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 MARCH 31, 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.
                              
                  { } Yes           {X} No
                              
   As of April 30, 1997 there were outstanding 24,384,214
      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 March 31, 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 2.  Changes in Securities

Item 6.  Exhibits and Reports on Form 8-K

SIGNATURES

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

                                          March 31,    December
                                            1997         31,
                                                         1996
                 Assets                   (unaudite   
                                             d)
Current assets:                                       
 Cash and cash equivalents                    21,136       10,239
 Marketable securities                         4,632        7,020
 Trade accounts receivable, net               80,343       87,410
 Accounts receivable, other                   10,831       11,187
  Related party receivable                    10,000          ---
 Refundable income taxes                         ---        2,498
 Prepaid expenses and other current            9,493       10,923
assets
      Total current assets                   136,435      129,277
Property and equipment, at cost, less                            
    accumulated depreciation                 17,476       19,041
Excess of cost over fair value of net                            
      assets acquired, net                   19,283       19,305
Other assets                                  14,047       14,218
      Total assets                           187,241      181,841
                                                                
  Liabilities and Shareholders' Equity                          
Current liabilities:                                             
 Current maturities and other short-term                         
      borrowings                             80,870       71,130
 Accounts payable                             43,329       46,307
  Income taxes payable                         3,693        2,211
 Accrued physicians fees and medical          29,936       33,709
costs
 Accrued expenses                             18,833       20,182
     Total current liabilities              176,661      173,539
Long-term debt, excluding current              4,352        4,799
maturities
      Total liabilities                      181,013      178,338
Shareholders' equity:                                            
   Series A convertible preferred stock                          
$.01 par                                                        
      value; shares authorized 48;                1          ---
 shares issued
      and outstanding 46 and 0,
 respectively
   Series B convertible preferred stock                          
$.01 par                                                        
      value; shares authorized 33;              ---          ---
 shares issued
      and outstanding 33 and 0,
 respectively
   Series C convertible preferred stock                          
$.01 par                                                        
      value; shares authorized 1,200;                           
 shares                                          11          ---
      issued and outstanding 109 and 0,
      respectively
 Preferred stock $.01 par value; shares                          
      authorized 10,000; none issued or                         
      outstanding                               ---          ---
 Common stock $.01 par value; shares                             
authorized                                                      
      100,000; shares issued and                244          241
 outstanding
      24,144 and 24,126, respectively
 Additional paid-in capital                  157,815      144,070
Common stock warrants                         1,518          987
 Retained earnings (accumulated deficit)   (153,497)    (141,931)
 Unrealized appreciation of available-                           
     for-sale securities                        136          136
      Total shareholders' equity               6,228        3,503
     Total liabilities and shareholders'     187,241      181,841
equity

  See accompanying notes to consolidated financial statements.

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

                                           Three months ended
                                                March 31,
                                           1997          1996
                                                      
Operating revenue, net                       124,714       152,734
                                                                  
Costs and expenses:                                               
                                                                  
 Physician and other provider services        94,644       113,565
 Medical support services                     13,341        24,177
 Selling, general and administrative          25,029        24,901
      Total costs and expenses               133,014       162,643
                                                                  
Operating loss                               (8,300)       (9,909)
                                                                  
Other income (expense):                                           
 Interest expense                            (3,843)       (2,103)
 Interest income                                 326           125
 Other, net                                      251           157
      Total other expense                    (3,266)       (1,821)
                                                                  
Loss before income taxes                    (11,566)      (11,730)
                                                                  
Benefit for income taxes                         ---           ---
                                                                  
Net loss                                    (11,566)      (11,730)
                                                                  
Net loss per share                            (0.48)        (0.49)
                                                                  
Weighted average number of shares                                 
 outstanding                                  24,129        23,791

  See accompanying notes to consolidated financial statements.

