected  to reduce the
     number of  CCN employees  from approximately  1,300 at  the time  of the
     acquisition to  approximately 650  at  December 31,  2002.   The Company
     reached its target during the quarter  ended September 30, 2002.  During
     the first nine months of 2002, approximately $3.9 million was charged to
     the purchase  reserve for severance  and related  employee benefits with
     $1.2 million of such costs charged during the third quarter.

     Facilities integration costs represent  the costs the Company expects to
     incur  to  integrate  CCN's   facilities  into  the  Company's  existing
     operations.  The majority of the facilities integration  costs have been
     and will be incurred to consolidate CCN's  former corporate headquarters
     and  various  sales offices  throughout the United  States.  During  the
     quarter ended September 30, 2002,  the Company reduced  the reserve  for
     facilities  integration by $4.7 million as the Company has capitalized a
     substantial amount of integration work as software with future  use that
     was  originally  included  in  the purchase reserve.  Approximately $3.5
     million of costs for facilities integration  was charged to the purchase
     reserve  in the first  nine months  of  2002  with $2.8 million  charged
     during the third quarter.

     Contract losses relate to the anticipated net  loss to be incurred on an
     assumed contract  to provide  certain screening services  to individuals
     who have agreed to be bound by  a proposed settlement in a legal matter.
     CCN signed a contract  in March 2000 to provide  these services for four
     years and the Company  has agreed to have  its network providers provide
     these  services  as  part  of  the  acquisition  of  CCN.   The  Company
     estimates as  many as  325,000 covered persons  may seek  such screening
     services.   During the  quarter  ended September  30, 2002,  the Company
     reduced the reserve for contract losses by $9.3 million.  This reduction
     was due primarily  to operational efficiencies the  Company has achieved
     in  the  completion  of  these  screening  services.  Approximately $0.2
     million  of costs  under  this  contract were  charged  to  the purchase
     reserve during the nine months ended September 30, 2002, none during the
     third quarter.

     Other reserves  represent  various operational  and tax  liabilities the
     Company expects  to incur to  fully integrate  the Company's operations.
     During the quarter  ended September 30, 2002,  the Company reduced other
     reserves by $0.5 million as  the Company has revised several operational
     liability assumptions  associated with  the acquisition.   Approximately
     $0.3  was charged  to  the purchase  reserve  in the  nine  months ended
     September 30, 2002, all in the third quarter.

     At the date of acquisition,  the Company reviewed the various businesses
     comprising the CCN Companies and determined  to hold PW and the Resource
     Opportunity, Inc. ("ROI") business of CCN for sale.  The sale of ROI was
     completed on December  28, 2001 for a  gross sales price  of $9 million.
     The sale of PW was completed on June 28, 2002 for a gross sales price of
     $4.1 million.  The Company realized approximately $10 million from these
     sales  after  selling  expenses  and  liabilities  assumed.  The Company
     increased the goodwill on the CCN acquisition  by $6 million as a result
     of the completion of these sales.

     The following  unaudited pro forma  information reflects  the results of
     the  Company's operations  as if  the  acquisition had  occurred  at the
     beginning  of 2001  adjusted for  (i)  the effect  of  recurring charges
     related to  the  acquisition, primarily  the amortization  of intangible
     assets over estimated  useful lives of  15 or 20  years, as appropriate,
     and  the recording  of interest  expense  on borrowings  to  finance the
     acquisition;  (ii) the  reduction  of depreciation  expense  due  to the
     write-down to fair value of  fixed assets, the reduction of amortization
     expense related to  the CCN Companies' preexisting  goodwill at the date
     of acquisition and the  elimination of compensation and benefit expenses
     for certain executives  of the CCN  Companies who were  terminated at or
     immediately subsequent to the acquisition  and will not be replaced; and
     (iii) the removal of revenues and  related cost of services and expenses
     for acquired businesses that were held for sale.

                                             Three Months      Nine Months
                                                 Ended            Ended
                                             September 30,    September 30,
                                                 2001             2001
     (In thousands except per share data)   --------------    --------------

     Pro forma:
       Revenue                                    $164,784        $490,487
       Net income                                   27,071          76,465
       Net income per common share _ basic             .27             .78
       Net income per common share - diluted           .26             .74


     These pro forma results have been prepared for comparative purposes only
     and do not purport to be indicative of what operating results would have
     been had the acquisition actually taken  place at the beginning of 2001,
     nor do  they purport  to represent results  of future  operations of the
     merged companies.

     On May  1, 2002,  the  Company completed  the acquisition  of HealthCare
     Value Management ("HCVM") for an  initial purchase price of $24 million.
     The Company may pay an additional $16  million over the next three years
     based  upon certain  HCVM performance  measures.   HCVM  is a  small New
     England  based  PPO company,  headquartered  in  suburban  Boston.   The
     acquisition was  accounted for by  the purchase method  of accounting in
     accordance with SFAS 141.   The acquisition was financed from borrowings
     under the Company's existing line of  credit.  The results of operations
     and  assets  acquired  are  immaterial  to  the  consolidated  financial
     statements of the Company.  Consequently, no pro forma financial results
     are included herein.

