SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-K

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

Date of Report       June 30, 1996           Commission file number  0-2751
                     -------------                                   ------

                    AMERICAN HOSPITAL MANAGEMENT CORPORATION
                    ----------------------------------------
             (Exact name of registrant as specified in its charter)

         CALIFORNIA                                            95-1861243
-------------------------------                            ------------------- 
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                             Identification No.)

P.O. Box 1116
Arcata, California                                                    95521
------------------                                                  ---------- 
(Address of principal executive                                     (Zip Code)
offices)

Registrant's telephone number, including area code:   (800) 662-2280
                                                   --------------------
Securities registered pursuant to Section 12(b) of the Act:

                                                Name of each exchange on
         Title of each class                       which registered
         -------------------                    ------------------------

                                      None
--------------------------------------------------------------------------------
           Securities registered pursuant to Section 12(g) of the Act:


                          Common Stock $1.00 par value
--------------------------------------------------------------------------------
                                (Title of class)

                $2.00 Cumulative Preferred Stock $1.00 par value
--------------------------------------------------------------------------------
                                (Title of class)

Indicate by check mark whether the registrant (1) has filed reports  required to
be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                               Yes       No    x
                                   -----    ------

                                      -1-

<PAGE>

State the aggregate  market value of the voting stock held by  nonaffiliates  of
the registrant. The aggregate market value shall be computed by reference to the
price at which the stock was sold,  or the average bid and asked  prices of such
stock,  at a  specified  date  within 60 days prior to the date of filing.  (See
definition of affiliate in Rule 405, 17 CRF 230.405.)

There is no market for the registrant's stock.

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

Indicate the number of shares outstanding of each of the registrant's classes of
common stock as of the latest practicable date (232,417 at December 31, 1996).

Total number of pages, including cover - 37




































                                      -2-

<PAGE>

PART I

Item 1.  Business
-------  --------

         The primary  business of the Company is the  operation and ownership of
         Mad River  Community  Hospital (the  Hospital)  and satellite  clinics,
         located in the Humboldt County area of Northern California.

         Over the last  several  years the  Company  has  expanded  the scope of
         services offered by the Hospital to include advanced  ancillary service
         departments used by physicians practicing in the rural service area. As
         a result of the ongoing  expansion  of  facilities  and  services,  the
         Hospital  continues to recruit new physicians to provide the added care
         as well as to replace physicians who are retiring from active practice,
         many  after  twenty-eight  years  of  medical  staff  membership.   The
         Hospital's  service area on the north coast is experiencing the highest
         rate of growth in the county and is especially attractive to physicians
         who want to live and work in a community with high family values.

         The nearest competition to the Hospital is in Eureka  (approximately 12
         miles south) where two acute care facilities are located. Management of
         the Hospital  feels that as long as it  maintains a strong  position in
         providing a full scope of health care services,  the facilities located
         in Eureka  will  have less of a  negative  impact  on  Hospital  use or
         occupancy.  For this reason,  the Hospital  organized  two  out-patient
         clinics,  one in-house clinic and one clinic in the outlying  community
         thereby  maintaining  the Hospital's  presence in the service area. New
         buildings  are planned  for those  departments  still  housed in mobile
         facilities  adjacent to the  Hospital.  In the past year,  business and
         administrative departments have been moved to a new permanent location.
         The area will be used for the expansion of adult day health care into a
         new building.  In addition, a cath-lab is in the final process of being
         approved for  installation  in the Hospital.  An MRI is on order and is
         expected to be operating adjacent to the Hospital by early 1997.

         Another   positive   factor   supporting   Hospital  use  is  community
         involvement.  As the largest private  employer in Arcata,  the Hospital
         provides  employment to approximately  520 local residents and, through
         its Home  Health  and  Adult Day  Health  Care  departments,  is highly
         visible in the community served. The Hospital continues to try to build
         on this strength by  maintaining a strong image through the media and a
         helping hand in the community,  while  providing  personalized  quality
         services. The Hospital is a strong advocate for a community health care
         plan  involving the medical staff,  employers and the area's  hospitals
         and health care providers  wherein they will work together to provide a
         locally based alternative to out of the area managed care.

