UNITED  STATES
     SECURITIES  AND  EXCHANGE  COMMISSION
     WASHINGTON,  D.C.  20549

     FORM  10-QSB

(Mark  One)

  X     QUARTERLY  REPORT  UNDER  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
---
ACT  OF  1934
--

               For  the  quarterly  period  ended  September  30,  1998
                                                  ---------------------

_____     TRANSITION  REPORT  UNDER  SECTION  13  OR  15(d)  OF THE EXCHANGE ACT

               For  the  transition  period  from  ________  to  ________

               COMMISSION  FILE  NUMBER:000-24807

                        CORECARE  SYSTEMS,  INC.
                        ------------------------
     (Name  of  small  business  issuer  as  specified  in  its  charter)

        Delaware                                     23-2840367
    -------------------                            -------------
(State  of  jurisdiction  of                    (I.R.S.  Employer
incorporation  or  organization)               Identification  No.)

     c/o  Kirkbride  Center,  111  North  49th  St.,  Phila.,  PA  19139
     -------------------------------------------------------------------
     (Address  of  principal  executive  offices)

           (215)  471-2600
     ---------------------
     (Issuer's  Telephone  Number)

Check  whether  the issuer (1) filed all reports required to be filed by Section
13  or  15(d)  of  the  Exchange  Act during the past 12 months (or 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  No  X
                                                                           ---

          As of November 1, 1998 the issuer had issued and outstanding
               15,693,782 shares, $.001 par value, of Common Stock



<PAGE>
     PART  I  -  FINANCIAL  INFORMATION


ITEM  1.     FINANCIAL  STATEMENTS



     INDEX  TO  FINANCIAL  STATEMENTS
     --------------------------------



                                          Page
                                          ----

Consolidated  Balance  Sheet
     Nine  months  ended
     September  30,  1998  and
     Fiscal  Year  Ended
     December  31,  1997                 F  -  1

Consolidated  Statement  of  Operations
     Nine  months  ended
     September  30,  1998  and  1997     F  -  2

Consolidated  Statement  of  operations
     Quarter  ended
     September  30,  1998  and  1997     F  -  3

Consolidated  States  of  Cash  Flows
     Nine  months  ended
     September  30,  1998  and  1997     F  -  4



<PAGE>
ITEM  2.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS


     CoreCare Systems, Inc. (the "Company") is a regional behavioral health care
network operating in Eastern Pennsylvania. The Company's headquarters are
located at c/o Kirkbride Center, 111 North 49th Street, Philadelphia, PA  19139
having recently moved its executive offices from 940 West Valley Road, Suite
2102, Wayne, PA 19087. Its telephone number at its new location is (215)
471-2600. In 1996, the Company transferred its state of incorporation from
Nevada to Delaware.


     Management's  discussion  and  analysis  is  based  upon  the  unaudited
consolidated  financial  statements  of  the  Company for the nine month periods
ended  September  30, 1998 and 1997, and include the accounts of the Company and
its  subsidiaries  after  elimination  of  any  inter-company  balances  and
transactions.


RESULTS  OF  OPERATIONS:

          Revenue  - Revenue in the nine month period ending September 30, 1998,
          -------
was $15,985,008, representing an increase of approximately 80% over total income
in  the  comparable  1997  period.  The material increase in total income in the
first  nine months of 1998, compared with the prior year period, is attributable
to  a  number  of  factors,  including  the  following:

          (a)  Nine months operation of Kirkbride Center during 1998 as compared
to  seven  months  during  1997;

          (b)  Patient  days  at  the  Kirkbride Center and Westmeade at Warwick
tripled  during  1998  from  1997;

          (c)  Outpatient  revenues  at  the  Kirkbride  Center  and  Penn
Interpersonal  Communications,  Inc.  doubled  in  1998  over  1997;

          (d)  New  programs  at  the  Kirkbride  Center consisting of geriatric
partial  hospitalization  and  43 drug and alcohol rehabilitation beds opened in
July,1998;

          (e)  Dual  diagnosis  program  at the Kirkbride Center expanded during
1998;  and

          (f)  One  of  the Company's subsidiaries, Managed Careware, Inc. d/b/a
CoreCare Management, Inc. ("CMI"), had three months of operations in 1997 versus
nine  months  in  1998.

