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, 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 July 31, 1997 there were outstanding 24,412,334 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 June 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 6.  Exhibits and Reports on Form 8-K                             11

SIGNATURES

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

                                          June 30,     December
                                            1997         31,
                                                         1996
                 Assets                   (unaudite   
                                             d)
Current assets:                                       
 Cash and cash equivalents                    16,913       10,239
 Marketable securities                         6,651        7,020
 Trade accounts receivable, net               32,580       87,410
 Accounts receivable, other                   15,011       11,187
 Refundable income taxes                         ---        2,498
 Prepaid expenses and other current           10,926       10,923
assets
      Total current assets                    82,081      129,277
Property and equipment, at cost, less                            
    accumulated depreciation                 15,324       19,041
Excess of cost over fair value of net                            
      assets acquired, net                   14,734       19,305
Other assets                                  13,605       14,218
      Total assets                           125,744      181,841
                                                                
  Liabilities and Shareholders' Equity                          
               (Deficit)
Current liabilities:                                             
 Current maturities and other short-term                         
      borrowings                              2,452       71,130
 Accounts payable                             36,436       46,307
  Deferred revenue                            50,224          ---
  Income taxes payable                         4,296        2,211
 Accrued physicians fees and medical          23,755       33,709
costs
 Accrued expenses                             18,592       20,182
     Total current liabilities              135,755      173,539
Long-term debt, excluding current              3,904        4,799
maturities
      Total liabilities                      139,659      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
      24,412 and 24,126, respectively
 Additional paid-in capital                  158,063      144,070
Common stock warrants                         2,828          987
 Retained earnings (accumulated deficit)   (175,124)    (141,931)
 Unrealized appreciation of available-                           
     for-sale securities                         62          136
      Total shareholders' equity            (13,915)        3,503
(deficit)
     Total liabilities and shareholders'                         
      equity (deficit)                      125,744      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
                                                June 30,
                                           1997          1996
                                                      
Operating revenue, net                       111,496       146,038
                                                                  
Costs and expenses:                                               
                                                                  
 Physician and other provider services        88,277       114,127
 Medical support services                     10,813        23,094
 Selling, general and administrative          28,421        30,615
      Total costs and expenses               127,511       167,836
                                                                  
Operating loss                              (16,015)      (21,798)
                                                                  
Other income (expense):                                           
 Interest expense                            (5,911)       (2,724)
 Interest income                                 136            77
 Other, net                                      163         (415)
      Total other expense                    (5,612)       (3,062)
                                                                  
Loss before income taxes                    (21,627)      (24,860)
                                                                  
Benefit for income taxes                         ---           ---
                                                                  
Net loss                                    (21,627)      (24,860)
                                                                  
Net loss per share                            (0.89)        (1.04)
                                                                  
Weighted average number of shares                                 
 outstanding                                 24,385        23,839

  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,
                                           1997          1996
                                                      
Operating revenue, net                       236,210       298,772
                                                                  
Costs and expenses:                                               
                                                                  
 Physician and other provider services       182,921       227,692
 Medical support services                     24,154        47,271
 Selling, general and administrative          53,450        55,388
      Total costs and expenses               260,525       330,351
                                                                  
Operating loss                              (24,315)      (31,579)
                                                                  
Other income (expense):                                           
 Interest expense                            (9,754)       (4,955)
 Interest income                                 462           202
 Other, net                                      414         (258)
      Total other expense                    (8,878)       (5,011)
                                                                  
Loss before income taxes                    (33,193)      (36,590)
                                                                  
Benefit for income taxes                         ---           ---
                                                                  
Net loss                                    (33,193)      (36,590)
                                                                  
Net loss per share                            (1.37)        (1.54)
                                                                  
Weighted average number of shares                                 
 outstanding                                 24,258        23,815

  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,
                                           1997          1996
                                                                  
Net cash provided by (used in)                                    
operating activities                         13,793      (27,417)
                                                                  
