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 JUNE 30, 1998
                               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 July 31, 1998 there were outstanding 37,699,692 shares of
             common stock, par value $.01 per share.
                                
                COASTAL  PHYSICIAN  GROUP,  INC.
                              INDEX
                                
                                
                                                             Page
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
          Consolidated Balance Sheets at December
           31, 1997 and June 30, 1998 (Unaudited)                1
        Unaudited Consolidated Statements of
           Operations                                            2
        Unaudited Consolidated Condensed
           Statements of Cash Flows                              4
        Notes to Consolidated Financial Statements
           (Unaudited)                                           6
Item 2.  Management's Discussion and Analysis of
           Financial Condition and Results of Operations         9

PART II - OTHER INFORMATION

Item 2.  Change in Securities                                    15

Item 5.  Other Information                                       15

Item 6.    Exhibits and Reports on Form 8-K                      16

SIGNATURES                                                       17

                 COASTAL PHYSICIAN GROUP, INC.
                  Consolidated Balance Sheets
             (In thousands, except per share data)
                                          June 30,     December
                                            1998         31,
                                                         1997
                 Assets                   (unaudite   
                                             d)
Current assets:                                       
 Cash and cash equivalents                     7,295        8,921
 Marketable securities                         2,508        5,735
  Trade accounts receivable, net             20,826       23,612
  Reserves held by NCFE                       7,148        6,396
 Accounts receivable, other                    6,084       12,684
  Receivables from related party               3,585        9,405
  Prepaid expenses and other current           8,628        7,923
assets
      Total current assets                    56,074       74,676
Property and equipment, at cost, less                            
    accumulated depreciation                  9,315       10,342
Excess of cost over fair value of net                            
      assets acquired, net                    2,359        2,450
Other assets                                  10,539        8,628
      Total assets                            78,287       96,096
                                                                
  Liabilities and Shareholders' Equity                          
               (Deficit)
Current liabilities:                                             
 Current maturities and other short-term                         
      borrowings                             13,202        2,529
 Accounts payable                             23,093       31,364
  Income taxes payable                         1,235        1,359
 Accrued physicians fees and medical          21,791       31,431
costs
 Accrued expenses                             11,404       16,142
     Total current liabilities               70,725       82,825
Long-term debt, excluding current             74,696       74,698
maturities
      Total liabilities                      145,421      157,523
Deferred credit on business transferred                          
net of
  note receivable                              2,794          ---
Shareholders' deficit:                                           
  Preferred stock $.01 par value; shares                         
      authorized 10,000; issued and                             
 outstanding                                      4          ---
      445 and 0 respectively
 Common stock $.01 par value; shares                             
authorized                                                      
      100,000; shares issued and                377          375
 outstanding
      37,700 and 37,493, respectively
 Additional paid-in capital                  162,582      160,374
Common stock warrants                         1,582        1,582
 Retained earnings (accumulated deficit)   (234,620)    (223,912)
    Accumulated comprehensive income             147          154
      Total shareholders' deficit           (69,928)     (61,427)
     Total liabilities and shareholders'                         
      deficit                                78,287       96,096
  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
                                                June 30,
                                           1998          1997
                                                      
Operating revenue, net                        78,692       111,496
                                                                  
Costs and expenses:                                               
                                                                  
 Physician and other provider services        60,991        88,277
 Medical support services                     14,386        10,813
 Selling, general and administrative           6,783        28,421
      Total costs and expenses                82,160       127,511
                                                                  
Operating loss                               (3,468)      (16,015)
                                                                  
Other income (expense):                                           
 Interest expense                            (2,814)       (5,911)
 Interest income                                 180           136
 Other, net                                     (13)           163
      Total other expense                    (2,647)       (5,612)
                                                                  
Loss from continuing operations before                            
income taxes                                (6,115)      (21,627)
                                                                  
Benefit for income taxes                         ---           ---
                                                                  
Net loss from continuing operations          (6,115)      (21,627)
                                                                  
Loss from discontinued operations                ---           ---
                                                                  
Net loss                                     (6,115)      (21,627)
                                                                  
Basic and diluted loss per share              (0.16)        (0.89)
                                                                  
Weighted average number of shares                                 
 outstanding                                 37,665        24,385

  See accompanying notes to consolidated financial statements.

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

                                            Six months ended
                                                June 30,
                                           1998          1997
                                                      
Operating revenue, net                       166,569       236,210
                                                                  
Costs and expenses:                                               
                                                                  
 Physician and other provider services       133,635       182,921
 Medical support services                     16,372        24,154
 Selling, general and administrative          22,689        53,450
      Total costs and expenses               172,696       260,525
                                                                  
Operating loss                               (6,127)      (24,315)
                                                                  
Other income (expense):                                           
 Interest expense                            (4,954)       (9,754)
 Interest income                                 236           462
 Other, net                                      137           414
      Total other expense                    (4,581)       (8,878)
                                                                  
Loss before income taxes                    (10,708)      (33,193)
                                                                  
Benefit for income taxes                         ---           ---
                                                                  
Net loss from continuing operations         (10,708)      (33,193)
                                                                  
Loss from discontinued operations                ---           ---
                                                                  
Net loss                                    (10,708)      (33,193)
                                                                  
Basic and diluted loss per share              (0.28)        (1.37)
                                                                  
Weighted average number of shares                                 
 outstanding                                 37,605        24,258

  See accompanying notes to consolidated financial statements.