          Operating,  selling,  general  and administrative expenses - Operating
          ----------------------------------------------------------
expenses  increased  by  approximately  $900,000  during  the  nine months ended
September  30,  1998  over  1997,  however,  as a percentage of total income the
expense  declined from 59% in 1997 to 39% in 1998. This was due primarily to the
improvement  in  selling,  general  and  administrative  (SG&A)  expenses, which
declined to 15% in 1998 from 37% in 1997.  This was partially offset by increase
salary  and  employee  benefit expense from 9% in 1997 to 18% in 1998.  The SG&A
declined  by  $900,000  due  to  cost  savings  realized  from cancellation of a
management  services  contract  for the Kirkbride Center for five months in 1997
and  consolidation  savings  following  the acquisition of CMI in July 1997. The
salary  expenses  increased by approximately $2.1 million to $2.9 million due to
an  increase  in  volume  and cancellation of the management services agreement.

          Direct  Costs  -  Direct  costs  include  costs principally related to
          -------------
patient  care  such  as  costs  of  nursing,  physicians, technicians, pharmacy,
dietary,  laboratory,  housekeeping  and supplies.  The ratio of direct costs to
revenue was 45% in 1998 versus 54% in 1997.  The improvement in gross profit was
due  to  the  stabilization  of  operations  compared  to  the  less  efficient
utilization  of  resources  following  the  acquisition of the Kirkbride Center.

          Net  Income  -  Net income in the nine months ended September 30, 1998
          -----------
was  $1,251,761  (approximately  7.8%  of revenue) compared to a net loss in the
first  nine  months  of  1997  of ($1,126,933), principally as the result of the
increase  in  total  income  and decrease in selling, general and administrative
expenses  as  a  percentage  of  total  income,  as  discussed  above.

LIQUIDITY  AND  CAPITAL  RESOURCES:

          Due  to  the  Company's  rapid  growth  during  1998,  the Company has
experienced  liquidity  constraints  from  time  to  time.  This was offset by a
completion of a major financing with WRH Mortgage, Inc. during the first quarter
of 1998.  These funds provided capital for improvements to the Kirkbride Center,
reduction  of  more  expensive debt, and working capital.  The Company is in the
process  of  attempting  to consolidate its short-term debt and to refinance the
Kirkbride  Center  mortgage  at  a  lower  interest  rate.





<PAGE>
     PART  II  -  OTHER  INFORMATION


ITEM  1.     LEGAL  PROCEEDINGS

          None.


ITEM  2.     CHANGES  IN  SECURITIES

          The  following  sales  of  securities  of  the  Company  took place as
indicated  below.  Unless  otherwise  described, all such sales were a result of
transactions  that  were  exempt  from  registration  under  the  Securities Act
pursuant  to  Section  4(2)  of such Act, and the shares of the Company's Common
Stock  issued  (or issuable in the case of warrants or options) were "restricted
securities"  as  that  term  is  defined  in  Rule 144 and may be resold only in
compliance  with  registration  provisions of the Securities Act or an exemption
thereunder.

RULE  504  OFFERING  -  1998
----------------------------

     In  July  1998,  the  Company  initiated  an equity offering under Rule 504
("Rule  504")  Regulation  D,  promulgated  under the Securities Act of 1933, as
amended  ("Securities  Act")  of  a maximum of $1,000,000 in Common Stock of the
Company.  Through  September  30,  1998,  a  total  of  274,000  shares  to  one
investment  group and two individuals for a total amount of $232,220 were issued
pursuant  to  said  offering.