Cash flows from investing activities:                             
Sales of marketable securities and                                 
investments, net                                234         5,660
Sales (purchases) of property and                                   
equipment, net                                 (37)         4,208
 Disposition of subsidiaries, net of                              
    cash disposed                             1,402          (82)
          Net cash provided by                                    
          investing activities                1,599         9,786
                                                                  
Cash flows from financing activities:                             
 Repayments of long-term debt               (91,321)       (8,786)
 Borrowings on long-term debt                 22,101        30,704
Deferred revenue                             50,224           ---
Cash payments for debt issue costs              ---       (1,558)
  Proceeds from issuances of preferred        10,000           ---
stock
 Proceeds from issuances of common               278           579
stock
          Net cash provided by                                    
          financing activities              (8,718)        20,939
                                                                  
                  Net increase in cash and cash                            
equivalents                                   6,674         3,308
                                                                  
Cash and cash equivalents at beginning                            
    of period                                10,239         8,147
Cash and cash equivalents at end of                               
    period                                   16,913        11,455
                                                                  
                                                                  
Supplemental disclosures of cash flow                             
      information:
      Cash payments (refunds) during                              
    the period for:
             Interest                          4,631         4,586
             Income taxes                    (4,581)      (12,993)
                                                                  
                                                                  

  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)  Debt Refinancing

On June 6, 1997, the Company entered into a series of sale
and subservicing agreements (the "Sale Agreements") with
various subsidiaries of National Century Financial
Enterprises, Inc. ("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.

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.

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.   The  existing  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.

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


(3)  Capital

On  June 9, 1997, in connection with the refinancing of  the
Company's  bank indebtedness, Dr. Steven M. Scott, Coastal's
Chief   Executive   Officer,   a   director,   and   largest
shareholder, invested $10 million in cash in the Company and
received  1,000,000 shares of Series C Convertible Preferred
Stock.   In  addition, Dr. Scott received 84,983  shares  of
Series  C Convertible Preferred Stock and 240,000 shares  of
Common Stock in satisfaction of certain obligations owed  to
him  by  the  Company of approximately  $1.1  million.   The
Series  C  Convertible Preferred Stock is  convertible  into
10,849,830  shares of Common Stock, subject to  approval  by
the Company's common stockholders.


(4)  Goodwill Impairment

During the second quarter of 1997, the Company recognized an
impairment   loss   (included  in   Selling,   general   and
administrative  expenses in the accompanying  statements  of
operations)  of  $4,200,000 related to  goodwill  associated
with  certain long-lived assets of Better Health Plan,  Inc.
("BHP"), a subsidiary which was subsequently sold on  August
19, 1997.

In   accordance  with  Statement  of  Financial   Accounting
Standards  No. 121, Accounting for the Impairment  of  Long-
Lived  Assets  and for Long-Lived Assets to Be Disposed  Of,
the   carrying   amount   of  the  long-lived   assets   and
identifiable intangibles associated with assets specifically
identified for sale was compared to the estimated fair value
of the assets, less estimated costs to sell.  Fair value was
based  on the estimated amount at which the assets could  be
sold   in   a  current  transaction  based  on  management's
evaluations  and  discussions  with  the  Company's  outside
financial  advisors.   This  reevaluation  resulted  in   an
impairment loss recognized in the second quarter of 1997  of
$4,200,000 for BHP.

The  $4,200,000 impairment loss is in addition to impairment
losses  totaling $13,562,000 recorded in 1996.  The  primary
reason  for the additional impairment loss recorded  in  the
second  quarter  of  1997 is the continued  decline  in  the
estimated amount at which the assets could be sold.
                              
                COASTAL PHYSICIAN GROUP, INC.
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                         (UNAUDITED)
                              
                              
(5)  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.  Due
to the $4,200,000 goodwill impairment adjustment recorded in
the  second quarter of 1997, (see Note 4 above) the gain  or
loss on this transaction is expected to be minimal.

