UNITED STATES
             SECURITIES AND EXCHANGE COMMISSION
                    WASHINGTON, DC  20549

                          Form 10-Q

  {X}    Quarterly Report Pursuant to Section 13 or 15(d) of
             the Securities Exchange Act of 1934
                              
      For the quarterly period ended SEPTEMBER 30, 1997
                              
                             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 001-13460


                  COASTAL PHYSICIAN GROUP, INC.
   (Exact name of registrant as specified in its charter)
                              
 DELAWARE                                         56-1379244
 (State or other jurisdiction of               (IRS Employer
incorporation or organization)           Identification No.)
                              
 2828 CROASDAILE DRIVE, DURHAM, NC                    27705
Address of principal executive offices)           (Zip Code)
                              
                       (919) 383-0355
     (Registrant's telephone number including area code)
                              
                            NONE
   (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.
                              
                   {X} Yes          { } No
                              
  As of October 31, 1997 there were outstanding 36,119,073
      shares of common stock, par value $.01 per share.
              COASTAL  PHYSICIAN  GROUP,  INC.
                            INDEX
                              
                              
                              
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
          Consolidated Balance Sheets at December
           31, 1996 and September 30, 1997 (Unaudited)
        Unaudited Consolidated Statements of
           Operations
        Unaudited Consolidated Condensed
           Statements of Cash Flows
        Notes to Consolidated Financial Statements
           (Unaudited)
Item 2.  Management's Discussion and Analysis of
           Financial Condition and Results of Operations

PART II - OTHER INFORMATION
Item 4.  Matters Voted Upon by Shareholders
Item 6.  Exhibits and Reports on Form 8-K

SIGNATURES

                 COASTAL PHYSICIAN GROUP, INC.
                  Consolidated Balance Sheets
             (In thousands, except per share data)

                                          September     December
                                             30,           31,
                                             1997         1996
                 Assets                   (unaudited   
                                              )
Current assets:                                        
 Cash and cash equivalents                      5,717        10,239
 Marketable securities                          7,723         7,020
 Trade accounts receivable, net                33,916        87,410
 Accounts receivable, other                    14,302        11,187
 Refundable income taxes                          ---         2,498
 Prepaid expenses and other current            11,783        10,923
assets
  Total current assets                         73,441       129,277
Property and equipment, at cost, less                              
    accumulated depreciation                  12,236        19,041
Excess of cost over fair value of net                              
  assets acquired, net                         8,408        19,305
Other assets                                   11,716        14,218
  Total assets                                105,801       181,841
                                                                  
  Liabilities and Shareholders' Equity                            
               (Deficit)
Current liabilities:                                               
 Current maturities and other short-term                           
  borrowings                                   2,481        71,130
 Accounts payable                              31,049        46,307
  Deferred revenue                             53,379           ---
  Income taxes payable                          2,716         2,211
 Accrued physicians fees and medical           24,253        33,709
costs
 Accrued expenses                              18,141        20,182
     Total current liabilities               132,019       173,539
Long-term debt, excluding current               3,215         4,799
maturities
  Total liabilities                           135,234       178,338
Shareholders' equity (deficit):                                    
  Preferred stock $.01 par value; shares                           
      authorized 10,000; issued and
 outstanding
      1,164 and 0, respectively
      Series A convertible preferred stock                         
      shares authorized 48; shares                                
 issued                                            1           ---
      and outstanding 46 and 0,
 respectively
      Series B convertible preferred stock                         
      shares authorized 33; shares                                
 issued                                          ---           ---
      and outstanding 33 and 0,
 respectively
      Series C convertible preferred stock                         
      shares authorized 1,200; shares                             
 issued                                           11           ---
      and outstanding 1,085 and 0,
 respectively
 Common stock $.01 par value; shares                               
authorized                                                        
  100,000; shares issued and                     244           241
 outstanding
      24,433 and 24,126, respectively
 Additional paid-in capital                   158,095       144,070
Common stock warrants                          2,828           987
 Retained earnings (accumulated deficit)    (190,693)     (141,931)
 Unrealized appreciation of available-                             
     for-sale securities                          81           136
  Total shareholders' equity (deficit)       (29,433)         3,503
     Total liabilities and shareholders'                           
      equity (deficit)                       105,801       181,841

  See accompanying notes to consolidated financial statements.


