--------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549





                                      FORM 10-Q
(Mark One)
 [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
      EXCHANGE ACT OF 1934 
              For the quarterly period ended March 31, 1999

                                       OR

 [  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT
       OF 1934
              For the transition period from to

                         Commission file number 0-21373

                           ProMedCo Management Company
             (Exact name of Registrant as specified in its charter)


                       Delaware                                  75-2529809
            (State or other jurisdiction of                   (I.R.S. Employer
            incorporation or organization)                Identification Number)


             801 Cherry Street, Suite 1450
                   Fort Worth, Texas                                76102
       (Address of principal executive offices)                  (Zip Code)

(817)                                                           335-5035
              (Registrant's telephone number, including area code)

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 (    )

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

                                                    Outstanding at
          Class of Common Stock                     April 30, 1999
             $.01 par value                        21,061,215 shares


--------------------------------------------------------------------------------

<PAGE>



                  PROMEDCO MANAGEMENT COMPANY AND SUBSIDIARIES

                                      INDEX


<TABLE>
<CAPTION>
                                                                                                           Page
                                                                                                            No.
<S>                                                                                                     <C>
Part I. Financial Information

         Item 1. Financial Statements

                  Condensed Consolidated Balance Sheets
                      March 31, 1999 and December 31, 1998                                                   2

                  Condensed Consolidated Statements of Operations
                      Three Months Ended March 31, 1999 and 1998                                             3

                  Condensed Consolidated Statements of Cash Flows
                      Three Months Ended March 31, 1999 and 1998                                             4

                  Notes to Condensed Consolidated Financial Statements                                       5

         Item 2. Management's Discussion and Analysis of Financial Condition and Results of
                  Operations                                                                                 9

Part II. Other Information

         Item 6. Exhibits and Reports on Form 8-K                                                           15

Signatures                                                                                                  16

</TABLE>



<PAGE>



                  PROMEDCO MANAGEMENT COMPANY AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    (All amounts are expressed in thousands)

<TABLE>
<CAPTION>

                                                                             March 31, 1999      December 31,
                                                                               (Unaudited)              1998       
<S>                                                                        <C>                    <C>
                                     ASSETS
Current assets:
         Cash and cash equivalents                                         $           15,363       $        13,871
         Accounts receivable, net                                                      55,934                51,375
         Management fees receivable                                                     7,464                 8,490
         Due from affiliated physician groups                                           4,862                 5,585
         Deferred tax benefit                                                           2,206                 2,206
         Prepaid expenses and other current assets                                     14,790                13,043
                                                                           ------------------      ----------------
                  Total current assets                                                100,619                94,570
                                                                           ------------------      ----------------
Property and equipment, net                                                            15,911                15,125
Intangible assets, net                                                                172,755               153,402
Long term receivables                                                                  40,632                40,429
Other assets                                                                            3,409                 3,133
                                                                           ------------------      ----------------
                  Total assets                                             $          333,326      $        306,659
                                                                           ==================      ================

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
         Accounts payable                                                  $            4,766      $          4,683
         Payable to affiliated physician groups                                         6,842                 6,641
         Accrued salaries, wages and benefits                                           8,404                 8,146
         Accrued purchased medical services                                             6,096                 6,087
         Accrued expenses and other current liabilities                                 6,224                 6,741
         Current maturities of notes payable                                            3,302                 3,232
         Current portion of obligations under capital leases                              496                   557
         Current portion of deferred purchase price                                     2,245                 2,137
         Income taxes payable                                                             726                   847
                                                                           ------------------      ----------------
                  Total current liabilities                                            39,101                39,071
                                                                           ------------------      ----------------
Notes payable, net of current maturities                                               96,098                58,130
Obligations under capital leases, net of current portion                                  605                   701
Deferred purchase price, net of current portion                                         8,662                25,290
Convertible subordinated notes payable                                                  7,635                 7,635
Deferred income tax liability                                                           3,430                 2,872
Other long term liabilities                                                             1,532                   312
                                                                           ------------------      ----------------
                  Total liabilities                                                   157,063               134,011
                                                                           ------------------      ----------------
Stockholders' equity:
         Common stock                                                                     211                   211
         Additional paid-in capital                                                   152,801               152,786
         Common stock to be issued                                                      6,005                 6,005
         Treasury stock                                                                  (254)               -
         Stockholder notes receivable                                                    (250)                 (370)
         Retained earnings                                                             17,750                14,016
                                                                           ------------------      ----------------
                  Total stockholders' equity                                          176,263               172,648
                                                                           ------------------      ----------------
                  Total liabilities and stockholders' equity               $          333,326      $        306,659
                                                                           ==================      ================
</TABLE>


  The accompanying  notes are an integral part of these financial statements.