     On July  1, 2002,  the Company  acquired operational  and administrative
     assets from CNA Insurance  Company for a purchase  price of $20 million.
     Included in this transaction is  the transfer of approximately 1,000 CNA
     employees and  related assets  which support  the Mail  Handlers Benefit
     Plan (the "Plan").  The acquisition relates to a long-term contract that
     the  Company was  awarded in  April  2002 to  provide  its comprehensive
     health plan services to the Plan.   The acquisition was accounted for by
     the purchase method  of accounting in  accordance with SFAS  141 and was
     financed with  borrowings under the  Company's existing  line of credit.
     The results  of operations  and  assets acquired  are immaterial  to the
     consolidated financial statements of  the Company.  Consequently, no pro
     forma financial results are included herein.

 3.  On April 23, 2002, the Company  obtained a $400 million revolving credit
     facility to replace  its previous $350 million  credit facility that was
     due to expire  on June 30, 2002.   This new credit  facility has a five-
     year  term and  provides  for  interest at  a  Euro  dollar  rate (which
     approximates LIBOR) plus a variable margin which fluctuates based on the
     Company's  debt  rating.  The  facility  also  has  a  corresponding fee
     calculated  at  a  variable  rate  of  the  available  facility  balance
     depending on  the debt  rating of  the  Company.   The interest  rate at
     September 30, 2002 was approximately 4% per annum. No principal payments
     are due on this facility until its maturity.

 4.  The Company's investments in marketable securities, which are classified
     as available  for sale,  had a net  unrealized gain  in market  value of
     $267,000, net of deferred income taxes,  for the nine month period ended
     September 30, 2002.   The net unrealized gain as  of September 30, 2002,
     included as  a component of  stockholders' equity, was  $428,000, net of
     deferred income taxes.  The Company  has seven separate investments in a
     limited partnership which invests in  equipment which is leased to third
     parties.  The total investment as of September 30, 2002 and December 31,
     2001 was $53.5 million and $47.1 million, respectively, and is accounted
     for  using the  equity method.   The  total  investment includes  a $5.0
     million investment the  Company made during the  quarter ended September
     30, 2002.  The Company's proportionate share of the partnership's income
     was $2.3 million for  both the nine months ended  September 30, 2002 and
     2001 and is  included in interest  income.  Approximately  90 percent of
     this partnership is owned  by parties related to a  former member of the
     Company's Board  of Directors.   All transactions  are made  on an arms-
     length basis at equal terms between all limited partners.

 5.  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 program.  Purchases may be made  from time to time, depending on
     market conditions and other relevant  factors.  During the quarter ended
     September 30, 2002,  the Company repurchased 750,000  shares on the open
     market for  approximately $19.2 million.   During the  nine months ended
     September 30, 2002, the Company repurchased 1,275,000 shares on the open
     market  for  approximately  $34.0 million.  As  of  September  30, 2002,
     approximately 3.9 million  shares remain available  for repurchase under
     the Company's current repurchase authorization.

 6.  Weighted average shares  outstanding increased for  diluted earnings per
     share  by  3,446,000  and  3,721,000  and  by  4,666,000  and  4,752,000
     respectively, for the three and nine months ended September 30, 2002 and
     2001 due to the effect of stock options outstanding.  Diluted net income
     per share was $.01 and $.03 less than basic net income per share for the
     three and  nine months  ended September 30,  2002 due  to the  effect of
     stock options outstanding.   Diluted net  income per share  was $.02 and
     $.04 less than basic net income per  share for the three and nine months
     ended September 30, 2001 due to the effect of stock options outstanding.

 7.  Effective  January 1,  2001, the  Company  adopted SFAS  No.  133 ("SFAS
     133"), "Accounting  For Derivative Instruments  and Hedging Activities".
     SFAS  133 requires  that  all derivative  instruments  be  recognized as
     either assets  or liabilities in  the balance sheet  and that 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  derivative.  There  was  no  material effect  on  the Company's
     results of operations or financial position  as a result of the adoption
     of SFAS 133.

     In July 2001,  the Financial Accounting Standards  Board ("FASB") issued
     SFAS  141.   SFAS 141  requires the  purchase  method of  accounting for
     business combinations initiated  after June 30, 2001  and eliminates the
     pooling-of-interests method.  In July 2001, the FASB issued SFAS No. 142
     ("SFAS 142"), "Goodwill and  Other Intangible Assets", which the Company
     adopted  effective  January  1, 2002.  SFAS  142  requires,  among other
     things, the  discontinuance of goodwill  amortization effective December
     31,  2001.   In  addition,  the  standard  includes  provisions  for the
     reassessment of the useful  lives of existing recognized intangibles and
     the  identification  of  reporting   units  for  purposes  of  assessing
     potential future impairments of goodwill.

     In accordance with  these pronouncements, the Company  accounted for the
     acquisitions  of  the  CCN  Companies,  HCVM  and  the  operational  and
     administrative assets acquired  from CNA as purchases  and allocated the
     purchase  price  to  all  identifiable  tangible  and  intangible assets
     and liabilities.  The  goodwill  resulting  from these  acquisitions  of
     approximately  $191.8 million  has  not  been  amortized.  Goodwill  and
     intangible assets  of  approximately $102  million acquired  in business
     combinations  completed  before  July  1,  2001  was  amortized  through
     December 31, 2001.   In accordance with SFAS 142,  none of the Company's
     $276.4 million  in net  goodwill  was amortized  during the  nine months
     ended September 30, 2002.