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

                                           Three months ended
                                                June 30,
                                           1998          1997
                                                                  
Net cash (used in)provided by                                     
operating activities                        (2,569)        15,392
                                                                  
Cash flows from investing activities:                             
Sales of marketable securities and                                 
investments, net                                 77       (2,154)
Purchases of property and equipment, net         (779)            78
                                                                 
 Disposition of subsidiaries, net of                              
    cash disposed                               ---           502
Net cash (used in)investing                                       
activities                                    (702)       (1,574)
                                                                  
Cash flows from financing activities:                             
 Repayments of long-term debt                (2,839)      (90,799)
 Borrowings on long-term debt                 10,385        62,510
  Proceeds from issuances of preferred         2,065        10,000
stock
 Proceeds from issuances of common                89           248
stock
          Net cash provided by (used                              
in)                                           9,700      (18,041)
          financing activities
                                                                  
                  Net increase (decrease)in                                
cash and cash equivalents                     6,429       (4,223)
                                                                  
Cash and cash equivalents at beginning                            
    of period                                   866        21,136
Cash and cash equivalents at end of                               
    period                                    7,295        16,913
                                                                  
                                                                  
Supplemental disclosures of cash flow                             
      information:
      Cash payments (refunds) during                              
    the period for:
             Interest                          2,422         2,581
             Income taxes                        124         (602)
                                                                  
                                                                  

  See accompanying notes to consolidated financial statements.



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

                                            Six months ended
                                                June 30,
                                           1998          1997
                                                                  
Net cash (used in)provided by                                     
operating activities                        (8,036)        13,793
                                                                  
Cash flows from investing activities:                             
Sales of marketable securities and                                 
investments, net                                322           234
Purchases of property and equipment, net         (932)          (37)
                                                                 
 Disposition of subsidiaries, net of                              
    cash disposed                           (5,865)         1,402
          Net cash (used in) provided                             
by                                          (6,475)         1,599
          investing activities
                                                                  
Cash flows from financing activities:                             
 Repayments of long-term debt                (3,453)      (91,321)
 Borrowings on long-term debt                 14,124        72,325
  Proceeds from issuances of preferred         2,065        10,000
stock
 Proceeds from issuances of common               149           278
stock
          Net cash provided by (used                              
in)                                          12,885       (8,718)
          financing activities
                                                                  
                  Net (decrease)increase in                                
cash and cash equivalents                   (1,626)         6,674
                                                                  
Cash and cash equivalents at beginning                            
    of period                                 8,921        10,239
Cash and cash equivalents at end of                               
    period                                    7,295        16,913
                                                                  
                                                                  
Supplemental disclosures of cash flow                             
      information:
      Cash payments (refunds) during                              
    the period for:
             Interest                          4,562         4,631
             Income taxes                        124       (4,581)
                                                                  
                                                                  

  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,  1997.  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, 1998.


(2) Health Plan Southeast, Inc.

Management has determined to focus its efforts on the physician
staffing  and management services businesses. To this  end,  on
June 5, 1998 the Company retained an investment banking firm to
advise the Company regarding strategic alternatives related  to
HealthPlan Southeast, Inc.("HPSE"), an HMO located in  Florida.
This   may   include  the  recapitalization,   disposition   or
restructuring of the operations of HPSE. The success of any  of
these  alternatives  cannot  be  assured.  HPSE's  results   of
operation for the quarter and six months ended are as follows:

Amounts in         Three months     Six months
thousands             ended            ended
                  June 30, 1998    June 30, 1998
                                         
Net revenues           $  28,252       $  55,580
Operating losses         (1,904)         (2,571)
                                                

(3) Comprehensive Income

The  Company  has  adopted  Statement of  Financial  Accounting
Standards  No. 130, "Reporting Comprehensive Income." Statement
130  establishes  new rules for the reporting  and  display  of
comprehensive income and its components. The adoption  of  this
Statement  requires  that unrealized gains  or  losses  on  the
Company's  available-for-sale securities be included  in  other
comprehensive  income,  which in prior  periods  were  reported
separately  in  shareholders'  equity.  Prior  year   financial
statements   have   been  reclassified  to   conform   to   the
requirements of Statement 130.

