================================================================================
                       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, 2000

                                       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 0-29172

                           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, 2000
                   $.01 par value                       22,251,813 shares


================================================================================


<PAGE>



                  PROMEDCO MANAGEMENT COMPANY AND SUBSIDIARIES

                                      INDEX

                                                                           Page
                                                                            No.

Part I. Financial Information

         Item 1. Financial Statements

                  Condensed Consolidated Balance Sheets

                      March 31, 2000 and December 31, 1999                    2

                  Condensed Consolidated Statements of Operations

                      Three Months Ended March 31, 2000 and 1999              3

                  Condensed Consolidated Statements of Cash Flows

                      Three Months Ended March 31, 2000 and 1999              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 2. Changes in Securities and Use of Proceeds                   14

         Item 6. Exhibits and Reports on Form 8-K                            14

Signatures                                                                   15




<PAGE>



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

                                                                             March 31, 2000         December 31,
                                                                               (Unaudited)              1999
                                     ASSETS
<S>                                                                            <C>                <C>
Current assets:
         Cash and cash equivalents                                             $        5,637      $          7,625
         Accounts receivable, net                                                      69,548                63,811
         Management fees receivable                                                    13,553                 9,905
         Due from affiliated medical groups                                            10,377                13,337
         Deferred tax benefit                                                             547                   537
         Prepaid expenses and other current assets                                     18,130                16,102
                                                                               --------------      ----------------
                  Total current assets                                                117,792               111,317
                                                                               --------------      ----------------
Property and equipment, net                                                            23,871                24,352
Intangible assets, net                                                                237,266               227,006
Long-term receivables                                                                  50,158                50,355
Deferred income taxes                                                                     605                   993
Other assets                                                                           10,200                 5,290
                                                                               --------------      ----------------
                  Total assets                                                 $      439,892      $        419,313
                                                                               ==============      ================
                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
         Accounts payable                                                      $        5,193      $          6,418
         Payable to affiliated medical groups                                          13,483                10,297
         Accrued salaries, wages and benefits                                           7,812                 7,578
         Accrued purchased medical services                                            10,392                 9,722
         Accrued expenses and other current liabilities                                 6,509                 7,321
         Current maturities of long-term debt                                          17,521                11,463
         Current portion of obligations under capital leases                              414                   476
         Current portion of deferred purchase price                                     3,050                 2,293
         Income taxes payable                                                           5,296                 3,643
                                                                               --------------      ----------------
                  Total current liabilities                                            69,670                59,211
                                                                               --------------      ----------------
Long-term debt, net of current maturities                                             137,541               149,674
Obligations under capital leases, net of current portion                                  253                   343
Deferred purchase price, net of current portion                                        17,399                17,592
Convertible subordinated notes payable                                                 24,994                 9,484
Other long-term liabilities                                                               800                   378
                                                                               --------------      ----------------
                  Total liabilities                                                   250,657               236,682
                                                                               --------------      ----------------
Stockholders' equity:
         Common stock                                                                     230                   219
         Additional paid-in capital                                                   159,805               156,106
         Common stock to be issued                                                         90                    90
         Treasury stock                                                                (2,964)               (2,865)
         Stockholder notes receivable                                                    (250)                 (250)
         Retained earnings                                                             32,324                29,331
                                                                               --------------      ----------------
                  Total stockholders' equity                                          189,235               182,631
                                                                               --------------      ----------------
                  Total liabilities and stockholders' equity                   $      439,892      $        419,313
                                                                               ==============      ================
</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,

                                                                                  2000                  1999
<S>                                                                            <C>                 <C>
Net revenue                                                                    $       94,351      $         73,092

Operating expenses:
         Clinic salaries and benefits                                                  31,816                25,706
         Clinic rent and lease expense                                                  8,081                 6,246
         Clinic supplies                                                               10,402                 8,589
         Purchased medical services                                                    17,350                11,912
         Other clinic costs                                                            11,990                 8,819
         General corporate expenses                                                     2,540                 2,010
         Depreciation and amortization                                                  3,839                 2,776
         Interest expense                                                               3,173                 1,011
                                                                               --------------      ----------------
                  Total                                                                89,191                67,069
                                                                               --------------      ----------------
Income before provision for income taxes                                                5,160                 6,023