     The  shares in this offering were not registered under Federal or any state
laws.  Pursuant  to  Rule 504(b)(1), the shares are not "registered securities",
as that term is defined in Rule 144, promulgated under the Securities Act ("Rule
144"),  and the Company does not intend to impose any restrictions on the resale
thereof,  except  to the extent that such restrictions is required by state law.

     This  offering  was  terminated  as  of October 12, 1998 when the Company's
registration  statement  on  Form  10-SB  became  effective.

SHARES  ISSUED  FOR  SERVICES
-----------------------------

     The following shares were issued during the nine months ended September 30,
1998: 250,000 shares were issued in private placements ; 1,025,804 shares were
issued as payment for services, 376,316 shares were issued pursuant forbearance
agreements with respect to certain notes financing; 350,000 shares were issued
as consideration for the acquisitions; 84,800 shares were issued to 199
employees pursuant to the Company's 1996 Stock Plan and for certain employee
compensation; 33,334 shares were issued with respect to a settlement agreement.


WARRANTS  ISSUED
----------------

     Between July 1, 1998 and September 30, 1998, the Company issued warrants to
purchase  a  total  of  75,000 shares of the Company's Common Stock at $1.00 per
share  and  an  expiration  date  of  June  30,  2002  to  one  of the Company's
lenders/investment  group  as  part  of  an  agreement to extinguish certain put
rights  granted  to  the  investment  group  in 1997. On September 30, 1998, the
Company  issued  warrants to purchase a total of 800,000 shares of the Company's
Common  Stock  at $1.00 per share and an expiration date of March 3, 2004 to WRH
Mortgage,  Inc.,  the  Mortgagee  of the Kirkbride Center owned by the Company's
subsidiary,  CoreCare  Behavioral  Health  Management,  Inc. in consideration of
advisory  services  rendered  to  the  Company.

ITEM  3.     DEFAULTS  ON  SENIOR  SECURITIES

          None.

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

          None.

ITEM  5.     OTHER  INFORMATION

In  October,  1999  the  company  announced  a contractual relationship with the
Temple  University  Behavioral  Network  to integrate the Kirkbride continuum of
care  with  services provided by the Temple University Behavioral Health Network
(TUHS)  to  increase  the services to TUHS' patient population. The scope of the
affiliation includes medical education and cooperation in the area of conducting
clinical  trials  on  new  pharmaceutical  products.

Also,  in  October Quantum Clinical Services Group, a wholly owned subsidiary of
Corecare  Systems,  Inc.,  began  generating  revenues from previously announced
contracts  to  conduct  clinical  trials  at  the  Kirkbride  Center on new drug
products  sponsored  by  pharmaceutical  companies.  The  company  initiated two
additional  clinical  trial  contracts  in  the  fourth  quarter.

The  company  has  applied for the necessary approvals to increase the number of
beds  for its drug and alcohol rehabilitation program from 43 to 63. The company
expects  to  receive  the  approvals  in  January,  1999.  The  drug and alcohol
rehabilitation  program has been operating at or close to capacity shortly after
its  inception.

<PAGE>
ITEM  6.     EXHIBITS  AND  REPORTS

          (a)     Exhibits.
                  --------

                    SEC
Exhibit            Reference
  No.               No.
-----            ------



 4.01               4               Form of Common Stock Purchase Warrant issued
to  WRH  Mortgage,  Inc.

 27                              Financial  Data  Schedule





          (b)     Reports  on  Form  8-K.
                  ----------------------

               No  new  reports  on  Form  8-K  were  filed in the quarter ended
September  30,  1998.

<PAGE>
     SIGNATURES



          In  accordance  with the requirements of the Exchange Act of 1934, the
registrant  caused  this  report  to be signed on its behalf by the undersigned,
thereunto  duly  authorized.


Date:  December    ,  1998
     ---------------------


                                   CORECARE  SYSTEMS,  INC.