                 COASTAL PHYSICIAN GROUP, INC.
        Unaudited Consolidated Statements of Operations
             (In thousands, except per share data)

                                           Three months ended
                                              September 30,
                                           1997          1996
                                                      
Operating revenue, net                        99,595       137,805
                                                                  
Costs and expenses:                                               
                                                                  
 Physician and other provider services        84,903       109,557
 Medical support services                      8,894        22,615
 Selling, general and administrative          18,694        52,958
  Total costs and expenses                   112,491       185,130
                                                                  
Operating loss                              (12,896)      (47,325)
                                                                  
Other income (expense):                                           
 Interest expense                              (119)       (4,133)
 Program costs                               (3,416)           ---
 Interest income                                  83           173
 Other, net                                    (621)        13,993
  Total other expense                        (4,073)        10,033
                                                                  
Loss before income taxes                    (16,969)      (37,292)
                                                                 
                                                                  
Provision (benefit) for income taxes         (1,400)         1,163
                                                                  
Net loss                                    (15,569)      (38,455)
                                                                  
Net loss per share                             (.64)        (1.61)
                                                                  
Weighted average number of shares                                 
 outstanding                                 24,415        23,862

  See accompanying notes to consolidated financial statements.

                 COASTAL PHYSICIAN GROUP, INC.
        Unaudited Consolidated Statements of Operations
             (In thousands, except per share data)

                                            Nine months ended
                                              September 30,
                                           1997          1996
                                                      
Operating revenue, net                       335,805       436,577
                                                                  
Costs and expenses:                                               
                                                                  
 Physician and other provider services       267,824       337,249
 Medical support services                     33,048        69,886
 Selling, general and administrative          72,144       108,346
  Total costs and expenses                   373,016       515,481
                                                                  
Operating loss                              (37,211)      (78,904)
                                                                  
Other income (expense):                                           
 Interest expense                            (9,159)       (9,088)
 Program costs                               (4,130)           ---
 Interest income                                 545           376
 Other, net                                    (207)        13,735
  Total other income(expense)               (12,951)         5,023
                                                                  
Loss before income taxes                    (50,162)      (73,881)
                                                                  
Provision (benefit) for income taxes         (1,400)         1,163
                                                                  
Net loss                                    (48,762)      (75,044)
                                                                  
Net loss per share                            (2.01)        (3.15)
                                                                  
Weighted average number of shares             24,311        23,832
 outstanding

  See accompanying notes to consolidated financial statements.




                 COASTAL PHYSICIAN GROUP, INC.
   Unaudited Consolidated Condensed Statements of Cash Flows
                         (In thousands)

                                            Nine months ended
                                              September 30,
                                           1997          1996
                                                                  
Net cash provided by (used in)                                    
operating activities                        (2,862)      (25,295)
                                                                  
Cash flows from investing activities:                             
Sales of marketable securities and                                 
investments, net                              (816)         4,795
Sales (purchases) of property and                                   
equipment, net                                  456         4,147
 Disposition of subsidiaries, net of                              
    cash disposed                             4,890        17,593
          Net cash provided by                                    
          investing activities                4,530        26,535
                                                                  
Cash flows from financing activities:                       
 Repayments of long-term debt               (92,086)      (41,673)
 Borrowings on long-term debt                 22,206        45,819
Deferred revenue                             53,379           ---
Cash payments for debt issue costs              ---       (3,048)
  Proceeds from issuances of preferred        10,000           ---
stock
 Proceeds from issuances of common               311           720
stock
          Net cash provided by(used                               
in)                                         (6,190)         1,818
          financing activities
                                                                  
                  Net increase (decreases)in                               
cash and cash equivalents                   (4,522)         3,058
                                                                  
Cash and cash equivalents at beginning                            
    of period                                10,239         8,147
Cash and cash equivalents at end of                               
    period                                    5,717        11,205
                                                                  
                                                                  
Supplemental disclosures of cash flow                             
  information:
      Cash payments (refunds) during                              
      the period for:
             Interest                          9,174         7,131
             Income taxes                    (4,401)      (14,665)
                                                                  
                                                                  

  See accompanying notes to consolidated financial statements.