Provision for income taxes                                                              2,167                 2,289
                                                                               --------------      ----------------
Net income                                                                     $        2,993      $          3,734
                                                                               ==============      ================
Earnings per share:
         Basic                                                                 $         0.14      $           0.17
                                                                               ==============      ================
         Diluted                                                               $         0.13      $           0.16
                                                                               ==============      ================

Weighted average number of common shares outstanding:
         Basic                                                                         22,076                21,457
                                                                               ==============      ================
         Diluted                                                                       24,008                23,740
                                                                               ==============      ================
</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,

                                                                                  2000                  1999
<S>                                                                            <C>                <C>
Cash flows from operating activities:

     Net income                                                                $        2,993     $           3,734

     Adjustments to reconcile net income to net cash provided by operating
     activities (net of effects of purchase transactions):
         Depreciation and amortization                                                  3,839                 2,776
         Provision for deferred income taxes                                              378                   458
         Changes in assets and liabilities:
              Accounts receivable, net                                                 (7,811)               (2,588)
              Management fees receivable                                               (3,723)                1,026
              Due from affiliated medical groups                                        3,787                   723
              Prepaid expenses and other assets                                        (1,586)               (1,164)
              Accounts payable                                                           (833)               (1,004)
              Payable to affiliated medical groups                                      3,099                  (239)
              Accrued expenses and other liabilities                                    2,444                (1,434)
                                                                               ---------------        --------------
Net cash provided by operating activities                                               2,587                 2,288
                                                                               ---------------        --------------
Cash flows from investing activities:

     Purchases of property and equipment                                               (1,626)               (1,098)
     Purchases of clinic assets, net of cash acquired                                  (9,345)              (36,961)
     Increase in notes receivable                                                        (827)                 (561)
                                                                               ---------------        --------------
Net cash used in investing activities                                                 (11,798)              (38,620)
                                                                               ---------------        --------------
Cash flows from financing activities:

     Borrowings under long-term debt                                                   27,827                38,031
     Payments on long-term debt                                                       (22,030)                  (19)
     Payments on capital lease obligations                                               (152)                 (157)
     Payment of deferred financing costs                                               (1,471)                -
     Proceeds from issuance of common stock, net                                        3,674                    18
     Purchase of treasury shares                                                         (625)                 (169)
     Collection of stockholder note receivable                                          -                       120
                                                                               ---------------        --------------
Net cash provided by financing activities                                               7,223                37,824
                                                                               ---------------        --------------
(Decrease) increase in cash and cash equivalents                                       (1,988)                1,492

Cash and cash equivalents, beginning of period                                          7,625                13,871
                                                                               ---------------        --------------
Cash and cash equivalents, end of period                                       $        5,637         $      15,363
                                                                               ===============        ==============
Supplemental disclosure of cash flow information
     Cash paid during the period for -
         Interest expense                                                      $        2,867         $       1,787
         Income taxes                                                          $        1,799         $       1,965
</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, 1999.

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.  For the three-month period ending March 31, 2000,  approximately
2.9 million of stock options were excluded from the  computation  of diluted EPS
because the options'  exercise prices were greater than the average market price
of the common shares.

Net Revenue

Net revenue  represents total revenue reduced by amounts paid to medical groups.
The amounts  paid to medical  groups  (typically  80-85% of the medical  group's
operating income)  represents amounts paid to the groups pursuant to the service
agreements between the Company and the groups and primarily consists of the cost
of the services of the group's  physicians.  Under the service  agreements,  the
Company  provides each medical 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-provider
personnel.

Net revenue is detailed as follows (in thousands):

                                                  Three Months Ended March 31,
                                                        2000         1999
         Total revenue                           $    132,007    $    106,784
         Less- Amounts paid to medical groups         (37,656)        (33,692)
                                                 -------------   -------------
         Net revenue                             $     94,351    $     73,092
                                                 =============   =============

Revenue  consists  primarily of billings  and charges to  patients,  third party
payors  and  others  and  payments   received  under  capitated   contracts  for
professional  and  ancillary  services  rendered.  Total  revenue also  includes
amounts earned for other services rendered,  including contract billing; medical
directorships;   interim  management;   strategic  and  financial  planning  and
management consulting.  Revenue is recorded at the estimated realizable amounts,
net of  contractual  and other  adjustments.  Revenue under certain  third-party
payor agreements is subject to audit and retroactive adjustments. Provisions for
third party  settlements and adjustments are estimated in the period the related
services are rendered  and adjusted in future  periods as the 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.