(6)  Reclassifications

Certain  reclassifications have been made to  the  unaudited
consolidated statements of operations for the three months
ended  June 30, 1996 and the six months ended June 30,  1996
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.

RESULTS OF OPERATIONS

Second  Quarter Ended June 30, 1997 Compared to  the  Second
Quarter Ended June 30, 1996.

Net  operating revenue ("operating revenue") decreased 23.7%
for   the  second  quarter  of  1997  to  $111,496,000  from
$146,038,000 in the second quarter of 1996.  The decrease in
operating  revenue due to dispositions completed  since  the
first quarter of 1996 for which prior periods' results  were
not  restated was approximately $13,634,000 or  9.4%.   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  as well as the sale  of  the  HealthNet
Medical  Group division of Physicians Planning  Group,  Inc.
("HealthNet")   effective  November  30,  1996.    Operating
revenue   not   related  to  disposed   entities   decreased
approximately $20,908,000 or 14.3%.  Contract attrition  and
less  new business development throughout 1996 and the first
half  of  1997  in  the  Company's  hospital-based  contract
management  division were significant factors  that  reduced
operating revenue in the second quarter of 1997 as  compared
to  the  second  quarter  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  New  York,  North
Carolina  and Florida. This decline in operating revenue  is
likely  to continue during 1997 given the Company's strategy
to  divest  certain  non-core assets that  the  Company  has
identified.

Operating  expenses decreased 24.0% to $127,511,000  in  the
second  quarter  of  1997 from $167,836,000  in  the  second
quarter of 1996.  The decrease in operating expenses due  to
dispositions completed since the first quarter of  1996  for
which   prior   periods'  results  were  not  restated   was
approximately  $12,125,000  or  7.2%.  This   decrease   was
primarily due to the sale of certain assets mentioned above.
Operating   expenses  not  related  to   disposed   entities
decreased  approximately $28,200,000 or 16.8%.  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), offset  by  increased
expenses  associated  with  the  growth  in  the  number  of
enrollees in each of the Company's health plans in New York,
North Carolina and Florida.

The  changes  in  operating revenue and  operating  expenses
described above resulted in an operating loss of $16,015,000
for  the  second quarter of 1997, compared to  an  operating
loss  of  $21,798,000  for the second quarter  of  1996.  In
addition  to  the factors noted above, contributing  to  the
operating  loss  was the increase in physician  compensation
expense  as  a  percentage of net revenues in the  Company's
hospital-based contract management division.

The  Company  experienced a slight improvement in  operating
margins  during the second quarter of 1997 compared  to  the
second quarter of 1996.  The operating margin for the  three
months  ended  June 30, 1997 was  negative  14.4%  versus  a
negative 14.9% for the same period in the prior year.  These
operating margins are expected to improve to the extent  the
Company   achieves  the  objectives  of  its   comprehensive
strategic and financial plan.

Other  expenses increased $2,550,000 for the second  quarter
of  1997 to $5,612,000 from $3,062,000 in the second quarter
of  1996.  The  increase  is  primarily  due  to  additional
amortization expense related to debt issuance costs.

There  was  no provision for income taxes recorded  for  the
first  quarter  of  1997 or 1996.  The  Company  expects  to
record no tax expense or benefit, other than as a result  of
future  asset  dispositions, until the  Company  returns  to
profitability in the future.

Overall,  the Company incurred a net loss of $21,627,000  in
the  second  quarter of 1997 as compared to a  net  loss  of
$24,860,000  in the second quarter of 1996 for  the  reasons
discussed above.

Weighted  average  shares outstanding  increased  2.3%  from
23,839,000  shares  in  the  second  quarter  of   1996   to
24,385,000  shares in the second 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 Company's employee  stock
purchase plan.


Six  Months  Ended June 30, 1997 Compared to the Six  Months
Ended June 30, 1996.