The components of comprehensive income, net of related tax, for
the  quarter and six month periods ended June 30, 1998 and 1997
are as follows:

In thousands of       Three months ended      Six months ended
dollars                     June 30               June 30
                        1998       1997       1998        1997
Net loss               $(6,115)  $(21,627)   $(10,708)  $(33,193)
Unrealized gains                                                 
(losses)on securities       (5)       (74)         (7)       (74)
Comprehensive Income   $(6,120)   (21,701)   $(10,715)   (33,267)
                                                                 

The  components  of accumulated comprehensive  income,  net  of
related  tax,  at June 30, 1998 and December 31,  1997  are  as
follows:

In thousands of dollars     June     December
                           30,1998   31, 1997
Unrealized gains                              
(losses)on securities       $  (7)          18
Accumulated comprehensive                     
income                      $  147       $ 154
                                              

(4)  Capital

On June 30, 1998 the Company issued 444,974 shares of Series  D
convertible Preferred Stock to Steven M. Scott M.D.,  Coastal's
Chief Executive Officer, a director and the largest shareholder
of the Company. The stock was issued to Dr. Scott in connection
with  the  conversion  of  a $2,000,000  convertible  debenture
bearing  interest  at 10% per annum. The Series  D  Convertible
Preferred  Stock is convertible into 10 shares of common  stock
only   upon   approval  of  the  conversion  by  the  Company's
shareholders.

(5) Sale of Doctors Health Plan, Inc.

In  March 1998, the Company received regulatory approval of the
sale  of  Doctor's  Health  Plan, Inc.,  a  health  maintenance
organization licensed in North Carolina ("DHP") to DHP Holdings
LLC., an entity that is controlled by Dr. Scott. Under terms of
the  sale, the Company received cash of $993,000 and a note  in
the  amount  of  $5,000,000, bearing interest at  the  rate  of
twelve  percent  12%  per annum until paid.  In  addition,  the
purchaser  assumed all liabilities of DHP as  of  December  31,
1997, in excess of the amount agreed upon between the buyer and
the  Company.  The  Company  has not  treated  the  sale  as  a
completed transaction for accounting purposes. As a result, the
difference  between  the proceeds and the  Company's  basis  is
shown on the Consolidated Balance Sheet as of June 30, 1998  as
a  deferred credit. The deferred credit has been reduced by the
$5,000,000  note received from the buyer. When the  transaction
is completed for accounting purposes, which management believes
will  be  in the third quarter of 1998, the Company anticipates
that shareholders' equity will be increased by $7,794,000.

On  June 7, 1998 the Company's disinterested directors approved
a  modification to the note received from DHP Holdings, LLC, in
connection with the sale of Doctors Health Plan, Inc. Under the
terms  of  the  Restated and Amended Promissory Note,  interest
accrues  at the rate of 12% per annum and is payable  quarterly
on  the 7th day of September, December, March and June of  each
year  until  the note is paid in full. Principal  payments  are
required  to  be made on June 7, 1999 and June 7, 2000  in  the
amount of $1,000,000 on each date. A final principal payment of
$3,000,000 is payable on June 7, 2001. The note is secured by a
pledge  of  all  of the outstanding stock of American  Alliance
Holding Company, a company controlled by Dr. Scott.

Net  revenues and operating losses for DHP for the  six  months
and  three months ended June 30, 1998 and 1997, included in the
Consolidated Statement of Operations were:

Amounts in         Three months      Six months
Thousands         ended June 30     ended June 30
                   1998    1997     1998     1997
Net revenues           -    6,527   10,008    12,018
Operating losses       -  (1,204)    (153)   (2,063)
                                           



                 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.

RESULTS OF OPERATIONS

Second  Quarter  Ended  June 30, 1998 Compared  to  the  Second
Quarter Ended June 30, 1997.

Net operating revenue ("operating revenue") decreased 29.4% for
the second quarter of 1998 to $78,692,000 from $111,496,000  in
the  second quarter of 1997.  The decrease in operating revenue
due  to dispositions completed since the first quarter of  1997
for   which  prior  periods'  results  were  not  restated  was
approximately  $27,506,000 or 24.7% of the 1997 second  quarter
revenues. The dispositions included the sale of certain  assets
of  Better  Health Plan, Inc. in August 1997, Coastal Physician
Services  of  the West, Inc. and Coastal Physician Services  of
South  Florida, Inc. in November 1997, and the sale of  certain
clinics in May 1997 and November 1997; the sale of the stock of
Integrated  Provider Networks, Inc., Practice  Solutions,  Inc.
and Sunlife OB/GYN Services of Broward County, Inc. in November
1997, and the sale of the stock of Doctors Health Plan, Inc. in
March 1998.  Operating revenue not related to disposed entities
decreased approximately $5,298,000 or 4.8% from the 1997 second
quarter  revenues.  The net favorable impact  of  a  growth  in
revenue from those contracts that have been in operation  since
January 1, 1997 within the emergency room services group and  a
growth  in the number of enrollees in the HealthPlan Southeast,
Inc.  ("HPSE")  was more than offset by contract  terminations,
net  of  new contracts added. This decline in operating revenue
is   likely  to  continue  during  1998  as  a  result  of  the
dispositions listed above.