2.       ACQUISITIONS:

Through  March 31, 2000 and during 1999,  the Company,  through its wholly owned
subsidiaries,  acquired  certain  operating  assets  of  the  following  medical
clinics:

<TABLE>
<CAPTION>

                     Medical Group                         Date                             Location
<S>       <C>                                        <C>                                <C>
2000:    First Choice Medical (a)                    January 2000                       Flower Mound, TX

1999:    El Paseo Medical Center                     January 1999 (b)                   Las Cruces, NM
         Boca Raton Medical Associates               February 1999 (c)                  Boca Raton, FL
         Medical Office Services                     May 1999                           Flagstaff, AZ
         Family Care Center of Indiana               May 1999                           Dyer, IN
         MedGroup                                    August 1999                        Prescott, AZ
         Horizon Medical Group                       October 1999 (d)                   Columbus, GA

</TABLE>

(a)           The  physicians  of  First  Choice   Medical   combined  with  the
              HealthFirst  Medical Group,  which had previously  affiliated with
              the Company in June 1996.

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

(c)           The  Company  operated  Boca  Raton  Medical  Associates  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 effective February 1, 1999.

(d)           The  Company  operated  Horizon  Medical  Group  under an  interim
              service  agreement  effective July 1, 1998. The Company  completed
              its  acquisition  in October  1999,  and entered  into a long-term
              service agreement effective October 1, 1999.

Effective  August 1,  1999,  the  Company,  through a wholly  owned  subsidiary,
completed its acquisition of Primergy,  Inc.,  ("Primergy").  Based in Kingston,
New  York,  Primergy  is a  medical  network  management  company  that owns and
operates five IPAs in the Hudson Valley of New York and has under  contract more
than 1,000 physicians.

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 medical group acquisition, the Company entered
into a long-term  service  agreement with the related medical group. The service
agreements are typically 40 years in length.

The  following   unaudited  pro  forma   information   reflects  the  effect  of
acquisitions  of medical  groups and  Primergy  on the  consolidated  results of
operations  of the  Company  had the  acquisitions  occurred at January 1, 1999.
Future  results may differ  substantially  from pro forma  results and cannot be
considered indicative of future results (in thousands).

                                                       Three Months Ended
                                                     2000               1999

         Net revenue                              $   94,351         $  85,208
                                                  ==========         =========
         Net income                               $    2,993         $   3,863
                                                  ==========         =========
         Earnings per share
                  Basic                           $     0.14         $    0.18
                                                  ==========         =========
                  Diluted                         $     0.13         $    0.16
                                                  ==========         =========
         Weighted average number of
            common shares outstanding
                  Basic                               22,076            21,707
                                                  ==========         =========
                  Diluted                             24,008            23,443
                                                  ==========         =========

The pro forma net income for the three months ended March 31, 2000, is less than
the  amount  for the same pro  forma  period in 1999 due to  increased  interest
expense from the increase in the overall  effective rate on the credit  facility
of over 1% and the  issuance  of  senior  subordinated  notes to  affiliates  of
Goldman, Sachs & Co. (see Note 3.) and higher general corporate expenses none of
which includes a pro forma adjustment.