<PAGE>



                 PROMEDCO MANAGEMENT COMPANY AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (UNAUDITED)
       (All amounts are expressed in thousands, except for earnings per share)


<TABLE>
<CAPTION>

                                                                                      Three Months Ended
                                                                                           March 31,               
                                                                                  1999                  1998       
<S>                                                                        <C>                     <C>
Net revenue                                                                $           73,092       $        40,612

Operating expenses:
         Clinic salaries and benefits                                                  25,706                13,340
         Clinic rent and lease expense                                                  6,246                 3,199
         Clinic supplies                                                                8,589                 4,858
         Purchased medical services                                                    11,912                 8,132
         Other clinic costs                                                             8,819                 4,322
         General corporate expenses                                                     2,010                 1,083
         Depreciation and amortization                                                  2,776                 1,294
         Interest expense                                                               1,011                   472
                                                                           ------------------       ---------------
                                                                                       67,069                36,700
                                                                           ------------------       ---------------

Income before provision for income taxes                                                6,023                 3,912

Provision for income taxes                                                              2,289                 1,486
                                                                           ------------------       ---------------
Net income                                                                 $            3,734       $         2,426
                                                                           ==================       ===============


Earnings per share:
         Basic                                                             $             0.17       $          0.18
                                                                           ==================       ===============
         Diluted                                                           $             0.16       $          0.15
                                                                           ==================       ===============

Weighted average number of common shares outstanding:
         Basic                                                                         21,457                13,616
                                                                           ==================       ===============
         Diluted                                                                       23,193                16,491
                                                                           ==================       ===============
</TABLE>












   The accompanying notes are an integral  part of these financial statements.


<PAGE>



                  PROMEDCO MANAGEMENT COMPANY AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                    (All amounts are expressed in thousands)

<TABLE>
<CAPTION>

                                                                                   Three Months Ended
                                                                                        March 31,               
                                                                                1999                   1998       
<S>                                                                        <C>                     <C>
Cash flows from operating activities:
     Net income                                                            $      3,734            $    2,426
     Adjustments to reconcile net income to 
         net cash provided by (used in)
         operating activities (net of effects
         of purchase transactions):
         Depreciation and amortization                                            2,776                 1,294
         Provision for deferred income taxes                                        458                   341
         Changes in assets and liabilities:
              Accounts receivable                                                (2,588)               (6,267)
              Management fees receivable                                          1,026                (2,476)
              Due from affiliated physician groups                                  723                 1,681
              Other assets                                                       (1,164)               (1,410)
              Accounts payable                                                   (1,004)               (1,188)
              Payable to physician groups                                          (239)                1,359
              Accrued expenses and other liabilities                             (1,434)                2,221
                                                                           ------------            ----------
Net cash provided by (used in) operating activities                               2,288                (2,019)
                                                                           ------------            ----------
Cash flows from investing activities:
     Purchases of property and equipment                                         (1,098)               (1,213)
     Purchases of clinic assets, net of cash                                    (36,961)               (3,648)
     Increase in notes receivable                                                  (561)                -    
                                                                           ------------            ----------
Net cash used in investing activities                                           (38,620)               (4,861)
                                                                           ------------            ----------
Cash flows from financing activities:
     Borrowings under long-term debt                                             38,031                 2,625
     Payments on long-term debt                                                     (19)                  (36)
     Payments on capital lease obligations                                         (157)                 (124)
     Proceeds from issuance of common stock, net                                     18                   795
     Purchase of treasury shares                                                   (169)                -    
     Collection of stockholder note receivable                                      120                 -    
                                                                           ------------            ----------
Net cash provided by financing activities                                        37,824                 3,260
                                                                           ------------            ----------
Increase (decrease) in cash and cash equivalents                                  1,492                (3,620)

Cash and cash equivalents, beginning of period                                   13,871                15,761
                                                                           ------------            ----------
Cash and cash equivalents, end of period                                   $     15,363           $    12,141
                                                                           ============            ==========
Supplemental disclosure of cash flow information
     Cash paid during the period for -
         Interest expense                                                  $      1,787           $       919
         Income taxes                                                      $      1,965           $       953

</TABLE>



   The accompanying  notes are an integral part of these financial statements.