         As the health care industry is dependent on government  payment of care
         for the elderly and indigent,  the Hospital may be negatively  impacted
         by new  Government  regulations.  As mentioned  above,  the Hospital is
         working diligently to establish a community health care plan that could
         compete with the various  outside  managed care plans planning to enter
         the Humboldt County area.


                                      -3-

<PAGE>



Item 2.  Properties
-------  ----------

         The main  facility  operated  by the  Company  is Mad  River  Community
         Hospital in Arcata, California. This single-level structure is licensed
         as a 78-bed acute  hospital in Northern  Humboldt  County,  California,
         where  it  provides   full   hospital   services  to  a  population  of
         approximately   55,000.   Since  opening  in  1972,  the  Hospital  has
         maintained a program of expansion and improvements. It is located on 12
         acres (part of a 48 acre site)  adjacent to an expanded  medical office
         complex owned by staff doctors  which leaves  sufficient  open area for
         further expansion of medical services as needed.

         The  Company  owns 27  acres  of land  approximately  4 miles  from the
         Hospital held for future residential  development.  A house and barn on
         the property is currently used as an office, guest quarters and storage
         space for the Company.  The Company owns a personal  residence adjacent
         to the  Hospital  that  had been  used as a  physician's  office.  This
         acquisition was made to facilitate a continued favorable occupancy by a
         hospital-related   specialty  and  is  presently  being  leased  to  an
         unrelated  private  resident,  providing  a child day care  service  to
         hospital  employees.  The Company also owns  residences  and commercial
         properties in Eureka and McKinleyville,  California. They are currently
         being leased to unrelated  private parties,  held for investment or can
         be converted to medical  offices,  if needed to protect the  Hospital's
         market share. From time to time, the Company acquires real estate being
         held for investment purposes.

         As part of its outreach program,  the Company owns and operates medical
         office  buildings  under the name of Willow  Creek Six  Rivers  Medical
         Center in Willow Creek, California (38 miles east of the Hospital). The
         Company also owns and operates  real  property in  McKinleyville  which
         provides laboratory and radiology outpatient services. It also operates
         an after-hours clinic at this location.

         Adult  Day  Health  Care  of  Mad  River  (the  Company),   a  separate
         not-for-profit  organization,  is  operating  an adult day health  care
         facility  in a building  adjacent  to and owned by Mad River  Community
         Hospital.  Michael Young,  Controller of the Company, is functioning as
         Adult Day Health Care's  Administrator and performs minimal  accounting
         services  for the  organization.  To meet the growing  demands for this
         service, a new building will be built adjacent to the present facility.
         The Company will lease the new facility from the Hospital.






                                      -4-

<PAGE>


Item 3.  Legal Proceedings
-------  -----------------

         None.










































                                      -5-


<PAGE>

Item 4.  Submission of Matters to Vote of Security Holders
-------  -------------------------------------------------

         There  were no  matters  submitted  to a vote by the  security  holders
         during the fourth quarter of the fiscal year covered by this report.











































                                      -6-

<PAGE>

PART II

Item 5.  Market for the  Registrant's  Common Stock and Related  Security Holder
-------  -----------------------------------------------------------------------
         Matters
         -------

         There is no market for the registrant's  stock. There are approximately
         436  shareholders.  No  dividends  were paid on common stock during the
         three years ended June 30, 1996.








































                                      -7-


<PAGE>

Item 6.  Selected Financial Data
-------  -----------------------


                                      Year ended June 30
                     -----------------------------------------------------------

                         1996        1995        1994        1993        1992
                         ----        ----        ----        ----        ----

Total operating
revenue, net         $21,421,707 $21,148,254 $20,671,387 $19,218,602 $18,592,956

Net income               223,815     593,342     502,956     387,436     624,342

Primary earnings
per share                    .52        2.06        1.67        1.18        2.16

Fully diluted
earnings per share           .67        1.75        1.47        1.13        1.81

Cash dividends per
common share                  --          --          --          --          --