     The following table  reflects the effect of  SFAS 142 on  net income and
     earnings per  share as if  SFAS 142 had  been in effect  for all periods
     presented:

                                               Three Months    Nine Months
                                                   Ended          Ended
                                               September 30,  September 30,
      (in thousands, except per share amounts)     2001           2001
      ---------------------------------------- -------------  -------------
       Net income                                 $26,364        $76,093
       Add back goodwill amortization                 865          2,598
       Tax effect of amortization                    (350)        (1,052)
                                                  -------        -------
       Adjusted net income                        $26,879        $77,639
                                                  =======        =======
       Adjusted income per common share - Basic   $   .27        $   .79
                                                  =======        =======
       Adjusted income per common share - Diluted $   .26        $   .76
                                                  =======        =======

     In accordance with the  provisions of SFAS 142,  the Company completed a
     transitional goodwill impairment  test within six months  of the date of
     adoption.  The  Company used standard valuation  techniques including an
     analysis  of  expected  business  performance  and  analysis  of  recent
     acquisitions within the healthcare industry.  There was no impairment in
     goodwill amounts as a  result of the transitional  impairment test.  The
     Company will perform an annual  impairment test during the third quarter
     of  each year  or at  such earlier  time  that circumstances  warrant an
     interim valuation.   There  was no impairment  in goodwill  amounts as a
     result of the annual impairment  test performed during the third quarter
     of 2002.

     Effective  January 1,  2002, the  Company  adopted SFAS  No.  144 ("SFAS
     144"), "Accounting for the Impairment or Disposal of Long-Lived Assets".
     SFAS  144  addresses accounting  and  reporting  for  the  impairment or
     disposal of  long-lived assets,  including discontinued  operations, and
     establishes  a  single accounting  model  for  long-lived  assets  to be
     disposed of by sale.  The adoption  of this pronouncement did not have a
     material impact on  the financial position and  results of operations of
     the Company.

 8.  The Company and  its subsidiaries are subject  to various claims arising
     in the  ordinary course  of business  and are  parties to  various legal
     proceedings that constitute litigation incidental to the business of the
     Company and  its subsidiaries.   The Company's  wholly owned subsidiary,
     First Health Services  Corporation ("Services") continues  to be subject
     to an  investigation by  the  District of  Columbia Office  of Inspector
     General ("OIG").  In  July 2000, the OIG issued  a report evaluating the
     District of Columbia's  Medicaid program and suggesting  ways to improve
     the program.  Services, a subsidiary of the Company that was acquired in
     July 1997, has acted as the program's fiscal agent intermediary for more
     than 20 years.   The OIG report  included allegations that  from 1993 to
     1996, Services, in its role as fiscal agent intermediary, made erroneous
     Medicaid payments to providers on  behalf of patients no longer eligible
     to receive  Medicaid benefits.   The Company  does not  believe that the
     outcome of the claim  or the investigation will  have a material adverse
     effect on the Company's business or financial position.

<PAGE>

 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", "could"
 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 obligation 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 certain  areas of  the Company's business;
 shifts  in  customer  demands;  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 on the  terms necessary  to support the  Company's future  business.  In
 addition, if the  Company does  not continue  to successfully  implement new
 contracts and  programs  and  control healthcare  benefit  expenses;  if the
 Company is  not  able  to successfully  integrate  CCN  (defined  below) and
 achieve the cost synergies anticipated as a result of the acquisition; or if
 the Company  does  not  successfully integrate  the  recently  acquired Mail
 Handlers Benefit  Plan  administrative assets  (discussed  below);  then the
 Company may not achieve its anticipated 2003 financial results.

 Recent Developments
 -------------------
    Mail Handlers Benefit Plan
    --------------------------
   On April 16, 2002, the Company  entered into a long-term contract with the
 National Postal  Mail  Handlers  Union, the  sponsor  of  the  Mail Handlers
 Benefit  Plan   (the  "Plan"),   whereby  the   Company  will   provide  its
 comprehensive health plan services to the Plan.  The Plan has nearly 400,000
 federal employees  and  annuitants  representing  approximately  one million
 members nationwide, and is one  of the nation's largest  health plans.  This
 new contract  builds  on an  existing  agreement which  the  Company  has to
 provide the First Health Network[R] to the Plan's members.  The new contract
 is valued at over $1.3 billion in service revenue over the initial five-year
 term.

   On July 1,  2002, the Company acquired  the operational and administrative
 assets used to  provide the various  services required by  this new contract
 (see Note 2 to  the Consolidated Financial Statements)  for a purchase price
 of $20  million.   The transaction  includes  the transfer  of approximately
 1,000 CNA employees  and related  assets which support  the Plan  in various
 offices throughout the United States.   These employees will assume the same
 function for First Health, providing the Company with an experienced team of
 personnel already accustomed  to administering  the one-million-member Plan.
 The Company believes this acquisition will significantly reduce the need for
 typical implementation efforts related to the new contract.  The acquisition
 was financed from borrowings under the Company's existing line of credit.

    CCN Acquisition
    ---------------
   On August  16, 2001, the Company  completed the acquisition of  all of the
 outstanding shares of  capital stock of  CCN Managed Care,  Inc. ("CCN") and
 Preferred Works, Inc. ("PW" and together with CCN, the "CCN Companies") from
 HCA-The  Healthcare  Company  and  VH   Holdings,  Inc.  (collectively,  the
 "Sellers") for a  purchase price  of $195  million in  cash, plus  a working
 capital adjustment which increased  the purchase price to  $198 million. The
 acquisition  was  effected  pursuant  to  the  terms  of  a  Stock  Purchase
 Agreement, dated as  of May  18, 2001 (as  amended as  of August  16, 2001),
 among the  Company  and the  Sellers.   The  acquisition  was  financed from
 borrowings under the  Company's previous  line of  credit.   At the  date of
 acquisition, the Company reviewed the various  businesses comprising the CCN
 Companies and  determined  to hold  PW  and the  Resource  Opportunity, Inc.
 ("ROI") business of CCN for sale.  The Company  completed the sale of ROI on
 December 28, 2001 for a gross sales price of $9 million.  The sale of PW was
 completed on June  28, 2002 for  a gross sales  price of $4.1  million.  The
 Company realized approximately  $10 million  from these sales  after selling
 expenses and liabilities assumed.