<PAGE>



                  PROMEDCO MANAGEMENT COMPANY AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.       SIGNIFICANT ACCOUNTING POLICIES:

Basis of Presentation/Principles of Consolidation

The  condensed  consolidated  financial  statements  included  herein  have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission ("SEC"). Certain information and footnote
disclosures  normally  included in financial  statements  prepared in accordance
with generally  accepted  accounting  principles  have been condensed or omitted
pursuant  to such  SEC  rules  and  regulations.  Management  believes  that the
disclosures herein are adequate to prevent the information  presented from being
misleading.  The foregoing  financial  information,  not audited by  independent
public  accountants,  reflects,  in the opinion of the Company,  all adjustments
(which  included  only  normal  recurring  adjustments)  necessary  for  a  fair
presentation  of the financial  position and the results of  operations  for the
interim periods presented.  The results of operations for any interim period are
not necessarily indicative of the results of the operations for the entire year.
It is suggested that these condensed  consolidated  financial statements be read
in conjunction  with the financial  statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998.

Earnings Per Share

Basic earnings per share ("EPS") is calculated by dividing  income  available to
common  stockholders by the weighted average number of common shares outstanding
during the  period.  Common  stock to be issued is  assumed  to be common  stock
outstanding  and is included in the  weighted  average  number of common  shares
outstanding  for the basic EPS  calculation.  Diluted EPS  includes the options,
warrants, and other potentially dilutive securities that are excluded from basic
EPS using the  treasury  method to the  extent  that  these  securities  are not
anti-dilutive.

Net Revenue

Net revenue represents  physician groups and other revenues less amounts paid to
physician groups.  The amounts paid to physician groups (typically 80-85% of the
physician  groups'  operating  income)  represents  distributions  paid  to  the
physicians  pursuant  to the  service  agreements  between  the  Company and the
physician groups and primarily consists of the cost of the affiliated  physician
services.  Under the service  agreements,  the Company  provides each  physician
group with the facilities and equipment  used in its medical  practice,  assumes
responsibility for the management of the operations of the practice, and employs
substantially all of the non-physician personnel utilized by the group.

Net revenue is detailed as follows (in thousands):
                                                    Three Months Ended March 31,
                                                          1999          1998
         Physician groups revenue, net                 $  103,916    $  59,679
         Other revenue                                      2,868        1,500
                                                       ----------    ---------
         Total revenue                                    106,784       61,179
         Less- Amounts paid to physician groups           (33,692)     (20,567)
                                                       ----------    ---------
         Net revenue                                   $   73,092    $  40,612
                                                       ==========    =========


<PAGE>

Physician groups revenue represents the revenue of the physician groups reported
at the estimated  realizable  amounts from  patients,  third-party  payors,  and
others for services rendered, net of contractual and other adjustments.  Revenue
under certain  third-party  payor agreements is subject to audit and retroactive
adjustments.  Provisions for third-party  payor  settlements and adjustments are
estimated in the period the related services are rendered and adjusted in future
periods as final  settlements  are  determined.  There are no  material  claims,
disputes,  or other  unsettled  matters  that  exist to  management's  knowledge
concerning third-party  reimbursements.  In addition,  management believes there
are no retroactive adjustments that would be material to the Company's financial
statements.   Other  revenue   represents  fees  from   management   consulting,
supplemental implementation services, and other miscellaneous revenues.


2.       ACQUISITIONS:

Through  March 31, 1999 and during 1998,  the Company,  through its wholly owned
subsidiaries,  acquired  certain  operating  assets  of  the  following  medical
clinics:
<TABLE>
<CAPTION>

                    Physician Group                        Date                             Location
<S>      <C>                                         <C>                               <C>
1999:    El Paseo Medical Center                     January 1999 (a)                   Las Cruces, NM
         Boca Raton Medical Associates               February 1999 (b)                  Boca Raton, FL

1998:    Berkshire Physicians & Surgeons             April 1998 (c)                     Pittsfield, MA
         Primary Medical Clinics                     May 1998                           Midland, TX
         Prime Medical Associates                    June 1998                          Hudson, NY
         Physicians' Primary Care                    July 1998                          Ft. Myers, FL
         Medical Associates of Pinellas              November 1998 (d)                  Clearwater, FL
</TABLE>

(a)           El Paseo  Medical  Center  was  operated  by the  Company  under a
              long-term  service  agreement  effective  December  1,  1998.  The
              Company completed its acquisition in January 1999.

(b)           Boca Raton Medical Associates was operated by the Company under an
              interim service  agreement  effective October 1, 1998. The Company
              completed its  acquisition  in February  1999,  and entered into a
              long-term  service  agreement with the physician  group  effective
              February 1, 1999.