Operating  revenue decreased 20.9% for the six months  ended
June 30, 1997 to $236,210,000 from $298,772,000 for the  six
months  ended  June  30,  1996. The  decrease  in  operating
revenue  due  to  dispositions completed in 1996  for  which
prior  periods' results were not restated was  approximately
$28,024,000 or 9.4%.  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 as well as the sale of HealthNet effective
November  30,  1996.   Operating  revenue  not  related   to
disposed  entities  decreased approximately  $34,538,000  or
11.5%.    Contract   attrition  and    less   new   business
development throughout 1996 and the first half  of  1997  in
the  Company's  hospital-based contract management  division
were  significant factors that reduced operating revenue  in
the  first  six months of 1997 as compared to the first  six
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 New York,  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 21.1% to $260,525,000  for  the
six months ended June 30, 1997 from $330,351,000 for the six
months  ended  June  30,  1996. The  decrease  in  operating
expenses  due  to  dispositions completed  since  the  first
quarter  of 1996 for which prior periods' results  were  not
restated   was  approximately  $25,370,000  or  7.7%.   This
decrease  was  primarily due to the sale of  certain  assets
mentioned above.  Operating expenses not related to disposed
entities decreased approximately $44,456,000 or 13.4%.  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), partially offset by
increased expenses associated with the growth in the  number
of  enrollees in each of the Company's health plans  in  New
York, North Carolina and Florida.

The  changes  in  operating revenue and  operating  expenses
described above resulted in an operating loss of $24,315,000
for  the  six  months ended June 30, 1997,  compared  to  an
operating loss of $31,579,000 for the six months ended  June
30,   1996.   In  addition  to  the  factors  noted   above,
contributing  to  the  operating loss was  the  increase  in
physician  compensation  expense  as  a  percentage  of  net
revenues in the Company's hospital-based contract management
division.

Other expenses increased $3,867,000 for the six months ended
June  30,  1997 to $8,878,000 from $5,011,000  for  the  six
months  ended June 30, 1996.  The increase is primarily  due
to  additional amortization expense related to debt issuance
costs.

There  was  no benefit for income taxes for the  six  months
ended  June  30, 1997 or for the six months ended  June  30,
1996.   The  Company  expects to record no  tax  expense  or
benefit,   other   than  as  a  result   of   future   asset
dispositions, until the Company returns to profitability  in
the future.

Overall,  for  the  reasons  discussed  above,  the  Company
incurred a net loss of $33,193,000 for the six months  ended
June  30, 1997 as compared to a net loss of $36,590,000  for
the six months ended June 30, 1996.

Weighted  average  shares outstanding  increased  1.9%  from
23,815,000 shares for the six months ended June 30, 1996  to
24,258,000  shares for the six months ended June  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 provided by operating activities for the six months
ended June 30, 1997 was $13,793,000 as compared to net  cash
used  in  operating activities of $27,417,000  for  the  six
months  ended  June  30, 1996.  The  net  cash  provided  by
operating activities for the six months ended June 30,  1997
was  primarily  due  to 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.

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.   Borrowings outstanding under these facilities as  of
March 31, 1997 were $77.6 million.

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  10.97%  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 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.

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  June 9, 1997, in connection with the refinancing of  the
Company's  bank indebtedness, Dr. Steven M. Scott, Coastal's
Chief   Executive   Officer,   a   director,   and   largest
shareholder, invested $10 million in cash in the Company and
received  1,000,000 shares of Series C Convertible Preferred
Stock.   In  addition, Dr. Scott received 84,983  shares  of
Series  C Convertible Preferred Stock and 240,000 shares  of
Common Stock in satisfaction of certain obligations owed  to
him  by  the  Company of approximately  $1.1  million.   The
Series  C  Convertible Preferred Stock is  convertible  into
10,849,830  shares of Common Stock, subject to  approval  by
the Company's common stockholders.  Such conversion is being
voted  upon by the Company's stockholders at the 1997 Annual
Meeting  of Stockholders scheduled to be held on August  29,
1997.