                COASTAL PHYSICIAN GROUP, INC.
         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (UNAUDITED)

(1)  Basis Of Presentation

The   accompanying  consolidated  financial  statements   of
Coastal  Physician  Group, Inc. and  its  subsidiaries  (the
"Company" or "Coastal") are unaudited and, in the opinion of
management, include all adjustments which are necessary  for
a  fair  presentation.  The unaudited consolidated financial
statements should be read in conjunction with the  Company's
audited  consolidated  financial statements  and  the  notes
thereto included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1996.  Operating results for
the interim periods presented are not necessarily indicative
of  the  results  that may be expected for the  fiscal  year
ending December 31, 1997.

(2)  Capital

On  August  29, 1997 the shareholders voted to  approve  the
issuance  of Common Stock of the Company upon the conversion
of  the Series A Convertible Preferred Stock, par value $.01
per  share,  the  conversion of  the  Series  B  Convertible
Preferred Stock, par value $.01 per share and the conversion
of  the Series C Convertible Preferred Stock, par value $.01
per  share.  On  October  23, 1997,  Dr.  Steven  M.  Scott,
Coastal's  Chief Executive Officer, a director, and  largest
shareholder,  converted the 46,033 shares of  the  Company's
Series A Convertible Preferred Stock into 460,330 shares  of
the  Company's  Common  Stock,  the  32,739  shares  of  the
Company's Series B Convertible Preferred Stock into  327,390
shares  of  the  Company's Common Stock  and  the  1,084,983
shares of the Company's Series C Convertible Preferred Stock
into 10,849,830 shares of the Company's Common Stock.




                              
                              
                COASTAL PHYSICIAN GROUP, INC.
         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (UNAUDITED)
                              
(3) Debt Refinancing

On  June 6, 1997, the Company entered into a series of  sale
and subservicing agreements ("Sale Agreements") with various
subsidiaries of National Century Financial Enterprises, Inc.
("NCFE").  The existing accounts receivables and  rights  to
future receivables sold were purchased at their current book
value,  and  therefore no gain or loss was recorded  on  the
sale.  A  gain or loss may be recognized in future  periods,
depending upon cash collections. The cash received  for  the
rights to future receivables is recorded as deferred revenue
in the accompanying consolidated balance sheets.

(4)  Sale of Better Health Plan, Inc.

On  August  19,  1997, the Company sold  certain  assets  of
Better  Health  Plan, Inc., to the New York  State  Catholic
Health  Plan, Inc. for approximately $7,750,000 in cash  and
short-term notes.  Due to the $4,200,000 goodwill impairment
adjustment recorded in the second quarter of 1997, the  loss
on  this  transaction was minimal. This loss in included  in
Other income and expense.

(5)   Tax provision and benefit

In September 1997, the Company analyzed the need to maintain
an   accrual  for  certain  federal  income  tax  items  and
determined that given the continuing operating loss, and the
Net  Operating  Loss carryforward available that  $1,400,000
of  the prior provision should be reversed. The Company  has
shown the effect of this as a benefit for income taxes.

(6)  Subsequent Events

The  Company and certain of its current and former  officers
and  directors  are  defendants in a  purported  shareholder
class  action  alleging  common law  fraud  and  deceit  and
negligent  misrepresentation.  The  suit  seeks  unspecified
compensatory and punitive damages and costs.  On August  21,
1997, Order was entered denying plaintiff's request to  have
the action declared a class action, and plaintiff has stated
                COASTAL PHYSICIAN GROUP, INC.
         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (UNAUDITED)
                              

his intention to appeal that Order.  The Company intends  to
vigorously  defend its position, and at this  stage  of  the
litigation exposure to the Company cannot be determined.

On  October 30, 1997, a person believed to be a relative  of
the  plaintiff  in  the  preceding case  filed  a  purported
shareholder class action against the Company and certain  of
its  current  and  former  officers and  directors  alleging
violations  of   10(b) and 20(s) of the Securities  Exchange
Act  of 1934 and Rule 10b-5 and negligent misrepresentations
concerning  the  Company's operations  and  prospects.   The
Company  intends to vigorously defend its position,  and  at
this  stage of the litigation exposure to the Company cannot
be determined.

In  November 1997, the Company received similar letters from
Medicare Part B carriers requesting specific information  on
the  Company's  compliance with the  Health  Care  Financing
Administration ("HCFA") requirement regarding  the  Medicare
reassignment.  Since  February 1997, the  Company  has  been
working  with HCFA's Central office and Region 4  office  to
reach an agreement on the issues raised by the Medicare Part
B carriers. While the Company believes that it can favorably
resolve  the issues raised by the Medicare Part  B  carriers
there  can  be  no assurance that Medicare payments  to  the
Company will not be delayed as a result of these inquiries.