      In conjunction with  the acquisition, the  Company recorded  as part of
 the purchase price a $41.1 million reserve for restructuring and integration
 costs as part of an overall plan  to reduce operating expenses and integrate
 the business of the acquired  companies.  During the  third quarter of 2002,
 the Company reduced the reserve by $14.4 million.  This reserve reduction is
 due primarily to  revisions in  the cost of  facilities integration  and the
 expected cost of contract  losses as discussed below.   The specific actions
 included in the restructuring plan are expected to be substantially complete
 by December 31,  2002.   The Company is  on track  with its  expectations of
 generating in  excess  of  $25  million  in  annualized  savings  from lower
 salaries  and  benefits   costs  and   lower  overall   operating  expenses.
 Components of the purchase reserve are as follows:


                                    Accrual                 2002     Accrual
                           Total    Balance                Amount    Balance
  (in thousands)          Charges   1/01/02     Adj.      Incurred   9/30/02
  --------------          -------   -------  ---------    --------   -------
  Severance & benefits    $13,712   $ 6,031  $     --     $(3,931)    $2,100
  Facilities integration   10,370     9,528    (4,685)     (3,493)     1,350
  Contract losses          10,000     9,750    (9,257)       (243)       250
  Other reserves            7,031     7,028      (481)       (297)     6,250
                          -------   -------  ---------    --------   -------
  Total                   $41,113   $32,337  $(14,423)    $(7,964)    $9,950
                          =======   =======  =========    ========   =======

     The restructuring plan includes  the reduction of employees from various
 offices within the United States.  The Company expected to reduce the number
 of CCN employees from approximately 1,300 at  the time of the acquisition to
 approximately 650  at December  31, 2002.   The  Company reached  its target
 during the quarter ended September 30, 2002.  During  the  first nine months
 of 2002, approximately $3.9 million was  charged to the purchase reserve for
 severance and  related employee  benefits with  $1.2  million of  such costs
 charged during the third quarter.

    Facilities integration  costs represent the costs  the Company expects to
 incur to integrate CCN's facilities into  the Company's existing operations.
 The  majority of the  facilities  integration  costs  have been and will  be
 incurred  to  consolidate  CCN's former  corporate headquarters  and various
 sales  offices  throughout the  United  States.  During  the  quarter  ended
 September  30,  2002,  the  Company  reduced  the  reserve  for   facilities
 integration  by $4.7 million  as  the Company has  capitalized a substantial
 amount  of integration work as software with  future use that was originally
 included  in  the purchase reserve.  Approximately $3.5 million of costs for
 facilities integration was charged to the purchase reserve in the first nine
 months of 2002 with $2.8 million charged during the third quarter.

    Contract losses relate  to the anticipated net loss to be incurred on  an
 assumed contract to  provide certain screening  services to individuals  who
 have agreed to be  bound by a proposed  settlement in a  legal matter.   CCN
 signed a contract in March 2000 to provide these services for four years and
 the Company has agreed to have its network providers provide these  services
 as a part  of the acquisition  of  CCN.  The  Company  estimates as many  as
 325,000  covered  persons  may seek  such  screening  services.  During  the
 quarter ended  September  30, 2002,  the  Company reduced  the  reserve  for
 contract losses  by $9.3  million.   This  reduction  was due  primarily  to
 operational efficiencies the Company has achieved in the completion of these
 screening services.  Approximately $0.2 million of costs under this contract
 were charged to the purchase reserve during the nine months ended  September
 30, 2002, none during the third quarter.

   Other  reserves  represent various  operational  and  tax  liabilities the
 Company has incurred  to fully integrate  the Company's  operations.  During
 the quarter ended September 30, 2002,  the Company reduced other reserves by
 $0.5 million  as  the  Company  has  revised  several  operational liability
 assumptions associated with the acquisition.  Approximately $0.3 was charged
 to the reserve in the nine  months ended September 30,  2002, all during the
 third quarter.

    HCVM Acquisition
    ----------------
   On May 1, 2002, the Company  completed the acquisition of HealthCare Value
 Management ("HCVM")  for an  initial purchase  price  of $24  million.   The
 Company may pay an additional $16 million over  the next three years if HCVM
 meets certain performance measures.   HCVM is a small  New England based PPO
 company, headquartered  in suburban  Boston.   The acquisition  was financed
 from borrowings under the Company's existing line of credit.

 Results of Operations
 ---------------------
      The Company's revenues  consist primarily  of fees for  cost management
 services provided under contracts on a  percentage of savings basis (PPO) or
 on a predetermined  contractual basis (claims  administration, fee schedule,
 pharmacy benefit management and clinical management  services).  As a result
 of the  Company's  insurance  company  acquisitions,  revenues  also include
 premium revenue.

