<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-QSB

             [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 1999

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                          Commission File No.: 0-28390

                  PENNSYLVANIA PHYSICIAN HEALTHCARE PLAN, INC.
             (Exact name of registrant as specified in its Charter)

     Pennsylvania                                             23-2795795
(State of incorporation                                    (I.R.S. Employer
   or organization)                                      Identification Number)


   c/o Pelino & Lentz, 1650 Market Street, 32nd Floor, Philadelphia, PA 19103
                    (Address of Principal Executive Offices)

               Registrant's Telephone Number, including area code:
                                 (215) 246-3168

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 the filing
requirements for at least the past 90 days.

                                   Yes   X   No
                                      ------   ---------

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

         4,087 shares of Class A common stock, $.01 par value per share

         1,074 shares of Class B common stock, $.01 par value per share

                           (as of September 30, 1999)

                 Transitional Small Business Disclosure Format:

Yes   X          No
   ---------       ------------

<PAGE>

PENNSYLVANIA PHYSICIAN HEALTHCARE PLAN, INC.

<TABLE>
<CAPTION>
Consolidated Statement of Net Liabilities (Liquidation Basis) as of September 30, 1999 and
Consolidated Balance Sheet (Going Concern Basis) as of December 31, 1998
---------------------------------------------------------------------------------------------------------------------------------
                                                                                                September 30,       December 31,
Assets                                                                                              1999                1998
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                               <C>                <C>
Cash and cash equivalents                                                                         $ 427,689          $ 2,608,269
Short-term investment securities                                                                    597,908              400,750
Accrued interest income                                                                              31,413              145,654
Premiums receivable, net                                                                            356,024              171,766
Income taxes receivable                                                                                   -               28,853
Other assets                                                                                          7,950              245,056
Long-term investment securities                                                                   2,884,882            6,860,624
Equipment (at net realizable value as of September 30, 1999 and net
     of accumulated depreciation of $684,830 as of December 31, 1998)                               327,922              571,911
---------------------------------------------------------------------------------------------------------------------------------

Total assets                                                                                      4,633,788           11,032,883
---------------------------------------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Equity
---------------------------------------------------------------------------------------------------------------------------------

Liabilities:
     Medical claims liabilities                                                                   4,875,380            1,945,722
     Accounts payable                                                                               126,847              152,558
     Accrued expenses                                                                               155,800               44,350
     Other liabilities                                                                              193,000               29,075
     Reserve for estimated costs during the period of liquidation                                   600,000                    -
---------------------------------------------------------------------------------------------------------------------------------

Total liabilities                                                                                 5,951,027            2,171,705
---------------------------------------------------------------------------------------------------------------------------------

Stockholders' Equity:
Class A common voting stock, $.01 par value, 40,000 shares
     authorized;  4,087 shares issued and outstanding                                                     -                   41
Class B common non-voting stock, $.01 par value, 100,000 shares
     authorized;  1,074 shares issued and outstanding                                                     -                   11
Additional paid in capital                                                                                -           21,220,777
Accumulated deficit                                                                                       -          (12,364,727)
Net unrealized gain (loss) on investment securities, net of taxes                                         -                5,076
---------------------------------------------------------------------------------------------------------------------------------

Total stockholders' equity                                                                                -            8,861,178
---------------------------------------------------------------------------------------------------------------------------------

Total liabilities and stockholders' equity                                                                          $ 11,032,883
Net liabilities in liquidation                                                                 $ (1,317,239)
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.

                                       2
<PAGE>
PENNSYLVANIA PHYSICIAN HEALTHCARE PLAN, INC.