In   November   1997,  the  Company's  subsidiary,   Coastal
Physician Services, Inc., ("CPS") was notified that auditors
from  the  Regional Office of the Inspector General  ("OIG")
Health  and Human Services would be conducting a  review  of
CPS's  business,  including a sampling and Medicare  carrier
review of medical coding and billing done on behalf of  CPS.
While  the Company does not currently know the precise scope
and  nature of the OIG's review, CPS has from time  to  time
been  subject  to  Medicare Carrier Part B  audits  and  the
Company  believes that the OIG's current review is generally
in  the  nature  of  and  similar to past  Medicare  Carrier
audits.

                COASTAL PHYSICIAN GROUP, INC.
         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (UNAUDITED)
                              

(5)  Reclassifications

Certain  reclassifications have been made to  the  unaudited
consolidated  statements of operations for the three  months
ended September 30, 1996 and the nine months ended September
30,  l996  to conform to the 1997 presentation for the  same
periods.   Such reclassifications had no impact on  the  net
loss for the periods presented.
                COASTAL PHYSICIAN GROUP, INC.
           Management's Discussion And Analysis Of
        Financial Condition And Results Of Operations


INTRODUCTION

The  following  discussion provides  an  assessment  of  the
Company's  results  of  operations,  liquidity  and  capital
resources, and trends and uncertainties and should  be  read
in conjunction with the consolidated financial statements of
the  Company  and notes thereto included elsewhere  in  this
document, and the Company's Annual Report on Form  10-K  for
the year ended December 31, 1996.

RESULTS OF OPERATIONS

Third Quarter Ended September 30, 1997 Compared to the Third
Quarter Ended September 30, 1996.

Net  operating  revenue ("operating revenue")  decreased  by
$38,210,000  for  the third quarter of 1997  to  $99,595,000
from  $137,805,000  in  the  third  quarter  of  1996.   The
decrease  in operating revenue due to dispositions completed
since  the  first  quarter of 1996 for  which  prior  period
results were not restated was approximately $21,335,000,  or
55.8%,  of  the total decline.  This decrease was  primarily
due  to  the  sale of certain assets of Physicians  Planning
Group,  Inc.  ("PPG")  and the common  stock  of  Healthcare
Automation, Inc. ("HCA") effective September 30,  1996,  the
sale  of  MedCost, Inc. ("MedCost") effective  November  22,
1996,  the  sale of the HealthNet Medical Group division  of
Physicians  Planning  Group,  Inc.  ("HealthNet")  effective
November  30,  1996 as well as the sale  of  the  assets  of
Better   Health   Plan  ("BHP").   Net  operating   revenue,
excluding  operating revenue associated  with  dispositions,
decreased  approximately $16,875,000,  or  14.5%,  from  the
prior  period  level.  Contract  attrition  and   less   new
business  development throughout 1996  and  the  first  nine
months  of  1997  in  the Company's hospital-based  contract
management  division were significant factors  that  reduced
operating  revenue in the third quarter of 1997 as  compared
to  the  third  quarter  of  1996  when  disposition-related
revenues  are  excluded.  This decline in operating  revenue
was   partially   offset  by  increased  operating   revenue
associated  with  the growth in the number of  enrollees  in
each  of  the  Company's health plans in North Carolina  and
Florida.

Operating  expenses decreased by $72,639,000 for  the  third
quarter  of  1997 to $112,491,000 from $185,130,000  in  the
third  quarter of 1996.  The decrease in operating  expenses
due  to  dispositions completed since the first  quarter  of
1996  for  which prior period results were not restated  was
approximately  $31,387,000 or 43.2% of  the  total  decline.
This  decrease  was  primarily due to the  sale  of  certain
assets   mentioned  above.   Operating  expenses,  excluding
expenses    associated    with    dispositions,    decreased
approximately  $41,252,000 or 26.8% from  the  prior  period
level.   This  change  was a function of  decreases  due  to
contract attrition throughout 1996 and the first nine months
of  1997 (as discussed above) and expense reduction programs
implemented in 1997, partially offset by increased  expenses
associated  with  the growth in the number of  enrollees  in
each  of  the  Company's health plans in North Carolina  and
Florida.

