<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, 1998

                                       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)


                    651 East Park Drive, Harrisburg, PA 17111
                    (Address of Principal Executive Offices)

               Registrant's Telephone Number, including area code:
                                 (800) 671-7747

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 October 31, 1998)

                 Transitional Small Business Disclosure Format:
 
                               Yes    X     No           
                                   -------    -----------


<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements
PENNSYLVANIA PHYSICIAN HEALTHCARE PLAN, INC.

Consolidated Balance Sheets (unaudited)
<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------
                                                                           September 30,   December 31,
Assets                                                                        1998            1997
-------------------------------------------------------------------------------------------------------
<S>                                                                        <C>            <C>   
Current assets:
     Cash and cash equivalents                                             $  2,457,795    $ 14,250,640
     Short-term investments                                                   1,552,829            --
     Accrued interest income                                                     85,018          65,611
     Premiums receivable                                                        244,936          25,393
     Income taxes receivable                                                     28,853          28,853
     Other assets                                                                71,354          71,585
-------------------------------------------------------------------------------------------------------

Total current assets                                                          4,440,785      14,442,082
-------------------------------------------------------------------------------------------------------

Long-term investments                                                         8,030,890            --
Equipment (net of accumulated depreciation of $576,741
     and $272,859, respectively)                                                645,383         789,589
-------------------------------------------------------------------------------------------------------

Total assets                                                                 13,117,058      15,231,671
-------------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Equity
-------------------------------------------------------------------------------------------------------
Current liabilities:
     Medical claims liabilities                                               1,416,040          63,458
     Advance premiums                                                           268,052            --
     Accounts payable                                                            89,215         113,128
     Accrued expenses                                                            33,475          43,500
     Other liabilities                                                           29,000          65,000
-------------------------------------------------------------------------------------------------------

Total current liabilities                                                     1,835,782         285,086
-------------------------------------------------------------------------------------------------------

Stockholders' Equity:
Class A common voting stock, $.01 par value, 40,000 shares
     authorized;  4,087 shares issued and outstanding                                41              41
Class B common non-voting stock, $.01 par value, 100,000 shares
     authorized;  1,074 shares issued and outstanding                                11              11
Additional paid in capital                                                   21,220,777      21,220,777
Accumulated deficit                                                          (9,961,057)     (6,274,244)
Net unrealized gain on investments, net of taxes                                 21,504            --
-------------------------------------------------------------------------------------------------------

Total stockholders' equity                                                   11,281,276      14,946,585
-------------------------------------------------------------------------------------------------------

Total liabilities and stockholders' equity                                 $ 13,117,058    $ 15,231,671
-------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.








                                       2

<PAGE>


PENNSYLVANIA PHYSICIAN HEALTHCARE PLAN, INC.

Consolidated Statements of Operations (unaudited)
<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------------------------
                                           Three Months          Three Months           Nine Months           Nine Months
                                              Ended                 Ended                  Ended                 Ended
                                       September 30, 1998    September 30, 1997     September 30, 1998    September 30, 1997
--------------------------------------------------------------------------------------------------------------------------------

Revenues:
<S>                                         <C>                      <C>                 <C>                      <C>     
     Premiums                               $ 1,818,428              $ 60,242            $ 3,887,922              $ 60,242
     Consulting                                       -                     -                 65,000                     -
     Interest income                            157,232               208,264                494,781               638,522
--------------------------------------------------------------------------------------------------------------------------------

Total Revenue                                 1,975,660               268,506              4,447,703               698,764
--------------------------------------------------------------------------------------------------------------------------------

Expenses:
     Health care services                     2,017,125                61,334              4,017,692                61,334
     Salary and benefits                        786,613               541,822              2,136,947             1,509,631
     Operating  expenses                        453,874               341,521              1,300,288               739,088
     Consulting services                        108,219                65,375                248,092               207,747
     Legal fees                                  17,125                28,846                 90,596               120,627
     Other taxes                                 33,462                 2,901                 37,019                20,525
     Depreciation                               104,141                96,013                303,882               180,013
--------------------------------------------------------------------------------------------------------------------------------

Total expenses                                3,520,559             1,137,812              8,134,516             2,838,965
--------------------------------------------------------------------------------------------------------------------------------


Loss before income taxes                     (1,544,899)             (869,306)            (3,686,813)           (2,140,201)
--------------------------------------------------------------------------------------------------------------------------------

Income taxes (benefit):
     Current                                          -                     -                      -                     -
     Deferred                                         -                     -                      -                     -
--------------------------------------------------------------------------------------------------------------------------------

Net loss                                   $ (1,544,899)           $ (869,306)          $ (3,686,813)         $ (2,140,201)
--------------------------------------------------------------------------------------------------------------------------------

Weighted average common shares                    5,161                 5,161                  5,161                 5,161
Weighted average loss per outstanding
     common share - basic and diluted         $ (299.34)            $ (168.44)             $ (714.36)            $ (414.69)
--------------------------------------------------------------------------------------------------------------------------------

</TABLE>

See accompanying notes to consolidated financial statements.