Operating expenses decreased 35.6% to $82,160,000 in the second
quarter  of  1998  from $127,511,000 in the second  quarter  of
1997.   The  decrease in operating expenses due to dispositions
completed, as detailed above, for which prior periods'  results
were not restated was approximately $29,394,000 or 23.1% of the
1997 second quarter operating expenses. Operating expenses  not
related    to   disposed   entities   decreased   approximately
$15,957,000  or  12.5%.   This  decrease  was  partly  due   to
decreases in the number of contracts within the emergency  room
services  group.  In  addition, the  reductions  in  personnel,
telecommunication,  and information technology  costs,  reduced
legal  and professional fees, as well as the closure of certain
offices, contributed to the reduction in operating costs. These
reductions  were partly offset by increased expenses associated
with  the  growth in the number of enrollees in  HPSE  and  the
inclusion  in  selling,  general and  administrative  costs  of
certain program fees of approximately $700,000 associated  with
the  sale  of accounts receivable to National Century Financial
Enterprises, Inc.

The   changes  in  operating  revenue  and  operating  expenses
resulted  in  an  operating loss of $3,468,000 for  the  second
quarter  of  1998, compared to an operating loss of $16,015,000
for the second quarter of 1997. Approximately $1,900,000 of the
operating  loss in the second quarter of 1998 was  attributable
to the operations of HPSE.

The  Company  experienced an improvement in  operating  margins
during  the  second quarter of 1998, including the  results  of
HPSE and charges for program fees discussed above, compared  to
the  second quarter of 1997.  The operating margin as discussed
above,  for the three months ended June 30, 1998 was   negative
4.4%  versus a negative 14.4% for the same period in the  prior
year.

Interest  expense decreased $3,097,000, or 52.4%, to $2,814,000
for  the  three months ended June 30, 1998 from $5,911,000  for
the three months ended June 30,1997. The decrease was primarily
due  to  a  change  in the Company's debt structure  and  lower
interest  rates  charged in the current  quarter.  The  Company
reflected  in the second quarter a correction of $1,125,000  in
program fees previously expensed in error.

There was no provision for income taxes recorded for the second
quarter of 1998 or 1997.  The Company expects to record no  tax
expense  or benefit, other than as a result of potential  asset
dispositions, until the Company utilizes federal and state  net
operating loss carryforwards ("NOL"). As of June 30,  1998  the
Company had approximately $170,000,000 and $210,000,000 in NOLs
for  federal and state income tax purposes, respectively. These
amounts are exclusive of current years interim results.

Overall, the Company incurred a net loss of $6,115,000  in  the
second quarter of 1998 as compared to a net loss of $21,627,000
in the second quarter of 1997 for the reasons discussed above.

Weighted  average  shares  outstanding  increased  54.5%   from
24,385,000  shares in the second quarter of 1997 to  37,665,000
shares in the second quarter of 1998, primarily as a result  of
shares issued to Dr. Scott during 1997.

Six Months Ended June 30, 1998 Compared to the Six Months Ended
June 30, 1997.

Net operating revenue ("operating revenue") decreased 29.5% for
the  six  months  ended  June  30, 1998  to  $166,569,000  from
$236,210,000  for  the  six months ended  June  30,  1997.  The
decrease  in  operating  revenue due to dispositions  completed
since  the first quarter 1996 for which prior periods'  results
were  not restated was approximately $58,253,000 or 24.7%.  The
dispositions  included  the sale of certain  assets  of  Better
Health Plan, Inc. in August 1997, Coastal Physician Services of
the West, Inc. and Coastal Physician Services of South Florida,
Inc.  in November 1997, and the sale of certain clinics in  May
1997  and  November 1997; the sale of the stock  of  Integrated
Provider  Networks, Inc., Practice Solutions, Inc. and  Sunlife
OB/GYN  Services of Broward County, Inc. in November 1997,  and
the  sale  of the stock of Doctors Health Plan, Inc.  in  March
1998.   Operating  revenue  not related  to  disposed  entities
decreased  approximately $11,388,000 or 4.8%. The net favorable
impact  of  a growth in revenue from those contracts that  have
been  in  operation since January 1, 1997 within the  emergency
room services group and a growth in the number of enrollees  in
the HealthPlan Southeast, Inc. ("HPSE") was more than offset by
contract terminations, net of new contracts added. This decline
in  operating revenue is likely to continue during  1998  as  a
result  of  the  dispositions listed  above.  This  decline  in
operating revenue is likely to continue during 1998 as a result
of the dispositions listed above.

Operating expenses decreased 33.7% to $172,696,000 for the  six
months ended June 30, 1998 from $260,525,000 for the six months
ended June 30, 1997. The decrease in operating expenses due  to
dispositions  completed, as detailed  above,  for  which  prior
periods'   results   were   not  restated   was   approximately
$68,767,000 or 26.4% of the 1997 level.  Operating expenses not
related    to   disposed   entities   decreased   approximately
$19,062,000 or 7.3% of the 1997 level.  This change was  partly
due  to  decreases  in  the  number  of  contracts  within  the
emergency  room  services  group. In  addition,  reductions  in
personnel, telecommunication, and information technology  costs
and reduced legal and professional fees, as well as the closure
of  certain offices, contributed to the reduction in  operating
costs.  These  reductions were partially  offset  by  increased
expenses  associated with the growth in the number of enrollees
in the Company's health plans in North Carolina and Florida. In
addition,   the   Company  has  included  in  operating   costs
approximately  $2,552,000 of program fees associated  with  the
sale of accounts receivable.