<TABLE>
<CAPTION>
Consolidated Statements of Loss and Changes in Net Assets (Liabilities) For the Three and Nine Months Ended
September 30, 1999 (Liquidation Basis) and September 30, 1998 (Going Concern Basis)
------------------------------------------------------------------------------------------------------------------------------------
                                                      Three Months          Three Months       Nine Months           Nine Months
                                                         Ended                 Ended              Ended                 Ended
                                                      September 30,         September 30,      September 30,         September 30,
                                                          1999                  1998               1999                  1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>                <C>                  <C>                   <C>
Revenues:
     Premiums                                         $ 7,107,488        $    1,818,428       $   17,841,417        $    3,887,922
     Consulting                                                 -                     -                    -                65,000
     Investment income, net                                64,153               157,232              297,533               494,781
------------------------------------------------------------------------------------------------------------------------------------

Total Revenue                                           7,171,641             1,975,660           18,138,950             4,447,703
------------------------------------------------------------------------------------------------------------------------------------

Expenses:
     Health care services                               9,326,300             2,017,125           21,908,792             4,017,692
     Salary and benefits                                  912,266               786,613            2,780,233             2,136,947
     Operating  expenses                                  561,574               453,874            1,766,766             1,300,288
     Professional services                                 87,906               125,344              231,381               338,688
     Other taxes                                            4,100                33,462               15,292                37,019
     Depreciation                                          90,668               104,141              207,607               303,882
------------------------------------------------------------------------------------------------------------------------------------

Total expenses                                         10,982,814             3,520,559           26,910,071             8,134,516
------------------------------------------------------------------------------------------------------------------------------------

Net loss                                              $(3,811,173)       $   (1,544,899)      $   (8,771,121)       $   (3,686,813)
------------------------------------------------------------------------------------------------------------------------------------

Other comprehensive income, net of income taxes:
     Unrealized gain (loss) on investments                  1,963                21,504              (53,774)               21,504

------------------------------------------------------------------------------------------------------------------------------------
Comprehensive Loss                                    $(3,809,210)       $   (1,523,395)      $   (8,824,895)       $   (3,665,309)

Net Assets, Beginning of Period                         3,845,493            12,804,671            8,861,178            14,946,585

Adjustment to Liquidation Basis                        (1,353,522)                    -           (1,353,522)                    -

Net Assets (Liabilities), End of Period               $(1,317,239)       $   11,281,276       $   (1,317,239)       $   11,281,276
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.


                                       3
<PAGE>
PENNSYLVANIA PHYSICIAN HEALTHCARE PLAN, INC.

<TABLE>
<CAPTION>
Consolidated Statements of Changes In Net Liabilities (Deficiency In Assets) For The Nine Months Ended September 30, 1999
(Liquidation Basis) and Consolidated Statement of Changes in Stockholders' Equity For The Year Ended December 31, 1998
(Going Concern Basis)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          Accumulated       Net
                                         Common            Common Stock      Additional                      Other      Liabilities
                                       Stock Shares          Par Value        Paid In     Accumulated    Comprehensive  (Deficiency
                                   Class A     Class B  Class A    Class B    Capital       Deficit          Income      In Assets)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>         <C>      <C>        <C>     <C>          <C>               <C>          <C>
Balance, December 31, 1997          4,087       1,074    $ 41       $ 11    $21,220,777  $ (6,274,244)     $      -     $14,946,585

Comprehensive Loss
     Net loss                                                                              (6,090,483)                   (6,090,483)

Other Comprehensive Income
     Unrealized gains on
     investments                                                                                              5,076           5,076
------------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1998          4,087       1,074      41         11     21,220,777   (12,364,727)        5,076       8,861,178
------------------------------------------------------------------------------------------------------------------------------------

Comprehensive Loss
     Net loss                                                                              (8,771,121)                   (8,771,121)

Other Comprehensive Income
     Unrealized losses on
     investments                                                                                            (53,774)        (53,774)

     Adjustment to liquidation
     basis                                                                                               (1,353,522)     (1,353,522)
------------------------------------------------------------------------------------------------------------------------------------

Balance, September 30, 1999         4,087       1,074    $ 41       $ 11    $21,220,777  $(21,135,848)  $(1,402,220)    $(1,317,239)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.


                                       4
<PAGE>

PENNSYLVANIA PHYSICIAN HEALTHCARE PLAN, INC.

Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------------------------
                                                                Three Months    Three Months      Nine Months       Nine Months
                                                                   Ended           Ended             Ended             Ended
                                                                September 30,   September 30,     September 30,     September 30,
                                                                    1999            1998              1999              1998
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>             <C>               <C>               <C>
Cash flows from operating activities:
     Net loss                                                   $ (3,811,173)   $ (1,544,899)     $ (8,771,121)     $ (3,686,813)
     Adjustments to reconcile net loss to net cash
         provided by (used in) operating activities:
         Depreciation, amortization and accretion                     83,509         106,389           207,607           306,130
         Net loss on sale of invetment securities                     19,070               -            19,290                 -
         Change in assets and liabilities:
            Accrued interest income                                   72,178         (36,492)          114,241           (19,407)
            Premiums receivable                                     (287,110)       (241,362)         (184,258)         (219,543)
            Other assets                                              30,136         (25,241)         (291,386)              231
            Medical claims liabilities                             1,029,896         921,351         2,929,658         1,352,582
            Accounts payable                                          78,059         (98,081)          (25,711)          (23,913)
            Accrued expenses                                         (20,820)         (2,470)          111,450           (10,025)
            Other liabilities                                              -         287,377           163,925           232,052
---------------------------------------------------------------------------------------------------------------------------------

Net cash used in operating activities                             (2,806,255)       (633,428)       (5,726,305)       (2,068,706)
---------------------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
     Purchases of investment securities                                    -      (9,564,463)       (3,711,902)       (9,564,463)
     Proceeds from maturities of investment securities                     -               -         4,400,000                 -
     Proceeds from sale of investment securities                   2,767,594               -         3,017,421                 -
     Purchases of equipment                                          (57,399)        (29,747)         (159,794)         (159,676)
---------------------------------------------------------------------------------------------------------------------------------

Net cash received from (used in) investing activities              2,710,195      (9,594,210)        3,545,725        (9,724,139)
---------------------------------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                 (96,060)    (10,227,638)       (2,180,580)      (11,792,845)
Cash and cash equivalents, beginning of period                       523,749      12,685,433         2,608,269        14,250,640
---------------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                          $  427,689     $ 2,457,795         $ 427,689       $ 2,457,795
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.

                                       5
<PAGE>

PENNSYLVANIA PHYSICIAN HEALTHCARE PLAN, INC.

Notes to Consolidated Financial Statements.
--------------------------------------------------------------------------------

 (1)     Description of Business

         Pennsylvania Physician Healthcare Plan, Inc. (the Company) was formed
         as a Pennsylvania for-profit corporation on February 15, 1995, under
         the direction of private practicing physicians to develop a physician
         owned and controlled managed care organization in Pennsylvania.

         The Company received a third party administrator (TPA) license in March
         1997 and a license to operate a preferred provider organization (PPO)
         in April 1997. The Company received a license to operate a health
         maintenance organization (HMO) on March 22, 1999.

         Through June 30, 1997 the Company was in the developmental stage and
         activities consisted primarily of raising capital through a public
         stock offering, hiring a management team, applying for the necessary
         licenses to operate as a managed care organization and developing a
         business plan. In the third quarter of 1997, the Company became
         operational and, accordingly, all developmental stage references in the
         accompanying financial statements were removed.

         During the second and third quarters of 1999, the Company's PPO
         incurred significantly larger underwriting losses than anticipated.
         Since September 30, 1999, the Company's financial condition has
         continued to deteriorate and has required that the Company cease all
         operations and begin the process of winding up its affairs, liquidating
         its assets and dissolving. See Note 3, "Going Concern Matters", of
         Notes to Consolidated Financial Statements and Item 2, "Management's
         Discussion and Analysis or Plan of Operation." Accordingly, the Company
         adopted the liquidation basis of accounting as of September 30, 1999,
         and adjusted its remaining assets to estimated net realizable value and
         its liabilities to include estimated costs of liquidating the Company
         as follows:

             -------------------------------------------------------------------
             Write-down of tax receivable                            $  28,853
             --------------------------------------------------- ---------------
             Write-down of other assets                              $ 528,492
             --------------------------------------------------- ---------------
             Write-down of equipment                                 $ 196,177
             --------------------------------------------------- ---------------
             Liability for estimated cost of liquidation             $ 600,000
             --------------------------------------------------- ---------------
                      Adjustment to liquidation basis               $1,353,522
             -------------------------------------------------------------------

 (2)     Summary of Significant Accounting Policies

         Unaudited Financial Statements
         The unaudited consolidated financial statements should be read in
         conjunction with the audited consolidated financial statements as of
         December 31, 1998 and reflect, in the opinion of management, all
         adjustments necessary to fairly state the results of operations for
         such periods.

         The notes to the financial statements are condensed and may not include
         all information that is required to be disclosed by generally accepted
         accounting principles.

                                       6
<PAGE>

         Principles of Consolidation
         The consolidated financial statements include the financial statements
         of Pennsylvania Physician Healthcare Plan, Inc. and its three
         wholly-owned subsidiaries, Physicians Care HMO, Inc., Physicians Care
         PPO, Inc., and Pennsylvania Physicians Care Service Corp. All
         significant intercompany balances and transactions have been eliminated
         in consolidation.

         Cash and Cash Equivalents
         Cash and cash equivalents include cash and investments with maturities
         of less than three months when purchased. The cost of these investments
         approximates fair market value.

         Investments
         The investment securities portfolio is classified as
         available-for-sale, and carried at fair value. Such fair value is based
         upon values obtained from independent third parties or quoted market
         prices of comparable instruments. Temporary changes in the fair value
         of investments are reflected as a component of other comprehensive
         income.

         Premiums and discounts are amortized and accreted over the term of the
         related securities using a method that approximates the interest
         method, adjusted for prepayments. Realized gains and losses on the sale
         of investment securities (determined by the specific identification
         method) are shown separately in the consolidated statement of
         operations. A decline in the fair value of any investment below cost
         that is deemed other than temporary results in a reduction of the
         carrying amount to fair value through a charge to income. Dividends and
         interest income are recognized when earned.

         Equipment
         As of September 30, 1999, equipment, consisting of furniture and office
         equipment, data processing equipment, capitalized software and
         leasehold improvements, is carried at its estimated net realizable
         value. As of December 31, 1998, equipment was carried at cost.
         Depreciation is calculated on the accelerated cost recovery method for
         both financial reporting and income taxes purposes over the estimated
         useful lives of the assets.

         When changes in business circumstances warrant, the Company reviews the
         recoverability of long-lived assets to determine if there has been any
         permanent impairment. This assessment is based on estimated future
         undiscounted cash flows compared with the assets' carrying value. If
         impairment is indicated, a write-down to fair value (normally measured
         by discounting estimated cash flows) would be taken.




                                       7
<PAGE>


         Medical Claims Liability
         Medical claims liabilities consist of actual claims reported but not
         paid and estimates of health care services incurred but not reported.
         The estimated claims incurred but not reported are based on historical
         data, current enrollment, health service utilization statistics, and
         other related information. These accruals are continually monitored and
         reviewed, and, as settlements are made or accruals adjusted,
         differences are reflected in current operations. Changes in assumptions
         for medical costs caused by changes in actual experience could cause
         these estimates to change in the near term.

         Revenue Recognition
         Premiums are recorded as revenue in the month in which members are
         entitled to service. Premiums collected in advance are recorded as
         deferred revenue. Interest income is recorded in the period it is
         earned.

         Reinsurance
         Premiums paid to reinsurers are reported as health care services
         expense and the related reinsurance recoveries, if any, are reported as
         deductions from health care services expense.

         Income Taxes
         Income taxes are accounted for under the asset and liability method.
         Deferred tax assets and liabilities are recognized for the future tax
         consequences attributable to differences between the financial
         statement carrying amounts of existing assets and liabilities and their
         respective tax bases and to operating loss and tax credit
         carryforwards. Deferred tax assets and liabilities are measured using
         enacted tax rates expected to apply to taxable income in the years in
         which those temporary differences are expected to be recovered or
         settled. The effect on deferred tax assets and liabilities of a change
         in tax rates is recognized in income in the period that includes the
         enactment date.