The  changes  in  operating revenue and  operating  expenses
described above resulted in an operating loss of $12,896,000
for the third quarter of 1997, compared to an operating loss
of  $47,325,000 for the third quarter of 1996. After  giving
effect   to  disposed  operations,  operating  losses   were
$12,896,000  for  the  third quarter  of  1997  compared  to
$37,270,000 for the third quarter of 1996.

The  Company experienced an improvement in operating margins
during  the  third  quarter of 1997 compared  to  the  third
quarter of 1996.  The operating margin for the three  months
ended  September  30,  1997 was   negative  12.9%  versus  a
negative  34.3% for the same period in the prior year.  This
improvement is primarily attributable to the termination  of
low  or negative margin contracts at the Company's hospital-
based  contract  management division,  as  well  as  expense
reductions programs implemented in 1997.

Other income and expense was a net expense of $4,073,000 for
the  third quarter of 1997 versus income of $10,033,000  for
the third quarter of 1996.  This is attributable to gains on
assets  sold  in the third quarter of 1996. Excluding  these
gains, other expenses decreased primarily due to declines in
interest expenses offset by an increase in Program Costs  as
a  result  of changes in methods of financing, as  discussed
below.

There  was a benefit for income taxes recorded in the  third
quarter  of 1997 in the amount of $1,400,000 compared  to  a
provision  of  $1,163,000 recorded for the  same  period  in
1996.   The  benefit  is the result of a  reduction  in  the
accrued federal income taxes as discussed in Note (5) to the
financial  statements.  The Company  expects  to  record  no
additional tax expense or benefit, other than as a result of
future  asset dispositions, until such time as  the  Company
returns to profitability.

Overall,  the Company incurred a net loss of $15,569,000  in
the  third  quarter of 1997 as compared to  a  net  loss  of
$38,455,000  in  the third quarter of 1996 for  the  reasons
discussed above.

Weighted  average  shares outstanding  increased  2.3%  from
23,862,000 shares in the third quarter of 1996 to 24,415,000
shares  in the third quarter of 1997, primarily as a  result
of  shares  issued  to  Dr. Scott  in  satisfaction  of  the
Company's  obligation to reimburse him  for  certain  rental
obligations  and  proxy solicitation expenses,  as  well  as
shares  issued  in  connection with the  Company's  employee
stock purchase plan.


Nine  Months Ended September 30, 1997 Compared to  the  Nine
Months Ended September 30, 1996.

Operating revenue decreased $100,772,000 for the nine months
ended  September 30, 1997 to $335,805,000 from  $436,577,000
for  the  nine months ended September 30, 1996. The decrease
in  operating revenue due to dispositions completed in  1996
for  which  prior  period  results  were  not  restated  was
approximately  $46,209,000, or 45.9%, of the total  decline.
This  decrease  was  primarily due to the  sale  of  certain
assets  of  PPG  and  the  common  stock  of  HCA  effective
September  30, 1996, the sale of MedCost effective  November
22,  1996, the sale of HealthNet effective November 30, 1996
as  well  as  the sale of the assets of  Better Health  Plan
("BHP")  effective  August  19,  1997.   Operating  revenue,
excluding  operating revenue associated  with  dispositions,
decreased  approximately $54,563,000,  or  14.0%,  from  the
prior  period  level.   Contract  attrition  and   less  new
business  development throughout 1996  and  the  first  nine
months  of  1997  in  the Company's hospital-based  contract
management  division were significant factors  that  reduced
operating  revenue  in  the first nine  months  of  1997  as
compared  to the first nine months of 1996 when disposition-
related  revenues are excluded.  These declines in operating
revenue were partially offset by increased operating revenue
associated  with  the growth in the number of  enrollees  in
each  of  the  Company's health plans in North Carolina  and
Florida. This net decline in operating revenue is likely  to
continue  during  the balance of 1997 due to  the  Company's
strategy to divest certain non-core assets.