The   changes  in  operating  revenue  and  operating  expenses
described above resulted in an operating loss of $6,127,000 for
the  six  months ended June 30, 1998, compared to an  operating
loss of $24,315,000 for the six months ended June 30, 1997.

The  Company  experienced  a slight  improvement  in  operating
margins  during the six months ended June 30, 1998 compared  to
the  six  months  ended  June 30, 1997.  The  operating  margin
(excluding  the program fees as discussed above)  for  the  six
months ended June 30, 1998 was  negative 3.7% versus a negative
10.3% for the same period in the prior year.

Interest  expense decreased $4,800,000, or 49.2%, to $4,954,000
for  the six months ended June 30, 1998 from $9,754,000 for the
six  months ended June 30,1997. The decrease was primarily  due
to  a change in the Company's debt structure and lower interest
rates  charged in 1998. In addition, the Company  reflected  in
the  second quarter a correction of $1,125,000 in program  fees
previously expensed in error.

There  was no benefit for income taxes for the six months ended
June  30, 1998 or 1997.  The Company expects to record  no  tax
expense  or benefit, other than as a result of potential  asset
dispositions, until the Company utilizes federal and state  net
operating loss carryforwards ("NOL"). As of June 30,  1998  the
Company has approximately $170,000,000 and $210,000,000 in NOLs
for federal and state income tax purposes, respectively.

Overall,  for the reasons discussed above, the Company incurred
a  net  loss of $10,708,000 for the six months ended  June  30,
1998  as  compared  to a net loss of $33,193,000  for  the  six
months ended June 30, 1997.

Weighted  average  shares  outstanding  increased  55.0%   from
24,258,000  shares for the six months ended June  30,  1997  to
37,605,000  shares  for the six months  ended  June  30,  1998,
primarily  as  a  result of shares issued to Dr.  Scott  during
1997.





LIQUIDITY AND CAPITAL RESOURCES

Net  cash used in operating activities for the six months ended
June  30,  1998 was $8,036,000 as compared to net cash provided
by operating activities of $13,793,000 for the six months ended
June  30,  1997.  The net cash provided by operating activities
for  the six months ended June 30, 1997 resulted primarily from
the  sale  of  accounts receivable to various  subsidiaries  of
National  Century Financial Enterprises, Inc.  ("NCFE")  during
the  month of June, as explained below, partially offset by the
net loss for the period.

The  Company's  strategic business plan  provides  for  ongoing
reviews of its non-core businesses, improving the profitability
of  its core businesses, reducing contract attrition rates  and
cutting  overhead costs.  The Company has taken  the  following
actions to implement this plan.

As  a  result of the reviews of its business units, the Company
retained  an  investment banking firm  to  advise  the  Company
regarding strategic alternatives available to it regarding  the
Company's HealthPlan Southeast, Inc. subsidiary. (See Note 2 in
Notes to consolidated financial statements).

Coastal Physician Services, Inc. ("CPS") continues to implement
its Practice Partners Program which is designed to better match
payments to independent contractor physicians with the  revenue
they generate.

Healthcare  Business  Resources,  Inc.  ("HBR")  continues   to
introduce  the  "T-Chart" system to its clients. The  "T-Chart"
system  affords  the physician a better method  of  documenting
treatment, while helping HBR streamline the process  of  coding
and  billing. Management believes that the use of  the  T-Chart
system will assist the Company in reducing processing costs.

Although  these  actions are expected, over  time,  to  have  a
positive  effect on the Company's financial performance,  there
can  be  no assurance that these actions, or others the Company
may  decide  to implement, will be successful or 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 the amounts
available under its various agreements with NCFE, the  sale  of
certain non-core assets, as well as a reduction in cash used in
operations.

The  Company  has been advised by the New York  Stock  Exchange
("NYSE")  that  it  is not in compliance with  certain  of  the
NYSE's  continued listing criteria. Management of  the  Company
has  had  discussions with, and furnished current and projected
financial   information  to,  representatives   of   the   NYSE
concerning  this matter. The NYSE has advised the Company  that
it  will  review  on a quarterly basis the Company's  financial
performance in relation to the information provided,  and  that
continued  listing  in  the future may  be  dependent  on  such
financial performance.

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 2. - Changes in Securities

The  Series  D  Convertible Preferred Stock was issued  to  Dr.
Scott  in  reliance  on  the private placement  exemption  from
registration in Section 4(3) of the Securities Act of 1933.

Item 5 Other Information

A. Change in Directors

On  July  10, 1998, Mitchell Berger resigned from the Board  of
Directors due to the demands upon his time in his law firm  and
time devoted to other interest.

On  August  12, 1998, the Company announced the appointment  of
Mark  J. Pastin to the Board of Directors to fill the unexpired
term of Mr. Berger, whose term will expire in 1999.