Total assets          20,557,286  19,800,615  18,325,512  16,995,552  15,698,301

Long-term debt           403,581     803,248     861,648     809,411     466,362

Working capital        7,851,133   7,165,927   6,010,324   6,265,004   6,348,123

Redeemable
preferred stock           50,850      51,623      51,768      51,900      51,957

Stockholders'
equity                14,633,038  14,077,102  13,040,598  12,636,033  12,347,231


















                                      -8-

<PAGE>
Item 7.  Management's Discussion and Analysis of
-------  ---------------------------------------
         Financial Condition and Results of Operations
         ---------------------------------------------
                                        1996
                                        ----
         Results of Operations
         ---------------------

         Hospital  revenues  increased  slightly  during  1996  as the  hospital
         continues  to expand  services  to  encourage  use.  Use of  outpatient
         services  increased,  and  there  was a small  rate  increase.  Patient
         revenue totaled  $40,617,000 in 1996 compared to $39,002,000 in 1995, a
         4% increase of $615,000.

         Contractual   allowances  totaled   $13,808,000  in  1996  compared  to
         $13,638,000 in 1995, only a 1% increase. Government regulatory agencies
         attempt  to  reimburse  the  hospital  based  on the  cost of  services
         rendered. As the government continues its efforts to cut back on rising
         health care cost,  the actual  reimbursement  continues to decrease and
         the Hospital is unable to even recoup costs on many Medicare  patients.
         Medi-Cal has also imposed  certain  limitations  (discharge and Maximum
         Inpatient   Reimbursement   Liability)  that  have  adversely  affected
         reimbursements. As discussed in the next paragraph, the result of these
         continuing cuts is to increase the provision for bad debts.

         Operating costs and expenses were  $27,928,000  compared to $25,749,000
         in 1995, an 8.5% increase. This increase,  other than the provision for
         bad debts,  is mainly  related to  increased  labor costs and  moderate
         inflation.  In 1996,  the  provision  for bad debts  increased 24% from
         1995.  The  provision  for bad debts  increases as  third-party  payors
         reduce the amount they  reimburse,  as  discussed  in prior  paragraph.
         Increased use of outpatient services and the change in patient mix also
         affects bad debt write offs.

         The  result in the  reduction  of  third-party  reimbursement,  causing
         increased bad debt write offs,  was a $769,000  decrease in income from
         operations.  Net income,  after investment income, was $224,000 in 1996
         compared to $593,000 in 1995.

         Over the years, as the Company incurs more  contractual  allowances and
         uncollectible  accounts,  results from  operations  have suffered.  The
         Company  continues  to enjoy good  returns on its  investments  to help
         maintain a net  profit.  For the  current  year,  sales of  investments
         resulted  in  gains of  $113,600  while  total  investment  income  was
         $1,076,100.  As  discussed  in Item 1, the Company  continues to expand
         operations to maintain a competitive edge in a continuing ever changing
         health  care  environment.   All  construction   projects,   considered
         necessary to maintain  operations,  will be completed  without negative
         impact on the financial statements.

         The purpose of these  projects is to keep the users of the  Hospital in
         their  primary  service area close to the  Hospital  and medical  staff
         members,  thereby enhancing the Hospital's inpatient service occupancy.
         By so doing,  it is  anticipated  that  operations  will improve,  even
         though the  continued  burden of government  contractual  agreements to
         provide health care, sometimes below cost, is being further complicated
         by the  introduction  of managed care contracts in the Humboldt  County
         area.
                                      -9-

<PAGE>
                                 1996 continued
                                 ----

         Financial Condition
         -------------------

         The Company's  financial condition remains very strong with substantial
         investments,  strong  liquidity and minimal  debt.  The cash and liquid
         investments  are being  maintained  to subsidize  Hospital  operations,
         finance  needed  construction  and  increased  services  at  Mad  River
         Community Hospital. Currently, the Company has approximately $5,261,000
         in cash and short-term investments.  As previously noted, some of these
         investments,  as determined by management,  will be used to fund needed
         expansion.

         Cash provided by operating and  investing  activities  continue to fund
         investing  activities,  the  largest of which is the  purchase  of real
         estate, property and equipment,  which totaled $735,400 in 1996. As the
         long-term debt relates only to the acquisition of major equipment, cash
         required for financing activities remains relatively low.