Operating  expenses decreased by $142,465,000 for  the  nine
months  ended  September  30, 1997  from  $373,016,000  from
$515,481,000 for the nine months ended September  30,  1996.
The  decrease  in  operating  revenue  due  to  dispositions
completed  since the first quarter of 1996 for  which  prior
period   results   were  not  restated   was   approximately
$50,541,000 or 35.5% of the total decline. This decrease was
primarily due to the sale of certain assets mentioned above.
Operating  expenses,  excluding  expenses  associated   with
dispositions, decreased approximately $91,924,000, or 19.8%,
from the prior period level.  This change was a function  of
decreases  due to contract attrition and lower new  business
development throughout 1996 and the first half of  1997  (as
discussed  above) and expense reduction programs implemented
in  1997,  partially offset by increased expenses associated
with  the growth in the number of enrollees in each  of  the
Company's health plans in North Carolina and Florida.

The  Company experienced an improvement in operating margins
during the nine months ended September 1997, compared to the
same  period  of 1996.  The operating margin  for  the  nine
months ended September 30, 1997 was  negative 11.0% versus a
negative  18.0% for the same period in the prior year.  This
improvement is primarily attributable to the termination  of
low  or negative margin contracts at the Company's hospital-
based  contract  management division,  as  well  as  expense
reduction programs implemented in 1997.


Other  income  and expense was a net expense of  $12,951,000
for  the  nine months ended September 30, 1997 versus  other
income of $5,023,000 for the nine months ended September 30,
1996.  This is attributable to gains on assets sold in 1996.
Excluding  these  gains, other expenses increased  primarily
due  to increased interest expenses as a result of financing
costs   incurred  in  1997,  prior  to  repayment   of   the
outstanding bank credit facilities.

There  was  a  benefit for income taxes for the nine  months
ended  September  30,  1997  in  the  amount  of  $1,400,000
compared to a provision for income taxes of  $1,163,000  for
the  nine  months ended September 30, 1996.  The benefit  is
the  result  of  a reduction in the accrued  federal  income
taxes  as discussed in Note (4) to the financial statements.
The  Company expects to record no additional tax expense  or
benefit,   other   than  as  a  result   of   future   asset
dispositions, until the Company returns to profitability.

The  Company incurred a net loss of $48,762,000 for the nine
months ended September 30, 1997 as compared to a net loss of
$75,044,000 for the nine months ended September 30, 1996.

Weighted  average  shares outstanding  increased  2.0%  from
23,832,000  shares for the nine months ended  September  30,
1996   to  24,311,000  shares  for  the  nine  months  ended
September  30, 1997, primarily as a result of shares  issued
to  Dr. Scott in satisfaction of the Company's obligation to
reimburse  him  for  certain rental  obligations  and  proxy
solicitation   expenses,  as  well  as  shares   issued   in
connection with Company's employee stock purchase plan.


LIQUIDITY AND CAPITAL RESOURCES

Net  cash  used in operating activities for the nine  months
ended  September 30, 1997 was $2,862,000 as compared to  net
cash  used  in operating activities of $25,295,000  for  the
nine months ended September 30, 1996.  Net cash provided for
operating activities for the nine months ended September 30,
1997 was primarily due to the sale of accounts receivable to
various   subsidiaries   of   National   Century   Financial
Enterprises,  Inc.  during  the  period,   explained  below,
offset by the net loss for the period.

On  May 29, 1996, the Company entered into credit agreements
which  restructured  its  existing  credit  facilities   and
provided  the  Company with up to $40 million of  additional
borrowing   availability.  The  facilities  required   total
principal  payments of at least $40 million  by  January  2,
1997,  which  were made by the Company, at  which  time  the
availability of borrowings under the facilities declined  to
$10  million.  The facilities also required an amendment  to
be   finalized  by  January  15,  1997  which   would   have
established financial covenants for the period subsequent to
February 1997.  This amendment did not occur by January  15,
1997  and therefore outstanding amounts, originally  due  on
July  1,  1997,  became  due on  February  28,  1997.   From
February 28, 1997 through June 10, 1997, the Company was  in
default  on  these obligations, but accelerated payment  was
not required by the lenders.  From May 29, 1996 through June
10, 1997, interest on loans under the facilities accrued  at
rates  ranging  from  1.5% to 4.5% over a  designated  prime
rate.