      The following table sets forth information  with respect to the sources
 of the Company's revenues for the three  and nine months ended September 30,
 2002 and 2001, respectively:

   Sources of Revenue
                                                ($ in thousands)
                                         Three Months Ended September 30,
                                           ---------------------------
                                           2002     %      2001      %
                                          -------  ---    -------   ---
      Sources of Revenue:
        PPO Services                     $111,105   54%   $91,112    60%
        Claims Administration              71,685   35     41,793    27
        Fee Schedule Services              10,240    5      8,541     6
        Clinical Management Services        8,065    4      7,267     5
        Premiums, Net                       3,833    2      3,494     2
                                          -------  ---    -------   ---
      Total Revenue                      $204,928  100%  $152,207   100%
                                          =======  ===    =======   ===

                                                ($ in thousands)
                                         Nine Months Ended September 30,
                                           ---------------------------
                                           2002     %      2001      %
                                          -------  ---    -------   ---
      Sources of Revenue:
        PPO Services                     $326,104   59%  $244,927    57%
        Claims Administration             159,996   29    125,867    29
        Fee Schedule Services              30,854    6     25,054     6
        Clinical Management Services       21,605    4     21,178     5
        Premiums, Net                      11,653    2     11,114     3
                                          -------  ---    -------   ---
      Total Revenue                      $550,212  100%  $428,140   100%
                                          =======  ===    =======   ===

   Revenue for the  three and nine months ended  September 30, 2002 increased
 $52,721,000 (35%)  and  $122,072,000  (29%),  respectively,  from  the  same
 periods of  2001  due  primarily  to  strong  PPO  revenue  and  to  revenue
 associated with the  acquisition of  the administrative  assets from  CNA to
 administer the  Plan.   PPO  revenue for  the  three and  nine  months ended
 September 30,  2002  increased  $19,993,000  (22%)  and  $81,177,000  (33%),
 respectively, from  the  same periods  last  year.   This  increase  was due
 primarily to  new  client  activity,  existing  clients  utilizing  more PPO
 services, the overall increase in PPO providers  and the addition of CCN and
 HCVM revenue.  Claims  administration revenue for the  three and nine months
 ended September 30, 2002 increased $29,892,000  (72%) and $34,129,000 (27%),
 respectively,  from  the  same  periods  last  year  due  primarily  to  the
 acquisition of the administrative assets discussed  above.  Revenue from fee
 schedule services for  the three  and nine months  ended September  30, 2002
 increased $1,699,000  (20%)  and $5,800,000  (23%),  respectively,  from the
 comparable periods in 2001  due primarily to the  inclusion of CCN business.
 Revenue from clinical cost management services for the three and nine months
 ended September  30,  2002  increased  $798,000  (11%)  and  $427,000  (2%),
 respectively, from  the  comparable periods  in  2001 due  primarily  to new
 business.  Premium revenue for the three and nine months ended September 30,
 2002 increased $339,000 (10%) and $539,000 (5%), respectively, for the three
 and nine months ended  September 30, 2002  due primarily to  the addition of
 new stop loss insurance clients.

   Cost of services increased $26,663,000 (40%) and $54,529,000 (29%) for the
 three and nine months  ended September 30, 2002  from the comparable periods
 of 2001 due  primarily to  the inclusion of  CCN costs,  HCVM costs  and the
 costs associated  with the  administration of  the Plan.   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.  As a percentage of revenue, cost of services increased to
 45.6% and 43.9%  for the  three and  nine months  ended September  30, 2002,
 respectively, from 43.9% and 43.7% in the comparable periods last year.  The
 increase as a  percentage of  revenue is  due primarily  to the  addition of
 costs associated with the administration of the Plan.

   Selling and marketing costs for the  three and nine months ended September
 30,  2002  increased  $6,288,000  (42%)  and   $14,944,000  (36%)  from  the
 comparable periods of  2001 primarily  as a  result of  the addition  of CCN
 costs and  to increased  expenditures for  the Company's  national marketing
 campaign.  The Company began a national consumer advertising campaign in the
 third quarter of 2002  designed to increase name  recognition.  The campaign
 includes television commercials, print ads and  billboard ads in a number of
 markets.  To a lesser extent, the increase in selling and marketing costs is
 due to costs associated with the administration of the Plan.

   General  and administrative  costs for  the  three and  nine  months ended
 September 30, 2002 increased $5,041,000 (47%) and $11,406,000 (41%) from the
 comparable periods of 2001 due  primarily to the inclusion  of CCN costs and
 costs associated with the administration of the Plan.

   Healthcare benefits  represent medical losses incurred  by insureds of the
 Company's insurance entities.  Healthcare  benefits increased $762,000 (24%)
 and $1,347,000 (13%) for the three and  nine months ended September 30, 2002
 from the comparable periods of 2001.  This increase was due primarily to new
 client  activity.  The  loss  ratio  (healthcare benefits  as  a  percent of
 premiums) was 101% and 99% for the three and nine months ended September 30,
 2002 compared to 89% and 92% for the comparable periods of 2001.  Management
 continues to review  the book  of business  in detail  to minimize  the loss
 ratio.  Stop-loss insurance is related to the PPO  business and is used as a
 way to  attract  additional  PPO  business,  which  is  the  Company's  most
 profitable product.

   Depreciation and amortization  expenses  increased  $2,745,000  (23%)  and
 $7,186,000 (21%) for the three and nine months ended September 30, 2002 from
 the comparable  periods of  2001 due  primarily to  increased infrastructure
 investments made over  the course  of the past  few years,  various software
 applications which came  on-line during  2001 and  2002 and  amortization of
 intangible assets related to the various  acquisitions the Company has made.
 The increase was partially offset by  the reduction in goodwill amortization
 of $865,000 and $2,599,000 for the three and nine months ended September 30,
 2002 (See Note  7 to the  Consolidated Financial  Statements).  Depreciation
 expense  will  continue  to  grow  primarily   as  a  result  of  continuing
 investments the Company is making in its infrastructure.