3.       LONG-TERM DEBT:

Long-term debt is summarized as follows (in thousands):

                                                    March 31,      December 31,
                                                      2000            1999
  Borrowings under bank credit facility          $      150,000    $   156,000
  Notes payable issued to medical groups                  4,253          4,309
  Other long-term debt                                      809            828
                                                 --------------    -----------
                                                        155,062        161,137
  Less- current maturities                              (17,521)       (11,463)
                                                 --------------    -----------
  Long-term debt, net of current maturities      $      137,541    $   149,674
                                                 ==============    ===========

In January 2000, the Company  entered into a two-stage  transaction in which the
Company will issue  425,000 of  convertible  preferred  stock to  affiliates  of
Goldman, Sachs & Co. for aggregate gross proceeds of $42.5 million ("the Goldman
Sachs Transaction").  The first stage of the transaction, which was completed in
January 2000,  involved the issuance of $16 million  principal  amount of senior
subordinated  notes and 1,250,000  shares of the Company's  common stock for $16
million. In the second stage, which is expected to be completed in May 2000, the
investors will exchange the notes, common stock, and an additional $26.5 million
for 425,000 shares of the Company's  convertible  preferred stock,  bringing the
total  investment  to $42.5  million.  The  convertible  preferred  stock  has a
liquidation  preference  of  $100  per  share,  a  dividend  rate  of 6%  and is
convertible  into shares of the Company's  common stock at a conversion price of
$2.50  per  share,   subject  to  adjustment  in   accordance   with   customary
anti-dilution  provisions.  In  addition,  the  Company  will  issue  three-year
warrants to purchase up to $12.5 million of 6% convertible  preferred stock that
is convertible  into the Company's  common stock at a conversion  price of $4.00
per share.

In  connection  with the  completion  of the second  stage of the Goldman  Sachs
Transaction,  the  Company  intends to expand its credit  facility  by up to $25
million.  This expansion is expected to come in the form of additional revolving
credit and six-year  secured term loans. In addition to this initial  expansion,
the Company may require Goldman Sachs to exercise its warrants if an incremental
$25 million of senior debt is obtained prior to December 31, 2000.

4.       SUPPLEMENTAL CASH FLOW INFORMATION:

In the first quarter of 2000,  the Company  converted  approximately  $35,000 of
convertible  subordinated  notes payable to a medical group into 3,912 shares of
the Company's common stock.

In the  first  three  months  of 2000 and  1999,  an  affiliated  medical  group
surrendered 39,700 and 19,111 shares, respectively of the Company's common stock
as partial payment of an outstanding note balance and accrued interest.


<PAGE>




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

Overview

ProMedCo, headquartered in Fort Worth, Texas, is a medical services company that
coordinates and manages the delivery of a wide variety of healthcare services in
non-urban communities.  We believe that these non-urban communities,  which have
fewer healthcare  providers and lower HMO penetration than urban areas, offer an
opportunity  for  us to  capture  a  substantial  portion  of  local  healthcare
expenditures.  To enter  these  markets,  we  affiliate  with a  leading  group,
establishing  a  platform  from  which we can grow our  market  share by  adding
ancillary services and providers.

We currently  operate in 25 communities  throughout the United States,  where we
are affiliated with medical groups comprised of approximately 840 physicians and
170  mid-level   providers.   In  addition,   the  Company  is  associated  with
approximately 1,850 physicians in associated  independent  practice  association
("IPA") networks.

Our agreements with medical groups are structured to provide a common  incentive
for growth. When affiliating with a medical group, we typically acquire, at fair
market value,  the group's  non-real  estate  operating  assets and enter into a
40-year service agreement with the group in exchange for various combinations of
cash, our common stock,  other securities  issued by us and/or our assumption of
certain  liabilities.  Under  these  service  agreements,  we  receive  a  fixed
percentage,  typically  15% to 20%,  of each  group's  operating  income  before
physician  compensation.  In our more recent  affiliations,  our share of income
from new ancillary services has been increased to 50%. We also share between 25%
and 50% of each  group's  surplus or  deficit  under  risk-sharing  arrangements
pursuant to capitated managed care contracts.

We have also developed alternative  affiliation  structures that require minimal
initial  investment and closed one such affiliation in 1999. The related 25-year
service  agreement gives us a lower  percentage of the group's  operating income
than our typical agreement,  but entitles us to 50% of the income from ancillary
services added  following the initial  affiliation  date. The service  agreement
also allows the group to  terminate  the  agreement  for any reason at five-year
intervals, but only if the group purchases all of the practice assets then owned
by us and pays us a multiple of additional  cash flows created since the initial
affiliation date.