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

                                           Three months ended
                                                March 31,
                                           1997          1996
                                                                  
Net cash used in operating activities        (1,599)      (10,728)
                                                                  
Cash flows from investing activities:                             
Sales of marketable securities and                                 
investments, net                              2,388         4,873
Purchases of property and equipment, net         (115)         (782)
 Disposition of subsidiaries, net of                              
    cash disposed                               900         (322)
          Net cash provided by                                    
investing                                     3,173         3,769
          activities
                                                                  
Cash flows from financing activities:                             
 Repayments of long-term debt                  (522)       (1,290)
 Borrowings on long-term debt                  9,815        19,165
 Net proceeds from issuances of common                            
    stock                                        30           251
          Net cash provided by                                    
          financing activities                9,323        18,126
                                                                  
                  Net increase in cash and cash                            
equivalents                                  10,897        11,167
                                                                  
Cash and cash equivalents at beginning                            
    of period                                10,239         8,147
Cash and cash equivalents at end of                               
    period                                   21,136        19,314
                                                                  
                                                                  
Supplemental disclosures of cash flow                             
      information:
      Cash payments (refunds) during                              
      the period for:
             Interest                          2,050         1,673
             Income taxes                    (3,979)      (12,155)
                                                                  
                                                                  

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


(2)    CAPITAL STOCK

On  June  9, 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.   The  Series  C
Convertible  Preferred Stock, subject  to  approval  by  the
Company's   common   stockholders,   is   convertible   into
10,000,000 shares of common stock.














                              
                              
                              
                              
                              
                              
                COASTAL PHYSICIAN GROUP, INC.
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF
        FINANCIAL CONDITION AND RESULTS OF OPERATIONS



RESULTS OF OPERATIONS

FIRST  QUARTER ENDED MARCH 31, 1997 COMPARED  TO  THE  FIRST
QUARTER ENDED MARCH 31, 1996.

Net  operating revenue ("operating revenue") decreased 18.3%
for   the  first  quarter  of  1997  to  $124,714,000   from
$152,734,000 in the first 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 $14,461,000 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  $13,559,000 or 8.9%.  Contract attrition  and
less  new  business  development  throughout  1996  in   the
Company's  hospital-based contract management division  were
significant  factors that reduced operating revenue  in  the
first  quarter of 1997 as compared to the first  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 of certain non-core assets
that the Company has identified.

Operating  expenses decreased 18.2% to $133,014,000  in  the
first quarter of 1997 from $162,643,000 in the first 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  $13,453,000  or  8.3%.  This   decrease   was
primarily due to the sale of certain assets mentioned above.
Operating   expenses  not  related  to   disposed   entities
decreased  approximately $16,176,000 or 9.9%.   This  change
was  a  function of decreases due to contract attrition  and
lower new business development throughout 1996 (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,  and
increased investments in information technology.

The  changes  in  operating revenue and  operating  expenses
described  above resulted in an operating loss of $8,300,000
for the first quarter of 1997, compared to an operating loss
of  $9,909,000 for the first 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 similar operating margins during the
first  three  months  of 1997 compared to  the  first  three
months  of 1996.  The operating margin for the three  months
ended  March 31, 1997 was  negative 6.7% versus  a  negative
6.5% 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 $1,445,000, or 79.4%, for the first
quarter  of 1997 to $3,266,000 from $1,821,000 in the  first
quarter  of  1996.  The  increase is  primarily  due  to  an
increase  in  interest  expense  resulting  primarily   from
additional borrowings required to fund operating losses,  as
well   as  higher  interest  rates  paid  on  the  increased
borrowings.

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
potential  asset dispositions, until the Company returns  to
profitability in the future.

Overall,  the Company incurred a net loss of $11,566,000  in
the  first  quarter of 1997 as compared to  a  net  loss  of
$11,730,000  in  the first quarter of 1996 for  the  reasons
discussed above.

Weighted  average  shares outstanding  increased  0.1%  from
23,791,000 shares in the first quarter of 1996 to 24,129,000
shares  in the second quarter of 1996, primarily as a result
of  shares  issued  to  Dr. Scott  in  satisfaction  of  the
Company's  obligation  to reimburse him  for  certain  proxy
solicitation   expenses,  as  well  as  shares   issued   in
connection with Company's employee stock purchase plan.


LIQUIDITY AND CAPITAL RESOURCES

Net  cash used in operating activities for the three  months
ended   March  31,  1997  was  $1,599,000  as  compared   to
$10,728,000 for the three months ended March 31, 1996.   The
net  loss  for  the three months ended March  31,  1997  was
$11,566,000 as compared to a net loss of $11,730,000 for the
same  period in 1996.  The decline in the net cash  used  in
operating  activities is primarily due to a decline  in  the
accounts  receivable balances, due in part to both increased
collection   efforts   and  increased  valuation   reserves.
Borrowings  on  long-term debt for the  three  months  ended
March 31, 1997 was $9,815,000 as compared to $19,165,000 for
the  three  months  ended March 31,  1996.   The  borrowings
during  the  first  quarter of 1997  consisted  of  advances
received under the Company's previous credit agreements  and
occurred  prior  to the Company's default under  its  Credit
Facilities noted below.