BY:/s/_____________________________
       ROSE  S.  DIOTTAVIO,  PRESIDENT





<PAGE>

F-1

<TABLE>

<CAPTION>

CORECARE SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET



ASSETS


                                                      9/30/98       12/31/97
                                                    ------------  -------------
<S>                                                 <C>           <C>
Cash and cash equivalents                           $         -   $    304,267 
Accounts receivable, net                            $ 9,636,831   $  4,955,473 
Prepaid and Other Current Assets                    $ 1,674,388   $  1,767,367 
Due from Affiliates                                 $         -   $          0 
                                                    ------------               
   Total current assets                             $11,311,219      7,027,107 
                                                    ------------  -------------


Contract rights, net of amortization                $ 1,288,919   $  1,079,674 
  Less accumulated amortization                     $  (873,808)     ($531,011)
                                                    $   415,111        548,663 
                                                    ------------  -------------

Property & equipment                                $17,272,665   $ 13,269,061 
Less accumulated depreciation                       $(1,976,136)   ($1,027,953)
                                                    $15,296,529     12,241,108 
                                                    ------------  -------------

Cost in excess of net assets of aquired businesses  $ 1,801,155   $  1,801,155 
  Less accumulated amortization                     $  (197,642)  $          0 
                                                    $ 1,603,513      1,801,155 
                                                    ------------  -------------

Deferred finance costs                              $ 2,449,163   $    546,822 
  Less accumulated amortization                     $  (258,772)     ($241,468)
                                                    $ 2,190,392        305,354 
                                                    ------------  -------------

Restricted cash                                     $    13,644   $    197,394 
Deposits                                            $   109,334   $    108,933 
Other                                               $ 3,096,505   $  2,475,500 
Total Other Assets                                  $ 3,219,483      2,781,827 
                                                    ------------  -------------


TOTAL ASSETS                                        $34,036,247   $ 24,705,212 
                                                    ============  =============

</TABLE>

<TABLE>

<CAPTION>

CORECARE SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET

LIABILITIES


                                                9/30/98       12/31/97
                                              ------------  -------------
<S>                                           <C>           <C>
Accounts payable                              $ 3,816,693   $  2,275,442 
Payrolls and related taxes                    $ 1,813,004   $          0 
Accrued exp. and other liab.                  $ 1,200,788   $  3,779,780 
Notes Payable: including current portion LTD  $19,225,589   $ 11,857,428 
Capital leases,current portion                $    48,810   $     38,565 
Loans Payable - Officers                      $   913,172   $  1,013,428 
Total current liabilities                     $27,018,056     18,964,643 
                                              ------------  -------------

Long-term debt, net current portion           $ 2,206,460   $  2,286,265 
                                                2,206,460      2,286,265 
                                              ------------  -------------

TOTAL LIABILITIES                              29,224,516     21,250,908 
                                              ------------  -------------

SHAREHOLDERS EQUITY:
Preferred Stock                               $        36   $         36 
Common Stock                                  $    13,846   $     12,694 
Add'l PIC                                     $11,276,426   $ 10,650,975 
Accumulated deficit                           $(6,478,577)   ($7,209,400)

TOTAL SHAREHOLDERS EQUITY                       4,811,731      3,454,305 
                                              ------------  -------------

TOTAL  LIABILITY & SHAREHOLDERS EQUITY        $34,036,247   $ 24,705,212 
                                              ============  =============
</TABLE>












F-2

<TABLE>

<CAPTION>

CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997



                                    1998        1997
<S>                              <C>         <C>
Revenue:                         15,986,008   8,892,226 

Direct Costs:                     7,209,165   4,762,235 
                                 ----------  -----------

Gross Profit                      8,776,843   4,129,991 
                                 ----------  -----------

Operating Expenses:
Salaries and employee benefits    2,942,453     834,830 
Selling and administrative        2,183,344   3,264,273 
Depreciation                        315,388     259,879 
Amortization                        448,168     497,604 
Bad debt expense                    332,943     400,338 
Total operating expenses          6,222,296   5,256,924 
                                 ----------  -----------