(c)           Berkshire  Physicians  and  Surgeons  was  operated by the Company
              under an interim service agreement effective February 1, 1998. The
              Company  completed its acquisition in April 1998, and entered into
              a long-term  service  agreement with the physician group effective
              April 1, 1998.


<PAGE>


(d)           Medical  Associates  of Pinellas was operated by the Company under
              an interim  service  agreement  effective May 1, 1998. The Company
              completed  its  acquisition  in October  1998 and  entered  into a
              long-term  service  agreement with the physician  group  effective
              November 1, 1998.

These  acquisitions  were  accounted  for as  purchases,  and  the  accompanying
condensed  consolidated  financial  statements  include  the  results  of  their
operations  from the  dates of their  respective  acquisitions.  Purchase  price
allocations to tangible assets acquired and liabilities assumed are based on the
estimated  fair  values at the dates of  acquisitions  and are  subject to final
revisions.  Simultaneous  with each  acquisition,  the  Company  entered  into a
long-term  service  agreement  with the  related  physician  group.  The service
agreements are 40 years in length.

The  following   unaudited  pro  forma   information   reflects  the  effect  of
acquisitions of medical clinics on the consolidated results of operations of the
Company had the  acquisitions  occurred at January 1, 1998.  Future  results may
differ substantially from pro forma results and cannot be considered  indicative
of future results (in thousands).
<TABLE>
<CAPTION>

                                                                         Three Months Ended March 31,      
                                                                               1999           1998       
<S>                                                                        <C>            <C>
         Net revenue                                                       $    73,484    $   53,516
                                                                           ===========    ==========
         Net income                                                        $     3,753    $    2,834
                                                                           ===========    ==========
         Earnings per share
                  Basic                                                    $      0.17    $     0.20
                                                                           ===========    ==========
                  Diluted                                                  $      0.16    $     0.17
                                                                           ===========    ==========
         Weighted average number of common shares outstanding
                  Basic                                                         21,457        14,036
                                                                           ===========    ==========
                  Diluted                                                       23,193        16,911
                                                                           ===========    ==========
</TABLE>


3. LONG-TERM DEBT:

Long-term debt is summarized as follows (in thousands):
<TABLE>
<CAPTION>
                                                                                March 31,           December 31,
                                                                                  1999                  1998       
<S>                                                                        <C>                   <C>
         Borrowings under bank credit facility                             $           92,500    $           54,500
         Notes payable issued to physician groups                                       6,654                 6,654
         Other long-term debt                                                             246                   208
                                                                           ------------------    ------------------
                                                                                       99,400                61,362
         Less- current maturities                                                      (3,302)               (3,232)
                                                                           ------------------    ------------------
         Long-term debt, net of current maturities                         $           96,098    $           58,130
                                                                           ==================    ==================
</TABLE>

<PAGE>


4.       SUPPLEMENTAL CASH FLOW INFORMATION:

In March  1998,  an officer of the  Company  utilized  43,693  warrants  in full
payment of the $600,000 outstanding note balance and $30,875 of accrued interest
receivable.

In March 1998, the Company converted $359,991 of convertible  subordinated notes
payable to a physician group into 39,999 shares of the Company's common stock.

In the first quarter of 1999, an affiliated  physician group surrendered  19,113
shares of the Company's  common stock as partial payment of an outstanding  note
balance and accrued interest.


5.       SUPPLEMENTAL NET EARNINGS PER SHARE DATA:

In May 1998,  the Company  completed a public  offering of  6,900,000  shares of
common  stock at a price of $11.00 per share  (the  "Offering").  The  unaudited
supplemental  earnings per share data has been calculated  assuming the Offering
occurred as of January 1, 1998.

                                                               Three Months
                                                                  Ended
                                                               March 31,1998
         Supplemental net earnings per share
              Basic                                         $             0.14
                                                            ==================
              Diluted                                       $             0.12
                                                            ==================

         Supplemental weighted average number of 
              common shares outstanding (in thousands)
              Basic                                                     20,516
                                                            ==================
              Diluted                                                   23,391
                                                            ==================

6.       CHANGE IN ACCOUNTING ESTIMATE:

Effective  July 1, 1998,  the Company  changed its estimate  with respect to the
estimated life of its service agreement rights intangible  assets.  All existing
and future service  agreement rights  intangible assets will be amortized over a
period  not to exceed 25 years  from the  inception  of the  respective  service
agreements.  Had the  Company  adopted  this  policy at the  beginning  of 1998,
amortization  expense would have increased and diluted  earnings per share would
have decreased by approximately $220,000 and $0.01,  respectively,  in the first
quarter of 1998.