On  June 6, 1997, the Company entered into a series of  sale
and  subservicing  agreements (the "Sale  Agreements")  with
NCFE.   The  Sale Agreements provide for accounts receivable
purchase  commitments totaling $151 million for the purchase
of  the  Company's healthcare receivables from  third  party
payors that meet specified eligibility requirements. Certain
Sale Agreements create facilities for the purchase of up  to
$36  million of receivables and terminate on July  1,  1998.
Another  Sale Agreement creates a facility for the  purchase
of  up to $115 million of receivables and terminates on June
1,  2000.   After taking into account required reserves  and
administrative fees, the maximum amount of funding available
under  the  Sale Agreements at any one time is approximately
$125  million.  Pursuant to the Sale Agreement, the  Company
pays  a  program  fee ranging from approximately  10.94%  to
approximately 12.50% per annum on the outstanding amount  of
uncollected purchased receivables.

Also  on  June  6,  1997, pursuant to a  separate  loan  and
security  agreement, an affiliate of NCFE agreed to  provide
the  Company with a revolving line of credit of  up  to  $15
million.  Interest on outstanding amounts under this line of
credit   is   payable  monthly  at  prime  plus   4%.    The
availability  under  the  line of credit  declines,  at  the
option of the lender, based on the Company's receipt of  net
proceeds in excess of $10 million from the sale of specified
assets,  and the line of credit expires June 15, 1998.   The
line of credit is secured by substantially all of the assets
of  Coastal Physician Group, Inc., including pledges of  the
Common  Stock  of each of its subsidiaries,  including   the
HMO's where permitted by law.

The Sale and Subservicing Agreements, and the line of credit
requires that the Company's shareholder equity not  be  less
than  a  negative  $30,000,000.  The  Company's  shareholder
equity  as of September 30, 1997 was a negative $29,433,000.
The  Company  continues  to  strive  to  become  profitable,
however  additional losses could result in  a  violation  of
this  covenant.  Accordingly, the  Company  is  exploring  a
number  of alternatives that are available to it, including,
but   not   limited  to,  the  sale  of  additional  assets,
additional  equity infusions and seeking a  modification  to
the agreements. There can be no assurances that  the Company
will be successful in these efforts.

On June 10, 1997, the Company used proceeds of approximately
$82  million  from  sales  of its existing  receivables  and
rights  to future receivables to repay outstanding  balances
under  its  previous credit facilities which  terminated  on
that  date.  All collateral held by the lenders under  those
facilities  was released.  After repayment, the Company  had
access  to  approximately $40 million of cash from potential
additional sales of its existing receivables and  rights  to
future receivables and borrowing availability under the line
of  credit.  The Company continues to generate and sell  its
receivables to NCFE for working capital purposes.

On  August  19,  1997, the Company sold  certain  assets  of
Better  Health  Plan, Inc. to the New York  Catholic  Health
Plan,  Inc. for approximately $7,750,000 in cash and  short-
term  notes.   Due  to  the $4,200,000  goodwill  impairment
adjustment recorded in the second quarter of 1997, the  loss
on this transaction was minimal.

On  August  29, 1997 the shareholders voted to  approve  the
issuance  of Common Stock of the Company upon the conversion
of  the Series A Convertible Preferred Stock, par value $.01
per  share,  the  conversion of  the  Series  B  Convertible
Preferred Stock, par value $.01 per share and the conversion
of  the Series C Convertible Preferred Stock, par value $.01
per  share.   On  October  23,  1997  Dr.  Steven  M.  Scott
Coastal's  Chief Executive Officer, a director, and  largest
shareholder,  converted the 46,033 shares of  the  Company's
Series A Convertible Preferred Stock into 460,330 shares  of
the  Company's  Common  Stock,  the  32,739  shares  of  the
Company's Series B Convertible Preferred Stock into  327,390
shares  of  the  Company's Common Stock  and  the  1,084,983
shares of the Company's Series C Convertible Preferred Stock
into 10,849,830 shares of the Company's Common Stock.

The  Company's strategic business plan provides for  ongoing
reviews   of   the   non-core  businesses,   improving   the
profitability  of  its  core businesses,  reducing  contract
attrition  rates and cutting overhead costs. As a result  of
the  reviews  of  its business units, the Company  sold  the
assets of  Better Health Plan, Inc. in August 1997.