Income(loss) from operations      2,554,547  (1,126,933)
                                 ----------  -----------

Other expenses:
Interest expense                  1,243,500   1,408,688 
Taxes                                 8,919           0 
Factor fees                          84,107     173,908 
Total other expenses/(income)     1,336,526   1,582,596 
                                 ----------  -----------

Net income(loss) before Taxes     1,218,021  (2,709,529)
Income Taxes                        487,208           0 
-------------------------------  ----------  -----------
Net income(loss)                    730,813  (2,709,529)

Earnings Per Share
  Basic                               0.051      (0.210)
  Diluted                             0.032      (0.210)
                                 ==========  ===========
</TABLE>



F-3

<TABLE>

<CAPTION>

CORECARE SYSTEMS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
QUARTER ENDED SEPTEMBER 30,



                                   1998        1997
<S>                              <C>        <C>
Revenue:                         5,658,260  4,587,140 

Direct Costs:                    2,334,015  2,385,598 
                                 ---------  ----------

Gross Profit                     3,324,245  2,201,542 
                                 ---------  ----------

Operating Expenses:
Salaries and employee benefits   1,203,835    149,853 
Selling and administrative         771,715  1,226,109 
Depreciation                       120,515     87,194 
Amortization                        85,619    146,344 
Bad debt expense                   185,147    193,722 
Total operating expenses         2,366,831  1,803,222 
                                 ---------  ----------

Income(loss) from operations       957,414    398,320 
                                 ---------  ----------

Other expenses:
Interest expense                   490,107    404,849 
Taxes                                8,919          0 
Factor fees                         29,139     61,454 
Total other expenses/(income)      528,165    466,303 
                                 ---------  ----------

Net income(loss) before taxes      429,249    (67,983)
Income Tax Provision               171,700          0 
-------------------------------  ---------  ----------
Net Income                         257,549    (67,983)

Earnings Per Share
  Basic                              0.016     (0.005)
  Diluted                            0.011     (0.005)
                                 =========  ==========
</TABLE>


F-4

<TABLE>

<CAPTION>

 CORECARE SYSTEMS, INC.
 STATEMENT OF CASH FLOWS
 FOR THE NINE MONTHS  ENDING SEPTEMBER 30, 1998 AND 1997



                                                            1998         1997

<S>                                                      <C>          <C>
 CASH FLOW FROM OPERATING ACTIVITIES
 Net Income (loss)                                          730,823   (2,709,529)
 Common stock issued for services and interest expense                   518,075 
 Deferred income taxes                                                   259,879 
 Depreciation                                               315,388      497,604 
 Amortization*                                              250,523      457,649 
Accounts receivable, net                                 (4,681,358)  (3,498,473)
Prepaid and Other Current Assets                             92,979     (186,384)
Accounts payable                                          1,541,251    1,827,712 
Accrued exp. and other liab.                               (765,988)   1,492,581 
                                                         -----------  -----------
                                                         (2,516,382)  (1,340,886)

 CASH FROM INVESTING ACTIVITIES:
Purchase of property & equipment                         (3,063,591)  (6,866,629)
Deferred finance costs                                   (1,902,341)     (69,157)
Contract Rights                                            (209,245)           - 
Other Assets                                               (437,656)           - 
                                                         -----------  -----------
                                                         (5,612,833)  (6,935,786)

 CASH FROM FINANCING ACTIVITIES:
Long-term debt, net current portion                      13,713,069    7,458,541 
Repayment  of notes payable                              (6,424,713)           - 
Capital leases,current portion                               10,245            - 
Loans Payable - Officers                                   (100,256)           - 
 Shareholder's Equity                                       626,603      800,188 
                                                         -----------  -----------
                                                          7,824,948    8,258,729 

 Change in cash                                            (304,267)     (17,943)

 Beginning cash                                             304,267       44,249 
                                                         -----------  -----------

 Ending cash                                                      - 

 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
     INTEREST PAID                                        1,264,337      469,920 
                                                         -----------  -----------
          TAXES PAID                                              -            - 
                                                                      -----------

 NON CASH INVESTING ACTIVITIES:
 Common stock issued for services and interest expense      769,005      518,075 
                                                         -----------  -----------
</TABLE>





Notes to Financial Statements

1.     Basis of presentation:
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions for Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the nine months ended September 30, 1998 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1998. The unaudited financial statements should be read in
conjunction with the financial statements and footnote thereto included in the
Company's report on Form 10-SB for the year ended December 31, 1997.