B. Litigation Settlement

On  July  31,  1998, Judge Frank Bullock of the  United  States
District  Court  for  the Middle District  of  North  Carolina,
entered  an Order and Opinion dismissing entirely the  case  of
Mead  Ann Krim v. Coastal Physician Group, Inc. et al, in which
the  plaintiff asserted claims on her own behalf and on  behalf
of  other  members  of a class of purchasers of  the  Company's
stock for alleged violations of the Securities Exchange Act and
state law claims for negligent misrepresentation.



















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

(a)  Exhibits

3.1   Amended  and  Restated  Certificate  of  Incorporation  -
      Incorporated by reference to the June 30, 1995 Form  10-Q
      filed August 11, 1995 (File No. 001-13460)

3.2   Bylaws as amended - Incorporated by reference to the Form
      8-K Report for the event dated January 20, 1995, filed on
      January 27, 1995 (File No. 001-13460)

4.1   Certificate  of  Designation fixing the Relative  Rights,
      Preferences  and  Limitations  of  Series  D  Convertible
      Preferred Stock



27     Financial Data Schedule

(b)  Reports on Form 8-K

       None

                               
                               
                               
                               
                               
                               
                               
                               
                               
                               
                               
                               
                               
                               
                               
                               
                               
                               
                               
                               
                               
                               
                               
                               
                               
                               
                               
                               
                               
                          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: August 13, 1998          By: /S/STEVEN M. SCOTT, M.D.
                                 Steven M. Scott, M.D.
                                   President and Chief
                                    Executive Officer


Date: August 13, 1998          By: /S/CHARLES F. KUONI, III
                                 Charles F. Kuoni, III
                                   Executive Vice President
                                    and Chief Financial
                                    Officer
                                                    Exhibit 4.1
                               
      CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
            OF SERIES D CONVERTIBLE PREFERRED STOCK
                              OF
                 COASTAL PHYSICIAN GROUP, INC.

      COASTAL  PHYSICIAN  GROUP, INC., a corporation  organized
under  and  existing under the General Corporation Law  of  the
State of Delaware (the "Company"),

     DOES HEREBY CERTIFY:

      That,  pursuant to authority conferred upon the Board  of
Directors   by   the  Amended  and  Restated   Certificate   of
Incorporation of the Company, and pursuant to the provisions of
Section  151  of the General Corporation Law of  the  State  of
Delaware, the Board of Directors, acting at a meeting  held  on
June   29,  1998,  adopted  a  resolution  providing  for   the
designations, preferences and relative, participating, optional
or   other  rights,  and  the  qualifications,  limitations  or
restrictions  thereof,  of the Series D  Convertible  Preferred
Stock, which resolution is as follows:

      RESOLVED, that pursuant to the authority granted  to  and
vested  in  the Board of Directors of the Company in accordance
with the provisions of the Amended and Restated Certificate  of
Incorporation, the Board of Directors hereby creates  a  series
of  convertible preferred stock, with a par value of $0.01  per
share,  of  the  Company and hereby states the designation  and
number  of  shares, and fixes the relative rights,  preferences
and  limitation thereof (in addition to the provisions  in  the
Amended  and  Restated  Certificate of Incorporation  that  are
applicable to the preferred stock of all series) as follows:

             Series D Convertible Preferred Stock

     Section 1.     Designation and Amount.  The shares of such
series  shall  be designated as Series D Convertible  Preferred
Stock,  with  a  par value of $0.01 per share  (the  "Series  D
Convertible  Preferred  Stock"),  and  the  number  of   shares
constituting  such  series shall be  one  million  two  hundred
thousand (1,200,000).

     Section 2.     Dividends.  The holders of shares of Series
D  Convertible  Preferred Stock shall be  entitled  to  receive
dividends,  when, as and if declared by the Board of  Directors
or  a  duly authorized committee thereof, out of funds  legally
available  for  the  payment  of  dividends.   The  amount   of
dividends  payable  in  respect  of  each  share  of  Series  D
Convertible  Preferred  Stock shall  be  equal  to  the  result
obtained  by  multiplying (a) the number of  shares  (including
fractions) of the Company's Common Stock, $0.01 par  value  per
share  (the "Common Stock"), into which such share of Series  D
Convertible  Preferred Stock is then convertible in  accordance
with  Section  4  hereof (whether or not the Trigger  Date  (as
defined  in  Section 4K hereof) has yet occurred)  by  (b)  the
amount  of  dividends declared and paid on each  share  of  the
Common  Stock.   No dividend shall be paid or declared  on  any
share  of the Common Stock, unless a dividend, payable  in  the
same  consideration  and  manner,  is  simultaneously  paid  or
declared,  as  the  case  may be, on each  share  of  Series  D
Convertible  Preferred  Stock in an amount  determined  as  set
forth  above nor shall any dividend be paid or declared on  any
share  of  Series  D  Convertible  Preferred  Stock  unless   a
dividend,  payable  in the same consideration  and  manner,  is
simultaneously paid or declared, as the case may  be,  on  each
share  of the Common Stock, in each case without preference  or
priority of any kind.  For purposes of this Section 2, the term
"dividends"  shall  include any pro rata  distribution  by  the
Company  of  cash,  property, securities  (including,  but  not
limited  to, rights, warrants or options) or other property  or
assets to the holders of the Common Stock, whether or not  paid
out of capital, surplus or earnings.