         As discussed in Item 1, government regulations, as well as managed care
         contract  agreements,  may continue to  negatively  impact  operations.
         Management  is unable to  estimate  any  potential  negative  impact of
         forthcoming laws or regulations. Management believes that long-term key
         employees  approve of the working  conditions  at the Hospital and have
         proven  their  ability to keep the  Hospital  staffed  under  difficult
         conditions.

         Inflation
         ---------

         The  inflation  rate  affecting  costs  has  remained  relatively  low,
         approximately  5%,  over the  last  three  years.  This  moderate  rate
         contributes  to  the  Hospital's  success  in  maintaining  a  moderate
         increase in costs from year to year.















                                      -10-

<PAGE>
         Management's Discussion and Analysis of
         ---------------------------------------
         Financial Condition and Results of Operations
         ---------------------------------------------

                                        1995
                                        ----
         Results of Operations
         ---------------------

         Hospital  revenues  increased  slightly  during  1995  as the  hospital
         continues  to expand  services  to  encourage  use.  Use of  outpatient
         services  increased,  and  there  was a small  rate  increase.  Patient
         revenues in 1995 were  $39,002,000  compared to $38,120,000 for 1994, a
         2% increase of $882,000.

         Contractual   allowances  totaled   $13,638,000  in  1995  compared  to
         $13,929,000 in 1994, a 2% decrease. Therefore, although revenue went up
         slightly, contractural allowances decreased, indicating a different mix
         of patients.  Government  regulatory  agencies attempt to reimburse the
         hospital  based on the  cost of  services  rendered.  At  times,  under
         current regulations,  the hospital is unable to recoup costs on certain
         Medicare  patients.  Medi-Cal  has  also  imposed  certain  limitations
         (discharge and Maximum  Inpatient  Reimbursement  Liability)  that have
         adversely affected reimbursement.

         Operating costs and expenses were  $25,749,000  compared to $24,631,000
         in 1994, a 5% increase. This increase, other than the provision for bad
         debts,  is  mainly  related  to  increased  labor  costs  and  moderate
         inflation. The provision for bad debts, which increased from $3,914,601
         in 1994 to $4,669,157 in 1995,  increases as third-party  payors reduce
         their reimbursements, as discussed in previous paragraph. Increased use
         of  outpatient  services and the change in patient mix also affects bad
         debt write offs.

         Net income was  $593,000 in 1995,  compared to $503,000 in 1994,  a 18%
         increase.

         Over the years, as the Company incurs more  contractual  allowances and
         uncollectible  accounts,  results from  operations  have suffered.  The
         Company  continues  to enjoy good  returns on its  investments  to help
         maintain  an increase in net  profit.  For the current  year,  sales of
         investments resulted in gains of $171,000.  As discussed in Item 1, the
         Company  continues to expand  operations to maintain a competitive edge
         in a continuing ever changing health-care environment. All construction
         projects,   considered  necessary  to  maintain  operations,   will  be
         completed without negative impact on the financial statements.

         The purpose of these  projects is to keep the users of the  Hospital in
         their  primary  service area close to the  Hospital  and medical  staff
         members,  thereby enhancing the Hospital's inpatient service occupancy.
         By so doing, it is anticipated  that operations will remain  profitable
         even though the continued burden of government  contractual  agreements
         to  provide   healthcare,   sometimes  below  cost,  is  being  further
         complicated  by the  introduction  of  managed  care  contracts  in the
         Humboldt  County.  The Company  continues  to do what is  necessary  to
         retain its  occupancy,  cut costs and provide  excellent  care so as to
         continue profitable operations.
         
                                      -11-

<PAGE>
                                 1995 continued
                                 ----

         Financial Condition
         -------------------

         The Company's  financial  condition remains very strong with profitable
         hospital operations,  substantial investment capital,  strong liquidity
         and minimal debt. The cash and liquid  investments are being maintained
         to finance the planned construction and increased services at Mad River
         Community  Hospital.  As  discussed  above,  current  liquidity  may be
         affected by long-term plans to expand hospital  operations.  Currently,
         the Company has  approximately  $4,380,582 in  short-term  investments.
         Some of these investments, as determined by Management, will be used to
         fund needed expansion.