Our net revenue  represents total revenue for services rendered (reported at the
estimated  realizable amounts from patients,  third-party payors and others, net
of contractual and other adjustments),  less amounts paid to the medical groups.
The amounts paid to the medical groups,  typically 80-85% of the medical groups'
operating  income,  primarily consist of the cost of the services of the groups'
physicians. Under our service agreements, we provide each medical group with the
facilities and equipment used in its medical practice, assume responsibility for
the management of the operations of the clinic and employ  substantially  all of
the  non-provider  personnel.  We do not consolidate  the operating  results and
accounts of the medical groups.

Results of Operations

After beginning  operations in our first two  communities  1995, we entered five
additional  communities in 1996, six in 1997, eight in 1998 and four in 1999. In
addition to entering  new  markets,  we  continuously  work to expand our market
share  through   affiliations  with  additional   primary  care  physicians  and
specialists and selective additions of ancillary services. Changes in results of
operations were caused  primarily by expanding into  additional  communities and
same market growth in our existing  communities.  The following table sets forth
the  percentages  of revenue  represented  by  certain  items  reflected  in our
condensed consolidated statements of operations.

                                                           Three Months Ended
                                                            2000         1999
Net revenue                                                 100.0%       100.0%
Operating expenses:

         Clinic salaries and benefits                        33.7         35.2
         Clinic rent and lease expense                        8.5          8.5
         Clinic supplies                                     11.0         11.8
         Purchased medical services                          18.4         16.3
         Other clinic costs                                  12.7         12.1
         General corporate expenses                           2.7          2.7
         Depreciation and amortization                        4.1          3.8
         Interest expense                                     3.4          1.4
                                                        ---------    ---------
Income before provision for income taxes                      5.5          8.2
Provision for income taxes                                    2.3          3.1
                                                        ---------    ---------
Net income                                                    3.2%         5.1%
                                                       ==========    =========
Other Financial Information:
     Total revenue, amounts in thousands (1)            $ 132,007     $106,784

     Payor breakdown (2)
         Commercial and discounted fee-for-service          40.5%         37.6%
         Medicare/Medicaid                                  29.9          28.3
         Capitation                                         16.3          18.4
         Other                                              13.3          15.7
                                                        ---------    ---------
                                                           100.0%        100.0%
                                                        =========    =========

(1)  Total revenue  represents  amounts  received for professional and ancillary
     services  and  for  other  services,  such  as  contract  billing,  medical
     directorship  and interim  management.  These  amounts are  recorded at the
     estimated realizable amounts, net of contractual and other adjustments. Our
     net  revenue  represents  revenue,  reduced by amounts  paid to the medical
     groups.

(2)      As a percentage of total revenue.

Three Months Ended March 31, 2000 Compared With Three Months Ended March 31,
1999

Net revenue  increased  by 27.3% to $94.4  million  for the quarter  ended March
31,2000, from $73.1 million for the quarter ended March 31, 1999.  Approximately
76.1% of this increase was attributable to communities we entered since April 1,
1999,  with the balance  coming from  communities  in which we began  operations
prior to 1999.  Same market  growth in net revenue for  communities  in which we
operated  for longer than one year was over 10% for the quarter  ended March 31,
2000 compared with the quarter ended March 31, 1999.

Overall clinic costs,  including purchased medical services,  as a percentage of
net revenue increased to 84.3% for the quarter ended March 31, 2000, compared to
83.9% for the quarter ended March 31, 1999.  Purchased  medical services reflect
the cost of services required under managed care contracts that are not provided
by our medical groups and supplemental services to support incremental ancillary
services.  The primary reason for the overall  increase in clinic  expenses as a
percentage  of net revenue was a change in  purchased  medical  services,  which
increased to 18.4% as a percentage of net revenue for the first quarter of 2000,
compared to 16.3% in the first  quarter of 1999.  This change  resulted from the
relative increase in ancillary revenue and the related expenses to provide these
services.  The increase in purchased  medical  services was partially  offset by
decreases,  as a percentage of net revenue,  in clinic salaries and benefits and
clinic supplies which decreased to 33.7% and 11.0%,  respectively,  in the first
quarter of 2000 compared to 35.2% and 11.8%,  respectively  in the first quarter
of 1999.