   Interest income  for the  three and nine  months ended  September 30, 2002
 increased $190,000 (11%) and decreased $203,000 (4%), respectively, from the
 comparable periods of 2001.   The overall decrease was  due primarily to the
 aggressive debt repayments the  Company has made with  its available cash as
 well as the $34.0 million the Company used to repurchase its own stock.

   Interest expense  for the three and  nine months ended  September 30, 2002
 decreased $283,000 (17%) and $1,054,000 (20%) from the comparable periods of
 2001 due primarily  to the aggressive  debt repayments the  Company has made
 with its  available  cash.  The  interest  rate  at September  30,  2002 was
 approximately 4%  per  annum  and  the  Company  had  $104  million  of debt
 outstanding.

   Net  income  for the  three  and  nine months  ended  September  30, 2002,
 increased $7,379,000 (28%) and $21,148,000 (28%) from the comparable periods
 of 2001.  This increase is  due primarily to the increase  in PPO revenue as
 well as the synergies achieved in  combining CCN and First  Health and, to a
 lesser extent, the other factors discussed above.

   Diluted  net  income  per common share for the three and nine months ended
 September 30, 2002 increased 28% to $.32 per share and 26% to $.93 per share
 from the comparable periods of 2001.  The increase in net income per  common
 share was  favorably  impacted by  the  repurchase of  1,275,000  shares  of
 Company common stock during the nine  months ended September 30, 2002.   The
 increase was also favorably  impacted by the adoption  of SFAS No. 142  (See
 Note  7  to  the  Consolidated  Financial  Statements  and  "New  Accounting
 Pronouncements").  For the three months and nine months ended September  30,
 2002, diluted common shares outstanding  increased 1% and 2%,  respectively,
 from the comparable periods of 2001.

 Liquidity and Capital Resources
 -------------------------------
      The Company had  $8,021,000 in working  capital at  September 30,  2002
 compared with negative working capital of $159,130,000 at December 31, 2001.
 All of the Company's outstanding debt at December 31, 2001 was classified as
 a current liability as  the Company's credit facility  was due to expire  on
 June 30,  2002.   On April  23,  2002, the  Company  obtained a  new  credit
 facility which matures in  2007; consequently, the  outstanding debt is  now
 classified as  long-term.   Through  the  first  nine months  of  the  year,
 operating activities provided $197,706,000  of cash.  Investment  activities
 used  $90,561,000  of  cash  representing  purchases  of  fixed  assets   of
 $42,768,000, acquisitions of $42,959,000 and net purchases of investments of
 $5,757,000 partially offset by $923,000 in changes in assets held for  sale.
 Financing activities used  $99,531,000 of cash  representing $93,500,000  in
 repayment  of  long-term  debt  (net  of  $185,000,000  in  debt  issuance),
 $33,992,000 in  purchases  of  Company  common  stock  partially  offset  by
 $27,498,000 in proceeds from issuance of common stock, $375,000 in  proceeds
 from the sale  of put options  and $88,000 in  stock option loan  repayments
 (net of $2,272,000 in stock option loans granted).

      The Company  had a  revolving line  of  credit in  the amount  of  $350
 million which was due to expire  on June 30, 2002.   On April 23, 2002,  the
 Company obtained a new $400 million  revolving line of credit that  replaced
 the previous credit  facility.  The  new facility has  a five-year term  and
 provides for interest at a Euro dollar rate (which approximates LIBOR)  plus
 a variable margin and a facility  fee that fluctuate based on the  Company's
 debt rating. As of  September 30, 2002, $104  million was outstanding  under
 the new 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.

 Company Stock Options
 ---------------------
     The Company maintains  an Employee Stock Option  Plan that provides  for
 the granting of options to employees and consultants of the Company  and its
 subsidiaries to purchase common  stock at the fair  market value at date  of
 grant.   The Company  has granted  stock options  to  all employees  meeting
 certain defined performance requirements every year since 1988.   Management
 believes this plan has been invaluable in finding, attracting, retaining and
 providing incentive to employees by  offering them an ownership  interest in
 the Company.

     The  Company elected  the  disclosure-only  provisions of  Statement  of
 Financial Accounting Standards No. 123.  Consequently, no  compensation cost
 is included in the Consolidated Financial Statements related to Stock Option
 Plans.  If  the Company had  chosen to  expense the compensation  associated
 with the various options granted in 2002 (totaling 1,243,000  options) using
 the Black-Scholes option-pricing model,  diluted earnings per share  ("EPS")
 would have decreased $.01  and $.04 for the  third quarter and for  the full
 year.

 Business Outlook for 2003
 -------------------------
     The Company expects  to see continued growth  in each of our  sources of
 revenue during 2003.   Management  announced new  client relationships  this
 past September and will announce further client additions in  late February.
 Overall, the Company estimates 2003 revenue to be approximately $860 to $870
 million and EPS in the $1.50 range.

     The Company  anticipates claims  administration growth in  the 30%  area
 and PPO growth in the high single  digits area.  The overall growth  and the
 changing mix of our growth is due to the following:

       *  Successful cross selling of administrative services to existing
          PPO clients.
       *  Strong demand for our administrative services in the Public
          Sector market.
       *  Successful renegotiation of short-term contracts into longer-
          term agreements with more comprehensive packages of our services
          being purchased.
       *  Business prospects, which have ultimately become clients, are
          increasingly purchasing a package of services integrating our
          PPO with various administrative services.