         Cash  provided  by  operating  activities  continue  to fund  investing
         activities,  the  largest  of which  is the  purchase  of real  estate,
         property and  equipment  which  totaled  $884,109 in 1995. As long-term
         debt relates only to the  acquisition  of equipment,  cash required for
         financing activities remains relatively low.

         As  discussed  in Item 1,  Government  regulations,  as well as managed
         contract  agreements,  may negatively impact operations.  Management is
         unable to estimate any potential  negative impact of forth-coming  laws
         or  regulations.  Management  believes  that  long  term key  employees
         approve of the working conditions at the Hospital and have proven their
         ability to keep the Hospital  staffed under difficult  conditions.  The
         Hospital  creation of a cafeteria  benefit plan and a 401-k  investment
         fund is  appreciated  by employees and is beneficial in attracting  new
         professionals  to fill the positions  created by turnover and growth in
         services offered.

         Inflation
         ---------

         The  inflation  rate  affecting  costs  has  remained  relatively  low,
         approximately  4%,  over the  last  three  years.  This  moderate  rate
         contributes  to  the  Hospital's  success  in  maintaining  a  moderate
         increase in costs from year to year.













                                      -12-


<PAGE>

Item 8.           Financial Statements and Supplementary Data
-------           -------------------------------------------


                              FINANCIAL STATEMENTS

                                                                      Page
                                                                      ----
        Description
        -----------

Independent Auditors' Report                                           15


Financial Statements:

      Balance Sheets - June 30, 1996 and 1995                         16-17

      Statements of Income and Retained Earnings -
         Years ended June 30, 1996, 1995, and 1994                     18

      Statements of Cash Flows -
         Years ended June 30, 1996, 1995, and 1994                    19-20

      Notes to Financial Statements                                   21-26


Item 14.   Exhibits, Financial Statement, Schedules
          and Reports on Form 8-K                                      32



























                                      -13-

<PAGE>



                    AMERICAN HOSPITAL MANAGEMENT CORPORATION

                     Annual Report for Corporations - Form 10-K
                       Years ended June 30, 1996, and 1995


                              Financial Statements,
                     Supplementary Data and Auditors' Report






































                                      -14-

<PAGE>





                          Independent Auditors' Report
                          ----------------------------


The Board of Directors
American Hospital Management Corporation


We have audited the accompanying  balance sheets of American Hospital Management
Corporation as of June 30, 1996, and 1995, and the related  statements of income
and retained  earnings,  and cash flows and the supporting  financial  statement
schedules  as listed in the  accompanying  index at Item 14,  for the years then
ended.  These  financial  statements and financial  statement  schedules are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements and financial statement schedules based on
our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable  assurance  about  whether the  financial  statements  and  financial
statement  schedules  are  free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial  position of American Hospital  Management
Corporation at June 30, 1996 and 1995, and the results of its operations and its
cash  flows for the years  then  ended in  conformity  with  generally  accepted
accounting  principles,  and the  supporting  financial  statement  schedules as
listed in the accompanying  index at Item 14, when considered in relation to the
basic financial  statements taken as a whole, in our opinion,  present fairly in
all material respects, the information set forth therein.


                                                /s/ K.C. Miller, CPA   
                                               
                                                K.C. Miller, CPA



West Covina, California
December 20, 1996







                                      -15-

<PAGE>
                    AMERICAN HOSPITAL MANAGEMENT CORPORATION

                                 Balance Sheets

                             June 30, 1996 and 1995

                  Assets
                  ------
                                                              1996          1995
                                                              ----          ----
Current assets:
   Cash and cash equivalents                           $   925,843   $   819,341
   Investments                                           5,260,968     4,380,582
   Receivables:
      Patients, net of estimated
         uncollectibles of $202,650 and
         $217,709 in 1996 and 1995, respectively         6,231,306     6,178,224
      Other                                                290,028       126,161
   Supplies, at lower of cost
      (first-in, first-out) or market                      855,334       887,176
   Prepaid expenses                                         84,981        65,686
                                                       -----------   -----------