General  corporate  expenses as a percentage of net revenue remained constant at
2.7% for the quarter  ended March 31, 2000,  and for the quarter ended March 31,
1999.  While these costs remained  constant as a percentage of net revenue,  the
amount of general  corporate  expenses  increased  26.4% to $2.5 million for the
quarter  ended March 31, 2000 from $2.0 million for the quarter  ended March 31,
1999.  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 continues to grow.

Depreciation and  amortization as a percentage of net revenue  increased to 4.1%
for the quarter  ended  March  31,2000,  compared to 3.8% for the quarter  ended
March  31,  1999.  This  increase   resulted   primarily  from  an  increase  in
depreciation  due to changes in the mix of our medical  groups,  with certain of
our more recent  affiliations  having a relatively higher amount of property and
equipment.

Net interest  expense as a percentage  of net revenue  increased to 3.4% for the
quarter  ended March 31, 2000,  compared to 1.4% for the quarter ended March 31,
1999.  This  increase  is a result of an  overall  effective  rate on our credit
facility was higher in the first  quarter of 2000  compared to the first quarter
of 1999.  In  addition,  there was an  increase  interest  from the  issuance of
subordinated notes payable as part of the Goldman Sachs Transaction.

Provision  for income taxes  reflects an effective  rate of 42.0%,  which is our
estimated effective rate for all of 2000.


<PAGE>



Liquidity and Capital Resources

At March 31, 2000, we had working  capital of $48.1  million,  compared to $52.1
million at December 31, 1999. This decrease in working capital  resulted from an
increase in borrowings under the credit  facility,  of which a portion is due in
June 2000.  Net cash provided by operations for the three months ended March 31,
2000 was $2.6 million.  Net income,  combined with depreciation and amortization
and deferred  taxes,  a decrease in due from  affiliated  medical  groups and an
increases in payable to  affiliated  physician  groups and accrued  expenses and
other liabilities, provided $16.5 million in cash flows. This was offset by uses
of cash of $13.9 million that resulted  from  increases in accounts  receivable,
management fees receivable and other assets, and a decrease in accounts payable.

Our accounts receivable  increased $7.8 million,  net of the effects of purchase
accounting  since  December  31,  1999.  The  increase is due  primarily  to the
increase in revenues in the first quarter of 1999 compared to the fourth quarter
of  1999.  For the  first  quarter  of  2000,  the  number  of days in  accounts
receivable  was  47.7  days is a slight  increase  from  the  number  of days in
accounts  receivable  of 47.2 days for the  fourth  quarter  of 1999.  While our
days-outstanding  compares favorably within the healthcare industry, we continue
to focus  significant  efforts at all of our  clinics to continue to improve the
collections and the overall business office processes.

We had  aggregate  cash  expenditures  for  purchases  of clinic  assets of $9.3
million for the three months ended March 31, 2000. Of this amount,  $4.8 million
related  primarily to deferred  payments  associated with  previously  completed
acquisitions  and $4.5 million  related to  acquisitions  completed in the first
three months of 2000. Our capital expenditures  amounted to $1.6 million for the
three months ended March 31, 2000.  Although each of the service agreements with
our  affiliated  medical  groups  requires us to provide  capital for equipment,
expansion,  additional  physicians  and other  major  expenditures,  we have not
committed a specific  amount in  advance.  Capital  expenditures  are made based
partially  upon the  availability  of funds,  the sources of funds,  alternative
projects and an acceptable return on investment.

In November 1998, we authorized a common stock repurchase program whereby we may
repurchase  up to $10.0  million of our  common  stock.  During the first  three
months of 2000,  we  purchased  43,317  shares at an average  price of $2.28 per
share.