CPS  is  implementing  physician  educational  programs   to
increase revenues through better documentation of procedures
performed  in  emergency departments.  Using  its  Corporate
Compliance   Program  as  a  pattern,  Healthcare   Business
Resources, Inc. is educating  CPS' employees and independent
contractor physicians on compliance with Medicare,  Medicaid
and  CHAMPUS laws and regulations to ensure accurate billing
for  CPS'  services.  Also, a "Physician Partnering Program"
is  being  implemented which more closely ties revenue  with
physician  compensation.   These programs  are  expected  to
improve CPS' operating margins.  CPS is devoting significant
management  resources  to  contract  retention  efforts  and
margin improvement on less profitable contracts.  Management
has   also  completed  a  reorganization  of  the  corporate
headquarters  resulting in headcount  reductions  and  lower
consulting fees.

Although  these  actions are expected  to  have  a  positive
effect on the Company's financial performance, there can  be
no  assurances that each of these actions will be successful
and that improved financial results will be achieved without
additional asset sales, revenue and margin improvements  and
cost reductions.

The  Company expects to satisfy its anticipated demands  and
commitments for cash in the next twelve months from  amounts
available  under the various agreements with NCFE  discussed
above and the sale of certain non-core assets, as well as  a
reduction in cash used in operations.


Forward-looking  Information  or  Statements:   Except   for
statements  of historical fact, statements made  herein  are
forward-looking  in  nature and are  inherently  subject  to
uncertainties.  The actual results of the Company may differ
materially  from  those  reflected  in  the  forward-looking
statements  based  on  a number of important  risk  factors,
including,   but  not  limited  to:  receipt  of  sufficient
proceeds  from  divested  assets,  and  the  timing  of  any
divestitures;  the  level  and  timing  of  improvements  in
operating  results  and cash flow; the possibility  of  poor
accounts    receivable   generation,    collection    and/or
reimbursement  experience;  the  possibility  of   increased
medical   expenses   due  to  increased   utilization;   the
possibility  that  the Company may not be  able  to  improve
operations  or execute its divestiture strategy as  planned;
and  other important factors disclosed from time to time  in
the  Company's Form 10-K, Form 10-Q and other Securities and
Exchange Commission filings.



PART II - OTHER INFORMATION


Item 4. - Matters Voted Upon By Shareholders

The  Annual Meeting of Shareholders of the Company was  held
on  August 29, 1997.  At such meeting the following  members
were elected to the Board of Directors.

                                   Number of Shares Voted
                                  For             Withhold

Edward L. Suggs, Jr.              30,372,226      3,264,151
Charles E. Potter                 30,277,328      3,359,049
Deborah L. Redd                   30,288,456      3,347,921

The following director's terms of office continued after the
meeting:

Jacque J. Sokolov, M.D.         John P. Mahoney, M.D.
Steven M. Scott, M.D.           Eugene F. Dauchert, Jr.
Bertram E. Walls, M.D.               Mitchell W. Berger


The  vote  taken on the proposal to approve the issuance  of
Common  Stock upon conversion of Series B Convertible  Stock
was as follows:

      For 13,587,049   Against 3,754,382   Abstain 165,720

The  vote  taken on the proposal to approve the issuance  of
Common Stock upon conversion of Series A Preferred Stock was
as follows:

      For 13,591,899   Against 3,754,332   Abstain 160,920

The  vote  taken on the proposal to approve the issuance  of
Common Stock upon conversion of Series C Preferred Stock was
as follows:

      For 13,587,400   Against 3,751,389   Abstain 168,36l

The vote taken on the proposal to approve the appointment of
KPMG   Peat  Marwick,  LLP,  as  the  Company's  independent
certified  public  accountants for the Corporation  for  the
fiscal year ending December 31, 1997 was as follows:

      For 33,423,559   Against 100,630   Abstain 112,188


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

(a) Exhibits

BHP Asset Purchase  Agreement, incorporated by reference  to
               the Form 8-K filed on September 9, 1997.

(b) Reports on Form 8-K

Form 8-K was filed on September 9, 1997 in connection with
the sale of Better Health Plan, Inc., the Company's wholly-
owned New York-based Prepaid Health Services Plan, to The
New York State Catholic Health Plan, Inc. for $7,750,000 in
cash and short-term notes.

                         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.



                              COASTAL PHYSICIAN GROUP, INC.
                              (Registrant)



Date: November 21, 1997        By: /S/STEVEN M. SCOTT, M.D.
                                 Steven M. Scott, M.D.
                                   President and Chief
                                    Executive Officer





Date: November 21, 1997        By: /S/CHARLES F. KUONI, III
                                 Charles F. Kuoni, III
                                   Executive Vice President
                                    and Chief Financial
                                    Officer