<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, 1997

                                       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, 1997)

                 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                                                                                            1997                    1996
<S>                                                                                          <C>                     <C>     
-----------------------------------------------------------------------------------------------------------------------------------
Current assets:    
     Cash and cash equivalents                                                               $ 14,875,696            $ 17,381,607
     Accrued interest income                                                                       66,084                  77,641
     Premium receivable                                                                             1,616                    --
     Prepaid expenses                                                                              85,784                  45,816
     Income taxes receivable                                                                      166,000                 166,000
     Other assets                                                                                  44,100                  44,000
-----------------------------------------------------------------------------------------------------------------------------------
Total current assets                                                                           15,239,280              17,715,064
-----------------------------------------------------------------------------------------------------------------------------------
Equipment (net of accumulated depreciation of $180,013 and $0, respectively)                      846,670                 647,771

Total assets                                                                                   16,085,950              18,362,835
===================================================================================================================================
Liabilities and Stockholders' Equity
-----------------------------------------------------------------------------------------------------------------------------------
Current liabilities:
     Accounts payable                                                                             197,317                 335,106
     Other liabilities                                                                             23,163                  22,058
-----------------------------------------------------------------------------------------------------------------------------------
Total current liabilities                                                                         220,480                 357,164
-----------------------------------------------------------------------------------------------------------------------------------
Stockholders' Equity:
Class A common voting stock, $.01 par value, 40,000 shares authorized; 4,087 shares                    41                      41
     issued and outstanding at September 30, 1997 and December 31, 1996
Class B common non-voting stock, $.01 par value, 100,000 shares authorized; 1,074 shares               11                      11
     issued and outstanding at September 30, 1997 and December 31, 1996
Additional paid in capital                                                                     21,220,777              21,220,777
Accumulated deficit                                                                            (5,355,359)             (3,215,158)
-----------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity                                                                     15,865,470              18,005,671
-----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                                                   $ 16,085,950            $ 18,362,835
===================================================================================================================================

</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,     September 30,         September 30,     September 30, 
                                                               1997               1996                 1997                1996    
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>                 <C>                 <C>                 <C>      
Revenues:
     Premium                                              $    60,242         $      --           $    60,242         $      --
     Interest income                                          208,264             244,208             638,522             727,799
----------------------------------------------------------------------------------------------------------------------------------
Total Revenue                                                 268,506             244,208             698,764             727,799
----------------------------------------------------------------------------------------------------------------------------------
Expenses:
     Health care services                                      61,334                --                61,334                --   
     Legal fees                                                28,846              46,145             120,627             238,339
     Consulting services                                       65,375             556,845             207,747           2,009,462
     Operating expenses                                       341,521             292,579             739,088             436,220
     Salary and benefits                                      541,822             161,827           1,509,631             176,859
     Other taxes                                                2,901                --                20,525              53,000
     Depreciation                                              96,013                --               180,013                --   
----------------------------------------------------------------------------------------------------------------------------------
Total expenses                                              1,137,812           1,057,396           2,838,965           2,913,880
----------------------------------------------------------------------------------------------------------------------------------
Loss before income taxes                                     (869,306)           (813,188)         (2,140,201)         (2,186,081)
----------------------------------------------------------------------------------------------------------------------------------
Income taxes (benefit):
     Current                                                     --               (46,500)               --                (8,600)
     Deferred                                                    --                46,500                --                 8,600
----------------------------------------------------------------------------------------------------------------------------------
Net loss                                                  $  (869,306)        $  (813,188)        $(2,140,201)        $(2,186,081)
==================================================================================================================================
Weighted average common shares                                  5,161               5,161               5,161               5,059
Weighted average loss per outstanding common share        $   (168.44)        $   (157.56)        $   (414.69)        $   (432.12)
==================================================================================================================================
</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>
===================================================================================================================================
                                                                                              Additional    
                                           Common Stock Shares       Common Stock Par Value     Paid In     Accumulated   
                                      Class A    Class B  Class C   Class A   Class B Class C   Capital       Deficit       Total
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>         <C>                 <C>       <C>           <C>           <C>         <C>       
Balance, December 31, 1995             3,613       918       -       $ 36     $  9       -   $ 18,982,955 $  (666,830) $ 18,316,170

Issuance  of class A common
    stock January - March, 1996          474                            5                       2,369,995                 2,370,000

Issuance  of class B common
   stock January - March, 1996                     156                           2                155,998                   156,000

Charge-off of deferred offering
   costs - March 1, 1996                                                                         (288,171)                 (288,171)

Net loss                                                                                                   (2,548,328)   (2,548,328)
-----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996             4,087     1,074       -         41       11       -     21,220,777  (3,215,158)   18,005,671

Net loss                                                                                                   (2,140,201)   (2,140,201)
-----------------------------------------------------------------------------------------------------------------------------------
Balance, September 30, 1997            4,087     1,074       -       $ 41     $ 11  $    -   $ 21,220,777 $(5,355,359) $ 15,865,470
===================================================================================================================================