<PAGE>


                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview

ProMedCo is a medical services company that manages and coordinates the delivery
of healthcare in secondary  markets.  By affiliating  with leading  primary care
driven,  multi-specialty  physician groups,  the Company  establishes  dominant,
local healthcare  delivery  platforms thus providing  physicians the opportunity
for increasing control of medical  expenditures in their  communities.  ProMedCo
commenced  operations in December 1994 and affiliated with its initial physician
group in June 1995.  The  Company's  rapid  growth  since June 1995 has resulted
primarily from its  affiliation  with additional  physician  groups and from the
subsequent same-market growth of those groups following affiliation.  The groups
expand  through   affiliations  with  additional  primary  care  physicians  and
specialists  and  selective  additions  of  ancillary  services.  In addition to
providing  operating and expansion capital,  the Company provides its affiliated
groups with a broad range of strategic  and  management  expertise and services.
The Company currently is affiliated with multi-specialty  physician groups in 16
states,  comprised of approximately  740 physicians and 155 mid-level  providers
(primarily physician assistants and nurse practitioners), and is associated with
approximately 1,080 physicians in associated  independent  practice  association
("IPA") networks,  including those managed by Primergy,  Inc.  ("Primergy").  In
March 1999, the Company entered into a management  agreement with Kingston,  New
York-based  Primergy,  a physician  network  management  company  which owns and
operates five IPAs in the Hudson Valley of New York and has under  contract more
than 500 physicians and covers over 35,000  managed care  capitated  lives.  The
management  contract  also  includes an option for ProMedCo to acquire  Primergy
based on satisfaction of certain future events.

The Company  also  provides a full range of managed  care  services to capitated
providers,   including  clinical  quality  assessment,   credentialing,   claims
processing  and  payment,   referral  and  utilization   management,   and  case
management.  The Company is currently providing such services to it's associated
IPAs and to those of its  affiliated  groups that have entered  into  capitation
arrangements, together covering over 150,000 managed care capitated lives.

When affiliating with a physician group, the Company generally  acquires at fair
market  value the group's  non-real  estate  operating  assets and enters into a
40-year service agreement with the group in exchange for a combination of common
stock,  cash, other securities of the Company,  and/or the assumption of certain
liabilities.  Under  the  service  agreements,  the  Company  receives  a  fixed
percentage  (typically  15-20%) of the physician  groups'  operating  income (as
defined) and shares between 25% and 50% of the group's  surplus or deficit under
risk-sharing  arrangements pursuant to capitated managed care contracts. In many
of the more recent  affiliations,  the Company also  receives 50% of the profits
from new  ancillary  services  added  during the term of the service  agreement.
Although  the  group's  physicians  retain  full  control  over the  practice of
medicine, ProMedCo manages all day-to-day operations other than the provision of
medical services. The Company is continually seeking additional physician groups
with which to affiliate and is currently  engaged in  negotiations  with several
such groups.

The  Company's  net  revenue  represents  the  revenue of the  physician  groups
reported at the estimated realizable amounts from patients,  third-party payors,
and others for services  rendered,  net of contractual and other adjustments and
further  reduced by the amounts  paid to physician  groups.  The amounts paid to
physician groups  (typically  80-85% of the physician  groups' operating income)
pursuant  to  the  service  agreements  primarily  consist  of the  cost  of the
affiliated  physician  services.  Under  the  service  agreements,  the  Company
provides each  physician  group with the  facilities  and equipment  used in its
medical practice, assumes responsibility for the management of the operations of


<PAGE>


the  practice,  and employs  substantially  all of the  non-physician  personnel
utilized by the group.  The Company does not consolidate  the operating  results
and accounts of the physician groups under EITF 97-2,  "Applications of FASB No.
94 and APB No. 16 to Physician  Practice  Management  Entities and Certain Other
Entities under Contracted Management Agreement."