       Section   3.      Liquidation  Preferences.   Upon   any
liquidation,  dissolution or winding  up  of  the  Company,  no
distribution  shall be made to the holders of shares  of  stock
ranking  junior  to  the Series D Convertible  Preferred  Stock
unless,  prior  thereto, the holders  of  shares  of  Series  D
Convertible Preferred Stock shall have received an  amount  per
share  equal to ten times the lesser of (i) the average closing
price for shares of Common Stock on the New York Stock Exchange
for  the ten (10) trading days ending March 2, 1998 or (ii) the
average  closing price for shares of Common Stock  on  the  New
York  Stock Exchange for the ten (10) trading days ending  June
30,  1998.   Following the payment of the full amount  of  such
liquidation  preference, no additional distributions  shall  be
made to the holders of shares of Series D Convertible Preferred
Stock.  If, upon any liquidation, dissolution or winding up  of
the  Company,  the assets of the Company, or proceeds  thereof,
distributable  among  the  holders  of  shares  of   Series   D
Convertible Preferred Stock or any capital stock ranking  on  a
par   with  the  Series  D  Convertible  Preferred  Stock  upon
liquidation, dissolution or winding up of the Company, shall be
insufficient to pay in full the preferential amounts  to  which
such stock would be entitled, then such assets, or the proceeds
thereof,  shall be distributable among such holders ratably  in
accordance  with the respective amounts which would be  payable
on  such shares if all amounts payable thereon were payable  in
full.

     Section 4.     Conversion Rights, Antidilution Provisions.

       A.     Following  the  Trigger  Date  (as   defined   in
subparagraph  K  of this Section 4), shares  of  the  Series  D
Convertible Preferred Stock shall be convertible, in  whole  or
in  part,  at  the option of either the holder or the  Company,
into Common Stock, at any time or from time to time, subject to
the  following terms and conditions.  The Series D  Convertible
Preferred  Stock shall not be convertible into  any  shares  of
Common Stock unless and until the Trigger Date has occurred.

      B.   Following the Trigger Date, the shares of the Series
D  Convertible  Preferred Stock shall  be  convertible  at  the
principal  executive offices of the Company, and at such  other
office  or  offices,  if  any, as the Board  of  Directors  may
designate, into fully paid and nonassessable shares  of  Common
Stock of the Company, at an initial conversion rate of ten (10)
shares  of  Common Stock for each share of Series D Convertible
Preferred  Stock,  subject to adjustment as described  in  this
Section 4.

       C.    In  order  to  convert  shares  of  the  Series  D
Convertible  Preferred  Stock into  Common  Stock,  the  holder
thereof shall surrender, after the Trigger Date, at any  office
herein   above   mentioned  the  certificate  or   certificates
therefor, duly endorsed or assigned to the Company or in blank,
and give written notice to the Company at such office that such
holder  elects to convert such shares.  Shares of the Series  D
Convertible  Preferred  Stock shall  be  deemed  to  have  been
converted immediately prior to the close of business on the day
of  the  surrender of such shares for conversion in  accordance
with  the  foregoing  provisions, and  the  person  or  persons
entitled  to  receive  the  Common  Stock  issuable  upon  such
conversion  shall  be treated for all purposes  as  the  record
holder  or  holders  of such Common Stock  at  such  time.   As
promptly  as practicable on or after the conversion  date,  the
Company  shall  issue  and  shall  deliver  at  such  office  a
certificate  or certificates for the number of full  shares  of
Common  Stock  issuable  upon such  conversion,  together  with
payment  in  lieu  of any fraction of a share,  as  hereinafter
provided,  to  the person or persons entitled  to  receive  the
same.

      D.    At any time after the Trigger Date the Company,  by
written  notice  to  any  or  all  holders  of  the  Series   D
Convertible Preferred Stock, may require such holder or holders
to  convert,  in  whole  or in part, the Series  D  Convertible
Preferred  Stock into Common Stock.  Within thirty  days  after
the  receipt  of  such written notice, the  holder  or  holders
thereof  shall  cause  that  number  of  shares  of  Series   D
Convertible Preferred Stock as specified in such written notice
to  be converted into Common Stock in the manner described  in,
and  subject  to  the  provisions of, subparagraph  C  of  this
Section 4.

     E.   If at any time the Company shall subdivide or combine
its  outstanding shares of Common Stock into a different number
of  shares  of Common Stock, each share of Series D Convertible
Preferred Stock shall thereafter be convertible into  the  same
number  of shares of Common Stock to which the holder  of  such
shares of Series D Convertible Preferred Stock would thereafter
have  been  entitled  had such shares of Series  D  Convertible
Preferred  Stock  been converted into Common Stock  immediately
prior to the effective date of such subdivision or combination.