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
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. 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.

Pursuant  to  a  separate  loan and security  agreement,  an
affiliate of NCFE has 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.

On  June  9, 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.   The  Series  C
Convertible  Preferred Stock, subject  to  approval  by  the
Company's   common   stockholders,   is   convertible   into
10,000,000 shares of common stock.

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
that  the Company has identified, 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  the
operational  efforts;  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

In January 1997, pursuant to a reimbursement agreement dated
December  31,  1996 between the Company and Dr.  Scott,  the
Company  issued  226,690 shares of common stock  and  32,739
shares  of  Series B Convertible Preferred Stock ("Series  B
Preferred")  to Dr. Scott in satisfaction of  the  Company's
obligation  to reimburse him for certain proxy  solicitation
expenses totaling $1,662,278.

In  January 1997, the Company, Dr. Scott, and Dr. Bertram E.
Walls,  a director, entered into a dismissal agreement  with
respect  to  certain litigation whereby  the  Company,  with
court  approval, agreed to reimburse Dr. Scott and Dr. Walls
for legal fees and expenses totaling $1,657,208 incurred  by
them  in  the  litigation  by issuing  shares  of  Series  A
Convertible  Preferred Stock ("Series A Preferred")  to  Dr.
Scott  and  Dr.  Walls  in  satisfaction  of  the  Company's
obligation.  The Company has issued a total of 46,033 shares
of  Series A Preferred in payment of the aggregate amount of
fees and expenses incurred by Dr. Scott and Dr. Walls.

The  Series  A Preferred and Series B Preferred will  become
convertible into common stock at an initial conversion  rate
of  ten  shares of common stock for each share of  Series  A
Preferred or Series B Preferred, subject to approval by  the
Company's common shareholders.

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

None


(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 February 5, 1997, the Company filed a report on Form
8-K  dated  January 21, 1997, filing under Item  5  thereof.
The  report  disclosed  that  pursuant  to  a  reimbursement
agreement  dated December 31, 1996 between the  Company  and
Dr. Scott, the Company issued 226,690 shares of common stock
and 32,739 shares of Series B Convertible Preferred Stock to
Dr.  Scott  in  satisfaction of the Company's obligation  to
reimburse Dr. Scott for certain proxy solicitation expenses.
In  addition,  the  report disclosed that the  Company,  Dr.
Scott,  Bertram E. Walls, M.D., a Director,  and  Joseph  G.
Piemont, the former President and Chief Operating Officer of
the Company, entered into a Release and Settlement Agreement
on  January  21, 1997 with respect to the litigation  styled
Steven  M. Scott, M.D. and Bertram E. Walls, M.D.  on  their
own behalf and on behalf of Coastal Physician Group, Inc. v.
Jacque Jenning Sokolov, Joseph G. Piemont, Stephen D. Corman
and Coastal Physician Group, Inc.  The report also disclosed
that  the  Company, Dr. Scott and Dr. Walls entered  into  a
Dismissal Agreement as of January 21, 1997, with respect  to
the lawsuit mentioned above.  Under the Dismissal Agreement,
Dr.  Scott  and Dr. Walls, as plaintiffs, agreed to  file  a
dismissal without prejudice of all remaining claims asserted
by them in the litigation, and the Company agreed to file  a
dismissal  without prejudice of all claims asserted  by  the
Company  against Dr. Scott in the litigation.  In  addition,
under  the  Dismissal  Agreement,  the  Company  agreed   to
reimburse  Dr.  Scott  and  Dr. Walls  for  legal  fees  and
expenses  incurred by them in the litigation.  The  Company,
Dr.  Scott  and Dr. Walls, with the approval of  the  court,
agreed that reimbursement would be made by issuing shares of
Series  A Convertible Preferred Stock to Dr. Scott  and  Dr.
Walls in satisfaction of the Company's obligation.

                         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: June 13, 1997             By: /S/W. RANDALL DICKERSON
                                 W. Randall Dickerson
                                   Executive Vice President
                                    and Chief Financial
                                    Officer




Date: June 13, 1997             By: /S/MARY ANNE Z. WINGERT
                                 Mary Anne Z. Wingert
                                   Vice President, Corporate
                                    Controller and Chief
                                    Accounting Officer