Results of Operations

The Company commenced  operations in December 1994 and affiliated with its first
physician  group in June 1995 and its second group in December 1995. The Company
entered into  affiliations with five additional groups in 1996, seven additional
groups  during  1997,  and eight  additional  groups in 1998.  During  the first
quarter of 1999,  the Company  entered  into  affiliations  with two  additional
groups.  Changes in results of operations were caused  primarily by affiliations
with these  additional  physician  groups.  The  following  table sets forth the
percentages of physician  groups revenue  represented by certain items reflected
in the Company's condensed consolidated statements of operations.
<TABLE>
<CAPTION>

                                                                                 Three Months Ended March 31,      
                                                                                  1999                  1998
<S>                                                                        <C>                    <C>
Net revenue                                                                       100.0%                100.0%
Operating expenses:
         Clinic salaries and benefits                                              35.2                  32.8
         Clinic rent and lease expense                                              8.5                   7.9
         Clinic supplies                                                           11.8                  12.0
         Purchased medical services                                                16.3                  20.0
         Other clinic costs                                                        12.1                  10.6
         General corporate expenses                                                 2.7                   2.7
         Depreciation and amortization                                              3.8                   3.2
         Interest expense                                                           1.4                   1.2
                                                                            -----------           -----------
Income before provision for income taxes                                            8.2                   9.6
Provision for income taxes                                                          3.1                   3.6
                                                                            -----------           -----------
Net income                                                                          5.1%                  6.0%
                                                                            ===========           ===========

Other Financial Information:
     Total revenue, amounts in thousands (1)                                $   106,784           $    61,179
     Payor breakdown (2)
         Commercial and discounted fee-for-service                                 37.6%                 37.4%
         Medicare/Medicaid                                                         28.3                  27.1
         Capitation                                                                18.4                  21.6
         Other                                                                     15.7                  13.9
                                                                            -----------           -----------
                                                                                  100.0%                100.0%
                                                                            ===========           ===========
</TABLE>

(1)  Total revenue  represents  physician groups and other revenues  reported at
     the estimated  realizable  amounts from  patients,  third-party  payors and
     others for services rendered, net of contractual and other adjustments.
(2)  As a percentage of physician groups revenues.


<PAGE>


Net revenue  increased by 80% to $73.1  million for the quarter  ended March 31,
1999, from $40.6 million for the quarter ended March 31, 1998. Approximately 74%
of this growth in physician  groups revenue is attributable to new  affiliations
since March 31, 1998,  with the balance  coming from  increases in revenues from
affiliated  physician  groups  in  place  prior to  March  31,  1998 and from an
increases in other  revenues.  Same-market  growth in net revenue for  physician
groups affiliated with the Company for longer than one year was over 15% for the
quarter ended March 31, 1999 compared with the quarter ended March 31, 1998.

Overall clinic costs,  including purchased medical services,  as a percentage of
net revenue increased to 83.9% for the quarter ended March 31, 1999, compared to
83.3% for the quarter ended March 31, 1998.  The change in overall  clinic costs
and to the  individual  expense  categories  is  due  to the  mix of  affiliated
physician groups managed by the Company.  Clinic salaries and benefits and other
clinic  costs  created the  largest  increase as a  percentage  of net  revenue,
increasing  to 35.2%  and  12.1%,  respectively,  in the first  quarter  of 1999
compared to 32.8% and 10.6%,  respectively  in the first quarter of 1998.  These
increases  were  partially  offset by a decrease in purchased  medical  services
which decreased to 16.3% as a percentage of net revenue for the first quarter of
1999 compared to 20.0% in the first quarter of 1998.  These changes are directly
related to the mix of affiliated  physician groups and the relative  decrease in
full  professional and global  capitation  revenues caused by the affiliation of
additional physician groups.

General  corporate  expenses as a percentage of net revenue remained constant at
2.7% for the quarter  ended March 31, 1999,  and for the quarter ended March 31,
1998.  While these costs remained  constant as a percentage of net revenue,  the
amount of general  corporate  expenses  increased  85.6% to $2.0 million for the
quarter  ended March 31, 1999 from $1.1 million for the quarter  ended March 31,
1998.  This  increase in expenses was  expected as the Company  continued to add
management and technology infrastructure.  Management expects these increases in
amounts to continue as the Company increases the number of affiliated  physician
groups.

Depreciation and  amortization as a percentage of net revenue  increased to 3.8%
for the quarter  ended March 31,  1999,  compared to 3.2% for the quarter  ended
March 31, 1998. This increase results primarily from the Company's change in the
amortization   period  for  its  service  agreement  rights  intangible  assets.
Effective  July 1, 1998,  all  existing  and  future  service  agreement  rights
intangible  assets are  amortized  over a period not to exceed 25 years from the
inception of the respective service agreements.

Net interest  expense as a percentage  of net revenue  increased to 1.4% for the
quarter  ended March 31, 1999,  compared to 1.2% for the quarter ended March 31,
1998.  This  increase  is  directly  related to the  increase  in long term debt
relating to the affiliation with additional physician groups.