 New Accounting Pronouncements
 -----------------------------
     Effective January 1,  2001, the Company  adopted Statement of  Financial
 Accounting  Standards  No.  133  ("SFAS  133),  "Accounting  For  Derivative
 Instruments and Hedging Activities".  SFAS 133 requires that  all derivative
 instruments be recognized  as either  assets or liabilities  in the  balance
 sheet and  that 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 derivative.  There was no material  effect on the
 Company's results of  operations or financial  position as  a result of  the
 adoption of SFAS 133.

     In July 2001, the  Financial Accounting Standards Board  ("FASB") issued
 SFAS No. 141 ("SFAS 141"), "Business  Combinations."  SFAS 141  requires the
 purchase method of accounting for business combinations initiated after June
 30, 2001 and eliminates the pooling-of-interests method.  In July  2001, the
 FASB issued  SFAS  No. 142  ("SFAS  142"),  "Goodwill and  Other  Intangible
 Assets", which the  Company adopted  effective January  1, 2002.   SFAS  142
 requires, among other  things, the  discontinuance of goodwill  amortization
 effective December 31, 2001.  In addition, the standard  includes provisions
 for the reassessment of the useful lives of existing  recognized intangibles
 and  the  identification  of  reporting  units  for  purposes  of  assessing
 potential future impairments of goodwill.

     In accordance with these  pronouncements, the Company accounted  for the
 acquisitions  of  the   CCN  Companies,   HCVM  and   the  operational   and
 administrative assets  acquired  from CNA  as  purchases and  allocated  the
 purchase  price  to  all  identifiable   tangible  and   intangible   assets
 and  liabilities.  The  goodwill  resulting   from  these  acquisitions   of
 approximately  $191.8  million  has  not  been  amortized.    Goodwill   and
 intangible  assets  of  approximately  $102  million  acquired  in  business
 combinations completed before  July 1, 2001  was amortized through  December
 31, 2001.  In accordance with SFAS 142, none of the Company's $276.4 million
 in net goodwill  was amortized during  the nine  months ended September  30,
 2002.  The Company  recorded goodwill amortization expense  of approximately
 $0.9 million  and $2.6  million, respectively,  during  the three  and  nine
 months ended September 30, 2001.

     In accordance with the  provisions of SFAS 142, the Company  completed a
 transitional goodwill  impairment test  within six  months  of the  date  of
 adoption.   The  Company used  standard  valuation techniques  including  an
 analysis  of   expected  business   performance  and   analysis  of   recent
 acquisitions within the  healthcare industry.   There was  no impairment  in
 goodwill amounts as  a result  of this  transitional impairment  test.   The
 Company will perform an annual impairment  test during the third  quarter of
 each year or  at such  earlier time  that circumstances  warrant an  interim
 valuation.  There was no impairment  in goodwill amounts as a result  of the
 annual impairment test performed during the third quarter of 2002.

     Effective  January 1,  2002, the  Company adopted  SFAS  No. 144  ("SFAS
 144"), "Accounting for  the Impairment  or Disposal  of Long-Lived  Assets".
 SFAS 144 addresses accounting and  reporting for the impairment  or disposal
 of long-lived assets, including  discontinued operations, and establishes  a
 single accounting model  for long-lived assets  to be  disposed of by  sale.
 The adoption of  this pronouncement did  not have a  material impact on  the
 financial position and results of operations of the Company.

 Legal Proceedings
 -----------------
     The Company and its  subsidiaries are subject to various  claims arising
 in the  ordinary  course  of  business  and are  parties  to  various  legal
 proceedings that constitute  litigation incidental  to the  business of  the
 Company and its subsidiaries.  The Company's wholly owned  subsidiary, First
 Health Services  Corporation  ("Services") continues  to  be subject  to  an
 investigation by  the  District  of Columbia  Office  of  Inspector  General
 (OIG").  In July  2000, the OIG issued  a report evaluating the  District of
 Columbia's Medicaid  program and  suggesting ways  to  improve the  program.
 Services, a subsidiary of  the Company that was  acquired in July 1997,  has
 acted as the  program's fiscal agent  intermediary for  more than 20  years.
 The OIG report included allegations that from 1993 to 1996, Services,  in it
 role as  fiscal  agent intermediary,  made  erroneous Medicaid  payments  to
 providers on  behalf of  patients no  longer  eligible to  receive  Medicaid
 benefits.  The Company does not believe that the outcome of the claim or the
 investigation will have a material adverse effect on the  Company's business
 or financial position.


 Item 3.   Quantitative and Qualitative Disclosures About Market Risk

      The Company's market risk exposure at September 30, 2002  is consistent
 with the types of market risk  and amount of exposure presented in  its 2001
 Annual Report on Form 10-K.


 Item 4.   Controls and Procedures

      Within the 90 days prior to the filing date of this report, the Company
 carried out an evaluation, under the supervision and with  the participation
 of the Company's management, including the Company's Chief Executive Officer
 and Chief  Financial  Officer,  of  the  effectiveness  of  the  design  and
 operation  of  our  disclosure controls and procedures  as defined  in Rules
 13a-14(c) and 15d-14(c)  of the Securites Exchange Act of 1934,  as  amended
 (the  "Exchange Act").  Based  upon  that  evaluation,  the  Company's Chief
 Executive Officer  and Chief Financial Officer concluded  that the Company's
 disclosure  controls  and procedures are effective.  Disclosure controls and
 procedures  are controls and procedures that  are  designed  to  ensure that
 information required  to be disclosed in Company reports  filed or submitted
 under  the Exchange Act  is recorded,  processed,  summarized  and  reported
 within  the  time  periods  specified  in  the   Securities   and   Exchange
 Commission's rules and forms.