2.     The Business:
Corecare Systems, Inc. through its nine operating subsidiaries, provides
management services to behavioral health service providers; provides, owns, and
operates outpatient and inpatient behavioral health services; provides clinical
trial services to the pharmaceutical industry; and develops billing software for
the health industry.

3.     Summary of significant accounting policies:

Principles of consolidation:
The September 30, 1998 and December 31, 1997 financial statements of the Company
include accounts of Corecare Systems, Inc. and its wholly owned subsidiaries.


<PAGE>


                                                                               
                                   EXHIBIT 27

<TABLE>

<CAPTION>

     THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
     EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS OF
     SEPTEMBER 30, 1998 AND THE CONSOLIDATED STATEMENT OF
     OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
     AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
     FINANCIAL STATEMENTS.




               ITEM DESCRIPTION                                             AMOUNT
<C>            <S>                                                       <C>
      5-02(1)      Cash and Cash Items                                             0 
      5-02(2)      Marketable Securities                                           0 
5-02(3)(a)(1)      Notes and Accounts Receivable - trade                 $10,740,607 
      5-02(4)      Allowances for Doubtful Accounts                      $(1,373,814)
      5-02(6)      Inventory                                             $ 4,390,328 
      5-02(9)      Total Current Assets                                  $14,027,159 
     5-02(13)      Property, Plant & Equipment                           $23,802,653 
     5-02(14)      Accumulated Depreciation                              $(3,306,358)
     5-02(18)      Total Assets                                          $34,523,455 
     5-02(21)      Total Current Liabilities                             $27,018,056 
     5-02(22)      Bonds, Mortgages and similar debt                     $ 2,206,460 
     5-02(28)      Preferred Stock - Mandatory Redemption                $        10 
     5-02(29)      Preferred Stock - No Mandatory Redemption             $        26 
     5-02(30)      Common Stock                                          $    13,846 
     5-02(31)      Other Stockholders' Equity                            $ 5,285,057 
     5-02(32)      Total Liabilities & Stockholders' Equity              $34,523,455 
  5-03(b)1(a)      Net Sales of Tangible Products                                  0 
    5-03(b)1       Total Revenues                                        $15,986,008 
  5-03(b)2(a)      Cost of Tangible Goods Sold                                     0 
    5-03(b)2       Total Costs and Expenses Applicable
                   to Sales and Revenues                                 $ 6,222,296 
    5-03(b)3       Other Costs and Expenses                              $ 1,336,526 
    5-03(b)5       Provision for Doubtful Accounts and Notes             $   332,943 
   5-03(b)(8)      Interest and Amortization of Debt Discount                      0 
  5-03(b)(10)      Income Before Taxes and Other Items                   $ 1,218,021 
  5-03(b)(11)      Income Tax Expense                                    $   487,208 
  5-03(b)(14)      Income/Loss from Continuing Operations                $   730,813 
  5-03(b)(15)      Discontinued Operations                               $  (321,983)
  5-03(b)(17)      Extraordinary Items                                             0 
  5-03(b)(18)      Cumulative Effect - Changes in Accounting Principles            0 
  5-03(b)(19)      Net Income or Loss                                      1,052,796 
  5-03(b)(20)      Earnings Per Share - Primary                                0.048 
  5-03(b)(20)      Earnings Per Share - Fully Diluted                          0.043 







</TABLE>