         Earnings Per Common Share
         Earnings per common share have been computed based upon the weighted
         average number of common shares outstanding during each period.

         Effective January 1, 1997, the Company adopted Statement of Financial
         Accounting Standards Number 128 "Earnings Per Share" (FASB No. 128).
         FASB No. 128 requires the presentation of basic earnings per share
         (EPS), calculated by dividing income available to common shareholders
         by the weighted-average number of common shares outstanding during the
         period, and diluted EPS, calculated the same as basic EPS except that
         the denominator is increased to include the number of additional common
         shares that would have been issued if all dilutive potential common
         shares had been issued. FASB No. 128 requires the restatement of EPS
         for all periods presented. The adoption of FASB No. 128 had no effect
         on the Company's calculation of earnings per share in the accompanying
         financial statements.



                                       8
<PAGE>


         Use of Estimates
         Management has made a number of estimates and assumptions relating to
         the reporting of assets and liabilities to prepare these consolidated
         financial statements in conformity with generally accepted accounting
         principles. Actual results could differ from those estimates.

         New Accounting Standard
         In June 1997, the Financial Accounting Standards Board (FASB) issued
         FASB No. 130 "Reporting Comprehensive Income". This statement, which
         establishes standards for reporting and disclosure of comprehensive
         income, is effective for annual periods beginning after December 15,
         1997. The adoption of FASB No. 130 has not had any material impact on
         the Company's financial position or results of operations.

         In June 1997, the FASB issued Statement No. 131, "Disclosures about
         Segments of an Enterprise and Related Information," which became
         effective in 1998. This statement establishes standards for reporting
         selected information about operating segments in the Company's interim
         and annual financial statements. Adoption of this statement did not
         impact the presentation of the Company's financial information.

         In June 1998, the FASB issued Statement No. 133, "Accounting for
         Derivative Instruments and Hedging Activities," which is effective for
         the Company's fiscal year ending December 31, 2001. This statement
         establishes accounting and reporting standards for derivative
         instruments, including those embedded in other contracts, and for
         hedging activities. It requires recognizing derivatives as assets or
         liabilities at fair value on the balance sheet. Management is currently
         evaluating the effects of FASB No. 133 on the Company's financial
         condition and results of operations.

         Year 2000
         Costs incurred by the Company to address Year 2000 issues, to include
         costs for assessment, renovation, testing, verification, and
         implementation, are charged to expense as incurred.

 (3)     Going Concern Matters

         The accompanying financial statements have been prepared on a
         liquidation basis as of September 30, 1999, and on a going concern
         basis as of December 31, 1998. As shown in the financial statements for
         the three month and nine month periods ended September 30, 1999, the
         Company incurred comprehensive losses of $3,809,210 and $8,824,895,
         respectively. Additionally, the adjustment to a liquidation basis
         recognized reductions in asset values and increases in liabilities
         related to liquidation. The Company's net liability (deficiency in
         assets) in liquidation at September 30, 1999 was estimated to be
         $1,317,239. Pennsylvania managed care laws require that the Company
         possess a minimum net worth of $1,175,000 to operate a PPO and an
         additional $1,500,000 for a HMO. These factors among others indicate
         that the Company will be unable to continue as a going concern. Please
         see Item 2. "Management's Discussion and Analysis or Plan of
         Operation," for a more detailed discussion of this matter.


                                       9
<PAGE>



 (4)     Reinsurance

         The Company has a reinsurance agreement for portions of the risk that
         it has underwritten through its products. PPO risk was reinsured to
         $2,000,000 per member per lifetime in excess of maximum loss retention
         of $75,000 per member per year and subject to certain per day maximums.
         Coinsurance ranges from 50% to 90% depending on the type of service,
         age of the member, and service facility.