         Total current assets                           13,648,460    12,457,170
                                                       -----------   -----------

Deferred income taxes                                      478,107       446,258
                                                       -----------   -----------

Investments and other assets:
   Real estate held for investment, net of
      $268,071 and $228,666 accumulated
      depreciation in 1996 and 1995,
      respectively                                       1,974,803     1,887,073
   Investments in partnerships                              87,086        84,129
   Cash surrender value of life insurance                  227,270       208,649
   Other                                                   146,216       234,569
                                                       -----------   -----------

                                                         2,435,375     2,414,420
                                                       -----------   -----------
Property and equipment, at cost:
   Land and improvements                                    44,500        36,000
   Buildings                                             4,233,728     4,233,728
   Equipment                                             5,727,870     5,158,618
   Construction in progress                                   --           1,674
                                                       -----------   -----------

                                                        10,006,098     9,430,020
   Less accumulated depreciation and
      amortization                                       6,010,754     4,947,253
                                                       -----------   -----------

                                                         3,995,344     4,482,767
                                                       -----------   -----------

                                                       $20,557,286   $19,800,615
                                                       ===========   ===========


(continued)

See accompanying notes to financial statements

                                      -16-


<PAGE>

                    AMERICAN HOSPITAL MANAGEMENT CORPORATION

                           Balance Sheets (concluded)

                             June 30, 1996 and 1995


   Liabilities and Stockholders' Equity
   ------------------------------------
                                                              1996          1995
                                                              ----          ----
Current Liabilities:
   Current maturities of long-term debt                $   276,660   $   370,978
   Accounts payable and accrued expenses:
      Trade                                                562,306     1,138,571
      Accrued liabilities                                1,802,106     1,620,548
      Estimated third-party payor settlements            1,823,149       946,555
   Income taxes:
      Current                                                 --         195,798
      Deferred                                           1,333,106     1,018,793
                                                       -----------   -----------

         Total current liabilities                       5,797,327     5,291,243
                                                       -----------   -----------

Long-term debt, less current maturities                    126,921       432,270
                                                       -----------   -----------

Stockholders' equity:
   $2 cumulative  preferred  stock, par value $1
      per share;  authorized  100,000 shares;
      issued 65,270.82 shares; reacquired
      14,421.08 shares;  outstanding 50,849.74
      shares; aggregate redemption and
      liquidating value of $1,398,368 and
      $1,419,650 at June 30, 1996, and 1995,
      respectively                                          50,850        51,623
   Common stock, par value $1.00 per share;
      authorized 400,000 shares, issued
      249,051 shares; reacquired 15,838 shares;
      outstanding - 233,123 shares                         233,213       236,479
   Additional paid-in capital                              296,210       340,912
   Unrealized holding gains, net, for investments        1,026,809       551,933
   Retained earnings                                    13,025,956    12,896,155
                                                       -----------   -----------

         Total stockholders' equity                     14,633,038    14,077,102
                                                       -----------   -----------

                                                       $20,557,286   $19,800,615
                                                       ===========   ===========


See accompanying notes to financial statements.












                                      -17

<PAGE>
                    AMERICAN HOSPITAL MANAGEMENT CORPORATION

                   Statements of Income and Retained Earnings
                    Years ended June 30, 1996, 1995 and 1994
<TABLE>
<CAPTION>
                                                           1996            1995           1994
                                                           ----            ----           ----
<S>                                                <C>             <C>             <C>         
Net patient service revenue                        $ 26,809,409    $ 25,364,285    $ 24,191,063

Other revenue                                           417,075         453,126         394,385
                                                   ------------    ------------    ------------

              Total operating revenue                27,226,484      25,817,411      24,585,448
                                                   ------------    ------------    ------------