In January 2000, we entered into a two-stage  transaction in which we will issue
an aggregate of 425,000 shares of convertible  preferred  stock to affiliates of
Goldman,  Sachs & Co. for aggregate  gross proceeds of $42.5 million.  The first
stage of the  transaction,  which was  completed in January  2000,  involved the
issuance of $16 million  principal amount of our senior  subordinated  notes and
1,250,000 shares of our common stock for $16 million. In the second stage, which
is expected to be completed in May 2000,  the new  investors  will  exchange the
notes,  common stock,  and an additional $26.5 million for 425,000 shares of our
convertible preferred stock, bringing the total investment to $42.5 million. The
convertible  preferred stock has a liquidation  preference of $100 per share and
is  convertible  into shares of our common stock at a conversion  price of $2.50
per share,  subject to  adjustment in accordance  with  customary  anti-dilution
provisions.  In addition, the Company will issue three-year warrants to purchase
up to $12.5 million of 6% convertible  preferred stock that is convertible  into
the Company's common stock at a conversion price of $4.00 per share.

On December 17, 1998,  we entered into a new  revolving  credit  facility with a
syndicate of banks,  to provide for a three-year  commitment  to fund  revolving
credit  borrowings of up to $125.0 million for  acquisitions and general working
capital.  During  1999,  this credit  facility  was amended and  expanded to its
current  commitment  level of $157.5  million.  The  commitment  is comprised of
$142.5 million  maximum  commitment  that expires  December 17, 2001 and a $15.0
million  commitment  that expires June 27, 2000. The interest rate is set at our
option and  varies  based on our  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,  2000,  the
effective  interest rate under the credit facility was 8.4%. The credit facility
includes certain restrictive covenants,  including limitations on the payment of
dividends,  as well as  requirements  for the  maintenance of certain  financial
ratios. At the expiration of the revolving credit commitment, we can convert the
outstanding  balance  to a term  loan.  Upon such  conversion,  the  outstanding
balance will be repaid in 5% increments  over eight  quarters,  with the balance
due December 17, 2003. The credit  facility is secured by  substantially  all of
our assets. In obtaining the credit facility and subsequent amendments,  we paid
fees and other  closing  costs of  approximately  $1.7  million,  which has been
capitalized in other assets on our consolidated  balance sheets and is amortized
as an adjustment to interest expense using the effective  interest method. As of
March 31, 2000,  we had $150  million  outstanding  and $7.0 million  available,
subject to certain conditions under the agreement.

We had cash and cash  equivalents of $5.6 million at March 31, 2000. In addition
to this,  our  principal  sources of liquidity  at March 31, 2000 were  accounts
receivable  of $69.5 million and  availability  of $7.0 million under the credit
facility.  We believe that this,  combined  with the  proceeds  from the Goldman
Sachs  transaction,  will be sufficient to meet our working capital needs for at
least the next twelve  months.  Our future  acquisition,  expansion  and capital
expenditure  programs may, however,  require  substantial  amounts of additional
capital resources.  To meet the additional  capital needs of these programs,  we
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 we will be able to obtain additional financing at
acceptable terms.

Forward-Looking Statements

This report includes  "forward-looking  statements" under the Private Securities
Litigation Reform Act of 1995 about anticipated results, including statements as
to operating results,  liquidity and capital  resources,  and expansion into and
within additional communities.  These forward-looking  statements are based upon
our  internal  estimates,  which are  subject  to change  because  they  reflect
preliminary  information and our  assumptions.  Thus, a variety of factors could
cause  our  actual  results  and  experience  to  differ   materially  from  the
anticipated   results  or  other   expectations   we  have   expressed   in  the
forward-looking  statements.  The  factors  that could cause  actual  results or
outcomes to differ from our  expectations  include our ability to:

o    continue to operate profitably;

o    expand in our existing communities;

o    establish operations in additional communities; and

o    obtain additional financing upon terms acceptable to us;

along with the  uncertainties  and other factors described in this report and in
our public filings and reports.

Item 2. Changes in Securities and Use of Proceeds

In  January  2000,  the  Company  issued  1,250,000  shares of  Common  Stock to
affiliates  of Goldman,  Sachs & Co. as a private  offering.  This  issuance was
exempt from  registration  under the Securities Act, pursuant to section 4(2) of
the Act as it did not involve any public offering.

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 15, 2000
                                                Officer, and Director
                                                (Chief Executive Officer)

/s/ ROBERT D. SMITH
Robert D. Smith                                 Senior Vice President - Finance and          May 15, 2000
                                                Chief Financial Officer
                                                (Chief Accounting Officer)
</TABLE>