         There were no reinsurance recoveries for the nine month periods ended
         September 30, 1999 and 1998.

 (5)     Income Taxes

         The Company has Federal net operating losses available to offset future
         income before taxes, which expire in the period from 2011 to 2019. In
         light of the Company's current financial condition it is unlikely that
         these operating losses will ever be utilized.

 (6)     Recapitalization

         At a Special Meeting of Shareholders held on January 9, 1999, the
         holders of the Company's Class A voting common stock and Class B
         non-voting common stock approved a Plan of Recapitalization and Amended
         and Restated Articles of Incorporation of the Company. The
         recapitalization changed the voting rights of the Class A shares,
         created new classes of both common and preferred stock, provided for
         the conversion of the outstanding Class A shares and Class B shares to
         shares of a new class of voting common stock and simplified the shares
         of the Company by eliminating the Class C common stock and Class D
         common stock of the Company (no shares of which had been outstanding).

         The Class A shares and Class B shares were changed to permit the
         voluntary conversion into a new class of voting common stock on or
         after January 11, 1999 at the election of the holder and to require
         conversion effective as of January 1, 2000. The conversion ratio is 400
         shares of common stock for each Class A share and 100 shares of common
         stock for each Class B share. The conversion ratio is subject to
         adjustment in the event of a stock split, stock dividend, distribution
         or other transaction affecting the common stock prior to conversion.
         All Class A and Class B shares will also automatically convert to
         shares of common stock on the day before the occurrence of any of the
         following events:


                                       10

<PAGE>




         o    a reclassification or change of the outstanding common stock
              (except a stock split or a combination of shares);

         o    a consolidation or merger of the Company (except a merger in which
              the Company survives without a reclassification or change of the
              Company's common stock, except for a split or combination of
              shares); or

         o    the sale or conveyance (except if the sale or conveyance is for
              cash followed by the immediate distribution of such cash to the
              shareholders of the Company) to another corporation of all or
              substantially all of the Company's property.

         Holders who elect to convert their Class A shares or Class B shares to
         common stock must convert all of such shares. As of September 30, 1999,
         no Class A shares or Class B shares had been converted by the holders
         thereof into shares of common stock.

(7)      Restrictions on Cash

         The Company received a license to operate an HMO on March 22, 1999,
         which eliminated certain restrictions on its use of cash proceeds from
         its 1995-1996 stock offering. The Company returned its license to
         operate an HMO in October, 1999 as discussed in Item 2. "Management's
         Discussion and Analysis or Plan of Operation".


                                       11
<PAGE>



Item 2. Management's Discussion and Analysis or Plan of Operation.

         As discussed in Item 2. "Management's Discussion and Analysis or Plan
         of Operation," in the Company's Form 10-QSB for the fiscal quarter
         ended June 30, 1999, and in the Company's Current Reports on Form 8-K
         dated October 13, 1999 and October 24, 1999, incorporated herein by
         reference, during the second and third quarter of 1999 Physicians Care
         PPO, Inc., the Company's preferred provider organization, which is its
         sole revenue generating subsidiary (the "PPO"), incurred significantly
         larger underwriting losses than anticipated. These losses, which were
         primarily the result of higher than expected utilization of health care
         services by a select number of employer groups, continued in the third
         quarter of 1999. As a result of these losses, the PPO's external cash
         requirements materially exceeded its internally generated cash by an
         amount in excess of its ability to borrow or to access the capital
         markets. The Company was unable to enter into any definitive
         arrangements to provide it with the additional capital it needed to
         fund its internal cash requirements.

         Pennsylvania managed care laws require that the PPO possess a minimum
         net worth of at least $1,175,000 or its license may be revoked. The PPO
         had a net deficit at September 30, 1999 of $2,952,000. Consequently,
         the PPO's net worth declined below that required by Pennsylvania
         managed care laws.