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.  The Company has
taken  the  following actions in accordance with that  plan.
As  a  result  of  the  reviews of its business  units,  the
Company  completed the sale of Better Health Plan,  Inc.  in
August  1997.   Also, the Company successfully migrated  its
information technology hardware operations to a  lower  cost
vendor  and  renegotiated  its  telecommunications  contract
providing  additional  savings throughout  1997  and  future
years.

Coastal  Physician  Services,  Inc.  (CPS)  is  implementing
physician educational programs to increase billings  through
better  documentation of procedures performed  in  emergency
departments.   Using its Corporate Compliance Program  as  a
pattern,  Healthcare Business Resources, Inc. is inservicing
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 are  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  the
additional  cash  received from the sale of stock  discussed
above,  amounts available under the various agreements  with
NCFE  discussed above, 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 2. - Changes in Securities

On  June 9, 1997, in connection with the refinancing of  the
Company's bank indebtedness, Dr. Scott invested $10  million
in  cash  in  the Company and received 1,000,000  shares  of
Series  C  Convertible Preferred Stock.   In  addition,  Dr.
Scott   received  84,983  shares  of  Series  C  Convertible
Preferred  Stock  and  240,000 shares  of  Common  Stock  in
satisfaction  of  certain obligations owed  to  him  by  the
Company  of  approximately  $1.1  million.   The  Series   C
Convertible  Preferred Stock is convertible into  10,849,830
shares of Common Stock, subject to approval by the Company's
common stockholders. Such conversion is being voted upon  by
the  Company's  stockholders at the 1997 Annual  Meeting  of
Stockholders scheduled to be held on August 29, 1997.


These  transactions were not registered under the Securities
Act  pursuant  to  the exemption provided  by  Section  4(2)
thereof for transactions not involving any public offering.


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

(a) Exhibits

Exhibit 27 - Financial Data Schedule

(b) Reports on Form 8-K

One  report  on  Form 8-K was filed during the  quarter  for
which this report is filed:

1.   On June 25, 1997, the Company filed a report on Form 8-
K,  filing  under Items 1 and 2 thereof. Under Item  1,  the
report  disclosed  that on June 9, 1997, to  facilitate  the
closing  of  the refinancing transaction (described  below),
Dr.  Scott invested $10 million of his personal funds in the
Company  and  received  1,000,000 shares  of  the  Company's
Series  C  Convertible Preferred Stock, par value  $.01  per
share  (the "Series C Shares").  On the same day, Dr.  Scott
received  an  additional 84,983 Series C Shares and  240,000
shares  of Common Stock from the Company in satisfaction  of
obligations  owed  to him for assuming  certain  rental  and
related  obligations totaling $1,089,831.07 owed to  certain
entities,  some  of  which are affiliated  with  Dr.  Scott.
Through  the issuance of 240,000 shares of Common Stock  and
1,084,983  Series C Shares by the Company to  Dr.  Scott  on
June  9,  1997, Dr. Scott may be deemed to be the beneficial
owner of 18,417,653 shares, or 52.3% of the Company's Common
Stock.   Accordingly, the Company believes  that  Dr.  Scott
controls the Company.

Under Item 2, the report disclosed that on June 6, 1997, the
Company,   in   order   to  refinance  its   existing   bank
indebtedness and provide the Company with additional working
capital,  entered  into  a series of receivables  sales  and
other  financing  agreements with subsidiaries  of  National
Century  Financial Enterprises, Inc. ("NCFE") providing  for
commitments  to  purchase  accounts  receivable  of  certain
subsidiaries  of  the Company (the "A/R Facilities")  and  a
revolving line of credit of up to $15 million (the "Line  of
Credit").   On June 10, 1997, the Company used approximately
$82  million  of  funding from the sale  of  receivables  to
satisfy in full the Company's outstanding indebtedness under
its credit facilities with its previous lenders.


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





Date: August 21, 1997          By: /S/W. RANDALL DICKERSON
                                 W. Randall Dickerson
                                   Executive Vice President
                                    and Chief Financial
                                    Officer