</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,     September 30,     September 30,     September 30,
                                                               1997              1996              1997              1996
------------------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>               <C>               <C>               <C>          
Cash flows from operating activities:
     Net loss                                            $   (869,306)     $   (813,188)     $ (2,140,201)     $ (2,186,081)
     Adjustments to reconcile net loss to net cash
         provided by (used in) operating activities:
        Depreciation                                           96,013              --             180,013              --
        Change in assets and liabilities:
            Due from related entity                              --              18,531              --              18,531
            Accrued interest income                             3,305             4,727            11,557            (1,478)
            Premium receivable                                 (1,616)             --              (1,616)             --
            Prepaid expenses                                  (30,782)          (52,548)          (39,968)          (22,401)
            Income taxes receivable                              --             (46,500)             --            (146,029)
            Other assets                                         (100)             --                (100)             --
            Deferred income tax benefit                          --              46,500              --               8,600
            Accounts payable                                   26,249           (64,826)         (137,789)           74,562
            Accrued income taxes payable                         --              (1,775)             --             (28,571)
            Other liabilities                                     753              --               1,105           (44,966)
------------------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities                        (775,484)         (909,079)       (2,126,999)       (2,327,833)
------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
     Purchases of equipment                                   (77,911)          (66,461)         (378,912)          (66,461)
------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
     Proceeds from issuance of common stock                      --                --                --           2,521,000
     Deferred offering costs                                     --                --                --             (60,830)
------------------------------------------------------------------------------------------------------------------------------
Net cash provided from financing activities                      --                --                --           2,460,170
------------------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents         (853,395)         (975,540)       (2,505,911)           65,876
Cash and cash equivalents, beginning                       15,729,091        19,184,364        17,381,607        18,142,948
------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, ending                        $ 14,875,696      $ 18,208,824      $ 14,875,696      $ 18,208,824
==============================================================================================================================
Supplemental disclosures:
     Interest Paid                                       $       --        $       --        $       --        $       --
     Income Taxes Paid                                   $       --        $       --        $       --        $    166,000

</TABLE>

See accompanying notes to consolidated financial statements.

                                       5



<PAGE>

PENNSYLVANIA PHYSICIAN HEALTHCARE PLAN, INC.

Notes to Consolidated Financial Statements for the Three and Nine Month Periods
Ended September 30, 1997 and 1996.
--------------------------------------------------------------------------------

 (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 license to operate a preferred provider
         organization (PPO) in April 1997 and a third party administrator (TPA)
         license in March 1997. It expects to receive a license to operate a
         health maintenance organization (HMO) in the first quarter of 1998.

         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.

(3)      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, 1996 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, 1997 and 1996 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.


                                       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.

         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. As of December 31, 1996, equipment was not placed into service.
         Therefore, no depreciation expense was recorded for the year ending
         December 31, 1996.

         Deferred Offering Costs
         Through December 31, 1995, the Company deferred certain direct costs of
         $227,341 incurred in connection with its public stock offering. As of
         March 1, 1996, the Company had deferred an additional $60,830 of
         similar costs. Upon completion of the initial stock offering on March
         1, 1996, the Company charged $288,171 of deferred offering costs to
         additional paid-in capital as a direct reduction of the proceeds of
         such offering.

         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.

         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.

                                       7
<PAGE>

         Reclassifications
         Certain prior period amounts have been reclassified to facilitate
         comparison with current period reporting presentation.

         New Accounting Standard
         In February 1997, the Financial Accounting Standards Board issued
         Statement No. 128, "Earnings Per Share" (SFAS No. 128). SFAS 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 share 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. SFAS No. 128 is effective for periods ending
         after December 15, 1997, and requires the restatement of EPS for all
         periods presented. On a pro forma basis, the adoption of SFAS No. 128
         would not have a material effect on the Company's calculation of
         primary or fully diluted earnings per share in the accompanying
         financial statements.

 (4)     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 as of September 30, 1997 may only
         be used after an HMO licensure is attained; otherwise, such funds, less
         claims of creditors, must be distributed to the shareholders, unless
         holders of a majority of the voting shares elect otherwise.

 (5)     Income Taxes

         For federal and state income tax purposes, certain organizational
         expenses incurred by the Company in its development stage are not
         currently deductible as business expenses. Instead, these expenses
         accumulate until the Company is actively in business, at which time the
         expenses are deductible over a period of five years. For the period
         February 15, 1995 (Date of Inception) to June 30, 1997, the Company
         incurred expenses totaling approximately $3,028,000 that will, for
         federal and state income tax purposes, be deferred until future years.
         In order to recognize the income tax benefit of deducting these
         expenses in the future, the Company has recorded a deferred income tax
         benefit totaling $1,230,000. Also, the Company has federal net
         operating loss carryforwards of $1,059,000 which will be available to
         offset future taxable income through December 31, 2011.

         The total deferred income tax benefit of $2,289,000 was reduced by a
         valuation allowance of $2,289,000. Management recorded the valuation
         allowance to reduce the deferred income tax benefit to its estimated
         realizable value in light of the Company's commencement of operations
         and lack of operating history.

                                       8

<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, 1996 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 14, 1997         By: /s/ Richard A. Felice
         -----------------------       ---------------------------------
                                       Richard A. Felice, President and Chief
                                       Executive Officer


Date:    November 14, 1997         By: /s/ T. Clark Phillip
         -----------------------       ---------------------------------
                                       T. Clark Phillip, Treasurer and Chief
                                       Financial Officer




                                       9