         On October 13, 1999, the Company met with the Pennsylvania Department
         of Insurance (the "Department") so that satisfactory arrangements could
         be made to achieve a timely and orderly cessation of the PPO's
         business, including the placing of subscribers with other insurance
         providers. Although the Department had the authority to seek a
         rehabilator to manage the PPO's day-to-day operations, it then advised
         the Company that it had until October 25, 1999 to continue to remain in
         control in order to wind up the PPO's affairs and also to seek
         additional sources of funding. The Department indicated that after that
         date if would assess the PPO's financial condition, and, if no
         additional sources of funding were obtained, the Department would seek
         an order from the Commonwealth Court of Pennsylvania (the "Court")
         appointing a liquidator for the PPO.

         The Company was attempting to obtain additional capital from the
         Pennsylvania Medical Society ("PMS") by the October 25, 1999 deadline
         set by the Department. However, the Company and PMS were unable to come
         to a definitive arrangement regarding the provision of additional
         capital.

         Consequently, on October 24, 1999 the PPO consented to the entry of an
         order of liquidation from the Court which placed the PPO under the
         control of the Department and, among other things, revoked the PPO's
         license, appointed a rehabilator and/or liquidator for the PPO,
         discharged the PPO's employees, officers and directors, enjoined the
         PPO from transacting any further business and ordered that the PPO be
         dissolved. On October 26, 1999 the Court issued its order, which became
         effective on November 1, 1999.


                                       12

<PAGE>

         The Company entered into an arrangement with certain of the Blue
         Cross/Blue Shield plans doing business in the PPO's service area
         whereby these plans agreed to offer coverage without medical
         underwriting to all of the PPO's members effective November 1, 1999.

         Also on October 24, 1999, the Company's health maintenance
         organization, a subsidiary of the Company which had not yet commenced
         operations (the "HMO"), agreed to return its license to the Department.
         On November 3, 1999, the Department issued an order, amended November
         8, 1999, which required the Company to transfer $1 million of the HMO's
         $1.5 million statutory net worth to the PPO in order to provide for the
         payment of outstanding claims.

         The Company has settled the claims of most of its creditors, including
         its landlord and equipment lessors, and its only remaining assets
         consist of its cash balances and a small amount of computer equipment.
         The Company's winding down activities are now conducted out of the
         private residences of its remaining employees, its Chief Executive
         Officer and Chief Financial Officer. Other than its remaining cash
         balances, the Company's assets consist solely of a small amount of
         computer equipment. The Company is currently developing a plan of
         dissolution. The plan of dissolution will require the approval of the
         Company's shareholders at a special meeting of shareholders to be held
         for that purpose. The Company is hopeful that its liquidation can be
         effectuated without the necessity of a bankruptcy filing. Nevertheless,
         no assurance can be given that the Company will not have to seek
         protection from its creditors under the bankruptcy laws. The Company
         believes that any liquidating distribution to its shareholders would be
         extremely unlikely.



                                       13
<PAGE>




                           PART II - OTHER INFORMATION

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

(a)      Exhibits

         27       Financial Data Schedule

(b)      Reports on Form 8-K

         In a Current Report on Form 8-K, dated October 13, 1999, the Company
         reported under Item 5, "Other Events," its worsening financial
         condition and the outcome of its meetings with the Pennsylvania
         Department of Insurance.

         In a Current Report on Form 8-K, dated October 24, 1999, the Company
         reported under Item 5, "Other Events," the placement of its preferred
         provider organization under the control of the Pennsylvania Department
         of Insurance and the return of the Company's HMO license to the
         Pennsylvania Department of Insurance.


                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be filed on its behalf be the undersigned, thereunto duly
authorized:

                                   Pennsylvania Physician Healthcare Plan, Inc.
                                   (Registrant)

Date:    December 28, 1999         By:/s/ Richard A. Felice
         -----------------            ------------------------------------------
                                      Richard A. Felice, President and Chief
                                      Executive Officer


Date:    December 28, 1999         By:/s/ T. Clark Phillip
         -----------------            ------------------------------------------
                                      T. Clark Phillip, Treasurer and Chief
                                      Financial Officer

                                       14