Provision  for income  taxes  reflects an effective  rate of 38%, the  Company's
estimated effective rate for all of 1999.



<PAGE>


Year 2000

The Company is aware of issues  associated with the programming code in existing
computer  systems  as the year 2000  approaches.  The  "Year  2000"  problem  is
pervasive and complex, as virtually every computer operation will be affected in
the same way by the  rollover  of the two digit  year  value to 00. The issue is
whether computer systems will properly recognize date sensitive information when
the  year  changes  to  2000.  Systems  that  do  not  properly  recognize  such
information could generate erroneous data or cause a system to fail.

The  Company  continues  to assess  the  impact  of the Year  2000  issue on its
information  systems and operations using both internal and external  resources.
The  Company  divides  its  internal   processing   software  into  three  broad
categories: financial (including general ledger, accounts payable, fixed assets,
purchasing and inventory control),  practice  management  (including billing and
accounts  receivable)  and managed care. The Company has installed a new, common
financial  software  package  at all  locations  that  is  certified  Year  2000
compliant.  The Company's philosophy with respect to practice management systems
is to utilize  the legacy  system in place as long as it can  capably  serve the
physicians'  needs.  Of the  Company's  affiliated  medical  groups,  only three
locations are utilizing practice  management systems that are not currently Year
2000  compliant.   Two  of  these  locations  have  been  scheduled  for  system
conversions  and  upgrades  in the second  quarter  of 1999 to handle  increased
patient volume. These planned conversions will be Year 2000 compliant. The third
location utilizes a system  maintained by a local hospital;  ProMedCo is working
with the  hospital to complete  Year 2000 testing  during the second  quarter of
1999. The Year 2000  assessment  process  continues  with each new  affiliation.
Inadequate or noncompliant  practice  management  systems could be acquired in a
new affiliation,  which would require system  remediation or replacement.  Given
these  issues,  the Company is  currently  unable to  estimate  the costs of the
remediation or  replacements  that may be required during 1999. With its current
strategy of replacing  inadequate  practice  management  systems,  however,  the
Company does not believe that Year 2000 issues will cause a conversion of one or
more of its  practice  management  systems to be more or less  difficult  than a
typical system conversion. The Company's primary managed care technology resides
at its risk  management  subsidiary,  PMC  Medical  Management  ("PMC").  PMC is
currently  upgrading  its  systems to be Year 2000  compliant.  This  process is
expected  to be  completed  in the second  quarter of 1999 and the costs are not
currently estimated to be material.

The Company is also in the process of gathering  information about the Year 2000
compliance  status of its  significant  suppliers and vendors.  The inability of
suppliers and vendors to complete their Year 2000 resolution process in a timely
fashion could materially impact the Company. The potential effect on the Company
of non-compliance by suppliers and vendors has not yet been determined.

Management  of the  Company  believes  it has an  effective  program in place to
resolve  the Year 2000 issue in a timely  manner.  In the event that the Company
does not complete any additional phases, the Company's ability to record revenue
or process  collections  in a timely  fashion would be adversely  impacted after
January 1, 2000. In addition, disruptions in the general economy due to the Year
2000 problem could also materially adversely affect the Company.

<PAGE>


The Company currently has no contingency plans in place in the event it does not
complete all phases of its Year 2000 program.  The Company plans to evaluate the
status  of its  efforts  in  June  1999  to  determine  whether  such a plan  is
necessary.

Liquidity and Capital Resources

At March 31, 1999, the Company had working capital of $61.5 million, compared to
$55.5 million at December 31, 1998.  Cash provided by operations for the quarter
ended March 31, 1999 was $2.3 million.  Net accounts receivable of $55.9 million
at March 31, 1999 amounted to 47 days of net physician groups revenue (excluding
other  revenues)  for the  first  quarter  of 1999.  Net  income  combined  with
depreciation and amortization, deferred taxes, and a decrease in management fees
receivable and due from  affiliated  physician  groups  provided $8.7 million in
cash  flows.  This was  offset by uses of cash of $6.4  million  resulting  from
increases in accounts  receivable,  and other  assets and  decreases in accounts
payable, payable to physician groups and accrued expenses and other liabilities.