                                       3




<PAGE>
PENNSYLVANIA PHYSICIAN HEALTHCARE PLAN, INC.

Consolidated Statements of Changes In Stockholders' Equity (unaudited)
<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------------------------- 
                                        Common            Common Stock     Additional                 Net Unrealized
                                     Stock Shares           Par Value       Paid In      Accumulated  Gain (Loss) on
                                 Class A    Class B    Class A   Class B    Capital        Deficit      Investments       Total
---------------------------------------------------------------------------------------------------------------------------------

<S>              <C>               <C>       <C>        <C>         <C>    <C>           <C>                 <C>     <C>         
Balance, January 1, 1997           4,087     1,074      $ 41        $ 11   $ 21,220,777  $ (3,215,158)       $ -     $ 18,005,671

Net loss                                                                                   (3,059,086)                 (3,059,086)
---------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1997         4,087     1,074        41          11     21,220,777    (6,274,244)         -       14,946,585
---------------------------------------------------------------------------------------------------------------------------------

Net loss                                                                                   (3,686,813)                 (3,686,813)

Change in unrealized gain (loss)
  on investments, net of taxes                                                                            21,504           21,504
---------------------------------------------------------------------------------------------------------------------------------

Balance, September 30, 1998        4,087     1,074      $ 41        $ 11   $ 21,220,777  $ (9,961,057)  $ 21,504     $ 11,281,276
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>





See accompanying notes to consolidated financial statements.



                                       4



<PAGE>
PENNSYLVANIA PHYSICIAN HEALTHCARE PLAN, INC.

Consolidated Statements of Cash Flows (unaudited)
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
                                                         Three Months        Three Months        Nine Months         Nine Months
                                                            Ended               Ended               Ended               Ended
                                                     September 30, 1998  September 30, 1997  September 30, 1998  September 30, 1997
-----------------------------------------------------------------------------------------------------------------------------------

Cash flows from operating activities:
<S>                                                       <C>                 <C>                 <C>                 <C>          
     Net loss                                             $ (1,544,899)       $   (869,306)       $(3,686,813)        $ (2,140,201)
     Adjustments to reconcile net loss to net cash
         provided by (used in) operating activities:
         Depreciation                                          104,141              96,013            303,882              180,013
         Amortization and accretion                              2,248                   -              2,248                    -
         Change in assets and liabilities:
            Accrued interest income                            (36,492)              3,305            (19,407)              11,557
            Premiums receivable                               (241,362)             (1,616)          (219,543)              (1,616)
            Other assets                                       (25,241)            (30,882)               231              (40,068)
            Medical claims liabilities                         921,351                   -          1,352,582                    -
            Advance premiums                                   268,052                   -            268,052                    -
            Accounts payable                                   (98,081)             26,249            (23,913)            (137,789)
            Accrued expenses                                    (2,470)                  -            (10,025)                   -
            Other liabilities                                   19,325                 753            (36,000)               1,105
-----------------------------------------------------------------------------------------------------------------------------------

Net cash used in operating activities                         (633,428)           (775,484)        (2,068,706)          (2,126,999)
-----------------------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
     Purchases of investments                               (9,564,463)                  -         (9,564,463)                   -
     Purchases of equipment                                    (29,747)            (77,911)          (159,676)            (378,912)
-----------------------------------------------------------------------------------------------------------------------------------

 Net cash used in investing activities                      (9,594,210)            (77,911)        (9,724,139)            (378,912)
-----------------------------------------------------------------------------------------------------------------------------------

Net decrease in cash and cash equivalents                  (10,227,638)           (853,395)       (11,792,845)          (2,505,911)
Cash and cash equivalents, beginning of period              12,685,433          15,729,091         14,250,640           17,381,607
-----------------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                  $  2,457,795        $ 14,875,696        $ 2,457,795         $ 14,875,696
-----------------------------------------------------------------------------------------------------------------------------------

Supplemental disclosures:
     Income Taxes Paid                                    $          -        $          -        $         -         $          -
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.