      F.    If  there occurs any capital reorganization or  any
reclassification  of  the  capital  stock  of  the  Company  or
consolidation  or merger of the Company with  or  into  another
corporation  or  entity,  each share of  Series  D  Convertible
Preferred Stock shall thereafter be convertible into,  in  lieu
of  Common  Stock, the same kind and amounts of  securities  or
other assets, or both, which were issuable or distributable  to
the  holders  of  shares of outstanding  Common  Stock  of  the
Company    upon    such    reorganization,    reclassification,
consolidation or merger in respect of that number of shares  of
Common  Stock  into  which such share of Series  D  Convertible
Preferred  Stock would have been converted had  such  share  of
Series D Convertible Preferred Stock been converted into Common
Stock     immediately    prior    to    such    reorganization,
reclassification, consolidation or merger.

      G.   Upon any event described in subparagraphs E and F of
this  Section 4, the Company shall promptly mail to each holder
of  Series  D Convertible Preferred Stock a notice which  shall
describe  such event and the change in the number of shares  or
other  assets  or  securities issuable upon the  conversion  of
Series   D  Convertible  Preferred  Stock,  setting  forth   in
reasonable detail the method of calculation and the facts  upon
which such calculation is based.

      H.    The  Company  shall at all times reserve  and  keep
available,  free from pre-emptive rights, out of its authorized
but  unissued  Common Stock, for the purpose of  effecting  the
conversion  of  the Series D Convertible Preferred  Stock,  the
full  number of shares of Common Stock then issuable  upon  the
conversion  of  all  shares of Series D  Convertible  Preferred
Stock  then  outstanding and shall take  all  such  action  and
obtain all such permits or orders as may be necessary to enable
the  Company  lawfully  to issue such Common  Stock  upon  such
conversion.

      I.   No fractional shares of Common Stock shall be issued
upon  conversion, but, instead of any fraction of a share which
would  otherwise  be issuable, the Company  shall  pay  a  cash
adjustment in respect of such fraction.

      J.    The  Company will pay any and all taxes  (excluding
federal,  state and local income taxes) that may be payable  in
respect of the issue or delivery of shares of Common Stock upon
conversion of the Series D Convertible Preferred Stock pursuant
hereto.  The Company shall not, however, be required to pay any
tax which may be payable in respect of any transfer involved in
the  issue  and delivery of shares of Common Stock  in  a  name
other  than  that in which the shares of Series  D  Convertible
Preferred Stock so converted were registered, and no such issue
or delivery shall be made unless and until the person requiring
such  issue has paid to the Company the amount of any such tax,
or has established to the satisfaction of the Company that such
tax has been paid.

      K.    As  used herein, the term "Trigger Date" means  the
date  of the certification of the vote of stockholders  of  the
Company  held  at any annual or special meeting of stockholders
of  the  Company at which a quorum is present and at which  the
issuance  of  Common  Stock upon conversion  of  the  Series  D
Convertible  Preferred Stock is approved by the  holders  of  a
majority  of the shares of Common Stock voted at such  meeting,
provided  that  the total vote cast on the proposal  represents
over 50% in interest of all securities entitled to vote on  the
proposal.

      Section  5.      No Redemption.  The Series D Convertible
Preferred Stock shall not be redeemable.

     Section 6.     Voting Rights.  The holders of the Series D
Convertible Preferred Stock shall be entitled to that number of
votes  per share of Series D Convertible Preferred Stock  equal
to  the number of shares of Common Stock into which such  share
of  Series D Convertible Preferred Stock is then convertible in
accordance  with Section 4 hereof (whether or not  the  Trigger
Date  has yet occurred) at all meetings of stockholders of  the
Company;  provided  that  shares of the  Series  D  Convertible
Preferred  Stock shall not be entitled to vote on the  approval
of the issuance of Common Stock upon conversion of the Series D
Convertible  Preferred Stock referred to in subparagraph  K  of
Section 4.

     Section 7.     Exchange.  Certificates representing shares
of  the  Series D Convertible Preferred Stock and, if converted
in  accordance  with  the  terms and conditions  hereof,  after
conversion thereof into Common Stock, certificates representing
such  shares,  shall  be exchangeable, at  the  option  of  the
holder,  for a new certificate or certificates of the  same  or
different denominations representing in the aggregate the  same
number  of  shares of Series D Convertible Preferred  Stock  or
shares of Common Stock, as the case may be.

     Section 8.     Shares to be Retired.  All shares of Series
D  Convertible Preferred Stock which are converted into  Common
Stock  shall  revert to the status of authorized  but  unissued
shares  of  preferred  stock  of  the  Company  but  shall  not
thereafter  be  reissued  as shares  of  Series  D  Convertible
Preferred Stock.

     IN WITNESS WHEREOF, the Company has caused this
Certificate to be duly executed on its behalf by its
undersigned President and Chief Executive Officer and attested
to by its Secretary this 29th day of June, 1998.
_______________________________________
                               Name:  Steven M. Scott, M.D.
                               Title:  President and Chief
Executive Officer
[Corporate Seal]

ATTEST:
__________________________________
                                  Name:  Eugene F. Dauchert,Jr.
                                  Title:  Secretary