The Company had aggregate  cash  expenditures  for purchases of clinic assets of
$37.0  million  for the quarter  ended March 31,  1999.  Of this  amount,  $22.1
million  relates  primarily  to deferred  payments  associated  with  previously
completed  acquisitions  and $14.9 million relates to acquisitions  completed in
the first quarter of 1999. Capital expenditures amounted to $1.1 million for the
quarter ended March 31, 1999.  Although each of the Company's service agreements
with its affiliated physician groups requires the Company to provide capital for
equipment,  expansion,  additional  physicians and other major expenditures,  no
specific  amount has been committed in advance.  Capital  expenditures  are made
based  partially  upon  the   availability  of  funds,  the  sources  of  funds,
alternative projects and an acceptable repayment period.

In  November  1998,  the  Company  authorized  the  adoption  of a common  stock
repurchase  program  whereby the Company may repurchase up to $10 million of its
common stock.  During the first quarter of 1999,  the Company  purchased  35,000
shares  of its own  common  stock  at an  average  price  of  $4.75  per  share.
Subsequent to the end of the first quarter,  the Company purchased an additional
658,103 shares at an average price of $4.18 per share.

The Company's  revolving credit agreement (the "Credit Facility") provides for a
three-year  commitment  to fund  revolving  credit  borrowings  of up to  $125.0
million for acquisitions and general working capital purposes. The interest rate
under the Credit Facility is set at the Company's option and varies based on the
Company's  leverage,  as follows:  (i) the higher of the federal funds rate plus
0.5% to 1.25% or the prime rate plus 0.0% to 0.75%,  or (ii) the Eurodollar rate
plus 1.25% to 2.25%.  As of March 31, 1999,  the effective  interest rate on the
Credit Facility was 7.36%.  The Credit  Facility  includes  certain  restrictive
covenants  including  limitations  on the  payment of  dividends  as well as the
maintenance of certain financial  ratios.  At the Company's option,  the Company
can convert the outstanding balance on the Credit Facility to a term loan, which
would be due December 17, 2003. The Credit Facility is secured by  substantially
all the assets of the Company.


<PAGE>


The Company had cash and cash equivalents of $15.4 million at March 31, 1999. In
addition to this,  the  Company's  principal  sources of liquidity  are accounts
receivable of $55.9 million at March 31, 1998 and availability  under the Credit
Facility of $32.2 million.  The Company  believes that the  combination of these
sources will be sufficient to meet the Company's  working  capital needs for the
next twelve  months.  The Company's  future  acquisition,  expansion and capital
expenditure  programs will require substantial amounts of capital resources.  To
meet the capital needs of these programs,  the Company will continue to evaluate
alternative   sources  of  financing,   including   short-  and  long-term  bank
indebtedness,  additional equity and other forms of financing,  the availability
and terms of which will depend upon market and other conditions. There can be no
assurance that additional financing will be available on terms acceptable to the
Company.

Forward-Looking Statements

This  report  includes  certain  forward-looking  statements  about  anticipated
results,  including  statements as to operating  results,  liquidity and capital
resources,  and  negotiations  with and  acquisitions  of  additional  physician
groups. Such forward-looking  statements are based upon internal estimates which
are  subject  to  change  because  they  reflect  preliminary   information  and
management  assumptions,  and a variety of  factors  could  cause the  Company's
actual results and experience to differ materially from the anticipated  results
or other expectations expressed in the forward-looking  statements.  The factors
which could cause  actual  results or outcomes to differ from such  expectations
include the extent of the  Company's  success in (i)  consummating  affiliations
with additional  physician groups;  (ii) negotiating  managed care contracts and
managing  the  medical  risk  assumed  thereunder,  (iii)  obtaining  additional
financing upon terms acceptable to the Company,  and (iv) negotiating  favorable
reimbursement  rates with third-party  payors,  along with the uncertainties and
other factors described herein and in the Company's public filings and reports.

<PAGE>




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

         (a)      Exhibits:

                  11       Computation of Per Share Earnings

                  27       Financial Data Schedule

         (b)      Reports on Form 8-K

                  None.



<PAGE>



                               SIGNATURES


Pursuant to the  requirements  of the Securities Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned  thereunto
duly authorized.
<TABLE>
<CAPTION>

Signature                                                 Title                                    Date

<S>                                             <C>                                           <C> 

/s/ H. WAYNE POSEY                    
H. Wayne Posey                                  Chairman, President, Chief Executive           May 17, 1999
                                                Officer, and Director
                                                (Chief Executive Officer)

/s/ ROBERT D. SMITH                   
Robert D. Smith                                 Senior Vice President - Finance and            May 17, 1999
                                                Chief Financial Officer
                                                (Chief Accounting Officer)
</TABLE>