                                       5




<PAGE>


PENNSYLVANIA PHYSICIAN HEALTHCARE PLAN, INC.

Notes to Consolidated Financial Statements for the Nine Month Periods Ended
September 30, 1998 and 1997.
-------------------------------------------------------------------------------

(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 expects to receive a license to operate a
         health maintenance organization (HMO) in the first quarter of 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.

(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, 1997 and reflect, in the opinion of management, all
         adjustments necessary to fairly state the results of operations for
         such periods.

         The results of operations for the three and nine month periods ended
         September 30, 1998 and 1997 are not necessarily indicative of the
         results of operations expected for the full year.

         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.



<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
         Investments are to be classified in one of three categories and
         accounted for as follows: 1) debt securities the Company has the
         positive intent and ability to hold to maturity are classified as
         held-to-maturity securities and reported at amortized cost; 2) debt
         securities that are bought and held principally for the purpose of
         selling them in the near term are classified as trading securities and
         reported at fair value, with unrealized gains and losses included in
         earnings; and 3) debt securities not classified as either
         held-to-maturity or trading securities are classified as
         available-for-sale and reported at fair value, with unrealized gains
         and losses excluded from earnings and reported as a separate component
         of stockholders' equity, net of deferred taxes. Management has
         determined that the entire investment securities portfolio is
         classified as available-for-sale.

         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
         Equipment, consisting principally of office equipment, computer
         equipment and software, is 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
         Premium is 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 Company currently has no additional items qualifying as other
         comprehensive income under FASB No. 130 and, therefore, its adoption
         has not had any impact on the Company's financial position or results
         of operations.

 (3)     Restrictions on Cash

         As specified in the prospectus for the public stock offering,
         approximately $9,691,000 of offering proceeds which are included in the
         Company's cash and cash equivalents and investments as of September 30,
         1998 may only be used after an HMO license is obtained; otherwise, such
         funds, less claims of creditors, must be distributed to the
         shareholders, unless holders of a majority of the voting shares elect
         otherwise.

         The Company expects to receive its HMO license four to eight weeks 
         after the Department of Health and Department of Insurance complete 
         their respective site visits in December, 1998 and January, 1999.

         Management believes that cash flow and exsisting funds which are not 
         restricted as to use, will be adequate to meet operating needs until
         the HMO license is obtained. Should circumstances change and a portion 
         of the restricted funds are required prior to HMO licensure, the 
         Company will follow provisions in the prospectus which allow it to 
         request shareholder approval for the use of a portion of such 
         restricted funds.

 (4)     Reinsurance

         The Company has a reinsurance agreement for portions of the risk 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. 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, 1998 and 1997.

                                       9
<PAGE>


(5)      Income Taxes

         The net deferred amounts reported by the Company at September 30, 1998
         and December 31, 1997 are as follows:


                                                     1998           1997      
                                                  ------------   -----------
             Deferred tax assets:                                
                Start up costs                        971,264      1,148,518
                Amortization                           34,689         18,580
                Depreciation                              968            968
                Net operating loss carryforward     3,063,350      1,394,145
                                                  ------------   -----------
             Deferred tax asset                     4,070,272      2,562,211
                                                                 
             Valuation allowance                   (4,070,272)    (2,562,211)
                                                  ------------   -----------
             Net deferred tax asset                         -             -
                                                  ------------   -----------
                                                              
         The Company has Federal net operating losses of approximately
         $7,545,000 available to offset future income before taxes, which expire
         in the period from 2011 to 2013. Management recorded the valuation
         allowance to reduce the deferred income tax benefit to its estimated
         realizable value in light of the Company's lack of profitable 
         operating history.

                                       10


<PAGE>


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

         There have been no material changes in Registrant's plan of operations
         as set forth in the December 31, 1997 form 10-KSB


                           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

                  None


                                   SIGNATURES

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

                                          Pennsylvania Physician Healthcare
                                          Plan, Inc. 
                                          (Registrant)
                            
Date: November 13, 1998               By: /S/ Richard A. Felice               
      --------------------------          --------------------------------------
                                          Richard A. Felice, President and Chief
                                          Executive Officer


Date: November 13, 1998               By: /S/ T. Clark Phillip                  
      --------------------------          --------------------------------------
                                          T. Clark Phillip, Treasurer and Chief
                                          Financial Officer