 There have been no significant changes in our internal controls or  in other
 factors that could significantly affect internal controls subsequent  to the
 date we carried out this evaluation.


 PART II


 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

           (c) Exhibit 99.1 - Certification Pursuant to 18 U.S.C. Section
                              1350, as Adopted Pursuant to Section 906 of
                              the Sarbanes-Oxley Act of 2002 - Edward L.
                              Wristen

           (d) Exhibit 99.2 - Certification Pursuant to 18 U.S.C. Section
                              1350, as Adopted Pursuant to Section 906 of
                              the Sarbanes-Oxley Act of 2002 - Joseph E.
                              Whitters

      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: November 13, 2002      /s/Edward L. Wristen
                                    ------------------------------------
                                    Edward L. Wristen
                                    President and Chief Executive Officer



      Dated: November 13, 2002      /s/Joseph E. Whitters
                                    ------------------------------------
                                    Joseph E. Whitters
                                    Vice President, Finance and Chief
                                    Financial Officer
                                    (Principal Financial Officer)

<PAGE>


                                CERTIFICATIONS


 I, Edward L. Wristen, certify that:

 1.   I have reviewed this quarterly report on Form 10-Q of First Health
      Group Corp.;

 2.   Based on my knowledge, this quarterly report does not contain any
      untrue statement of a material fact or omit to state a material fact
      necessary to make the statements made, in light of the circumstances
      under which such statements were made, not misleading with respect to
      the period covered by this quarterly report;

 3.   Based on my knowledge, the financial statements, and other financial
      information included in this quarterly report, fairly present in all
      material respects the financial condition, results of operations and
      cash flows of the registrant as of, and for, the periods presented in
      this quarterly report;

 4.   The registrant's other certifying officer and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
      and we have:

      a)   designed such disclosure controls and procedures to ensure
      that material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this quarterly report
      is being prepared;

      b)   evaluated the effectiveness of the registrant's disclosure
      controls and procedures as of a date within 90 days prior to the
      filing date of this quarterly report (the "Evaluation Date"); and

      c)   presented in this quarterly report our conclusions about the
      effectiveness of the disclosure controls and procedures based on our
      evaluation as of the Evaluation Date;

 5.   The registrant's other certifying officer and I have disclosed, based
      on our most recent evaluation, to the registrant's auditors and the
      audit committee of registrant's board of directors (or persons
      performing the equivalent function):

      a)   all significant deficiencies in the design or operation of
      internal controls which could adversely affect the registrant's ability
      to record, process, summarize and report financial data and have
      identified for the registrant's auditors any material weaknesses in
      internal controls; and

      b)   any fraud, whether or not material, that involves management or
      other employees who have a significant role in the registrant's
      internal controls; and

 6.   The registrant's other certifying officer and I have indicated in
      this quarterly report whether or not there were significant changes in
      internal controls or in other factors that could significantly affect
      internal controls subsequent to the date of our most recent evaluation,
      including any corrective actions with regard to significant
      deficiencies and material weaknesses.


 Date: November 13, 2002

      /s/ Edward L. Wristen
      President and Chief Executive Officer



 I, Joseph E. Whitters, certify that:

 1.   I have reviewed this quarterly report on Form 10-Q of First Health
      Group Corp.;

 2.   Based on my knowledge, this quarterly report does not contain any
      untrue statement of a material fact or omit to state a material fact
      necessary to make the statements made, in light of the circumstances
      under which such statements were made, not misleading with respect to
      the period covered by this quarterly report;

 3.   Based on my knowledge, the financial statements, and other financial
      information included in this quarterly report, fairly present in all
      material respects the financial condition, results of operations and
      cash flows of the registrant as of, and for, the periods presented in
      this quarterly report;

 4.   The registrant's other certifying officer and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
      and we have:

      a)   designed such disclosure controls and procedures to ensure
      that material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this quarterly report
      is being prepared;

      b)   evaluated the effectiveness of the registrant's disclosure
      controls and procedures as of a date within 90 days prior to the
      filing date of this quarterly report (the "Evaluation Date"); and

      c)   presented in this quarterly report our conclusions about the
      effectiveness of the disclosure controls and procedures based on our
      evaluation as of the Evaluation Date;

 5.   The registrant's other certifying officer and I have disclosed, based
      on our most recent evaluation, to the registrant's auditors and the
      audit committee of registrant's board of directors (or persons
      performing the equivalent function):

      a)   all significant deficiencies in the design or operation of
      internal controls which could adversely affect the registrant's ability
      to record, process, summarize and report financial data and have
      identified for the registrant's auditors any material weaknesses in
      internal controls; and

      b)   any fraud, whether or not material, that involves management or
      other employees who have a significant role in the registrant's
      internal controls; and

 6.   The registrant's other certifying officer and I have indicated in
      this quarterly report whether or not there were significant changes in
      internal controls or in other factors that could significantly affect
      internal controls subsequent to the date of our most recent evaluation,
      including any corrective actions with regard to significant
      deficiencies and material weaknesses.


 Date: November 13, 2002

      /s/ Joseph E. Whitters
      Vice President, Finance and Chief Financial Officer