Operating costs and expenses:
     Professional care of patients                   13,462,487      12,984,368      12,942,401
     General services                                 2,734,438       2,426,633       2,455,063
     Administrative services                          2,989,859       2,759,002       2,716,641
     Employee health and welfare                      1,318,048       1,322,370       1,133,908
     Medical malpractice insurance                      406,630         430,435         509,380
     Interest                                            76,289          97,401          84,126
     Depreciation and amortization                    1,135,152       1,059,902         875,702
     Provision for bad debts                          5,804,777       4,669,157       3,914,061
                                                   ------------    ------------    ------------


              Total operating costs and expenses     27,927,680      25,749,268      24,631,282
                                                   ------------    ------------    ------------

              Income (loss) from operations            (701,196)         68,143         (45,834)
                                                   ------------    ------------    ------------
Other income:
     Investment income                                1,076,148         944,052         733,630
     Other                                               31,019           9,974          16,040
                                                   ------------    ------------    ------------

                                                      1,107,167         954,026         749,670
                                                   ------------    ------------    ------------

Income before income taxes                              405,971       1,022,169         703,836
     Income taxes                                       182,156         428,827         200,880
                                                   ------------    ------------    ------------

              Net income                                223,815         593,342         502,956

Retained earnings, beginning of year                 12,896,155      12,394,101      11,983,591

Cash dividends paid on preferred
     stock ($2 per share)                               (94,014)        (91,288)        (92,446)
                                                   ------------    ------------    ------------

Retained earnings, end of year                     $ 13,025,956    $ 12,896,155    $ 12,394,101
                                                   ============    ============    ============

Primary earnings per share                         $        .52    $       2.06    $       1.67
                                                   ============    ============    ============

Fully diluted earnings per share                   $        .67    $       1.75    $       1.47
                                                   ============    ============    ============

</TABLE>

See accompanying notes to financial statements.

                                      -18-

<PAGE>

                    AMERICAN HOSPITAL MANAGEMENT CORPORATION

                            Statements of Cash Flows
                    Years ended June 30, 1996, 1995 and 1994
<TABLE>
<CAPTION>
                                                                   1996            1995           1994
                                                                   ----            ----           ----
<S>                                                        <C>            <C>           <C>    
Cash flows from operating activities:
     Cash received from patients and third-party payors    $ 22,245,219    $ 20,398,950    $ 21,214,801
     Cash paid to employees and suppliers                   (21,312,243)    (19,638,638)    (19,555,423)
     Investment income received                               1,025,397         666,219         589,982
     Interest paid                                              (76,290)        (97,401)        (84,126)
     Income taxes paid                                         (412,073)       (225,467)       (173,485)
                                                           ------------    ------------    ------------

              Net cash provided by
                 operating activities                         1,470,010       1,103,663       1,991,749
                                                           ------------    ------------    ------------

Cash flows from investing activities:
     Purchase of real estate held for investment, net          (127,135)           --          (364,333)
     Distributions from partnerships                               --           132,424         226,605
     Purchase of property and equipment                        (608,324)       (844,109)     (1,172,796)
     Proceeds from sale of short-term investments             2,381,529       1,983,228       2,180,048
     Purchase of short-term investments                      (2,356,870)     (2,119,134)     (2,294,703)
     Other                                                     (110,286)        (20,596)         27,831
                                                           ------------    ------------    ------------

              Net cash used in  investing activities           (821,086)       (868,187)     (1,397,348)
                                                           ------------    ------------    ------------

Cash flows from financing activities:
     Proceeds from issuance of long-term debt                      --           336,766         270,532
     Principal reductions of long-term debt                    (399,667)       (395,166)       (218,295)
     Dividends paid                                             (94,014)        (91,288)        (92,655)
     Payments for reacquired stock                              (48,741)        (17,483)         (5,945)
                                                           ------------    ------------    ------------
              Net cash used in
                 financing activities                          (542,422)       (167,171)        (46,363)
                                                           ------------    ------------    ------------

Net increase in cash and cash equivalents                       106,502          68,305         548,038
Cash and cash equivalents, beginning of year                    819,341         751,036         202,998
                                                           ------------    ------------    ------------

Cash and cash equivalents, end of year                     $    925,843    $    819,341    $    751,036
                                                           ============    ============    ============

Supplemental schedule of non-cash investing activities:
     Increase in fair value of investments                 $    791,459    $    919,888
     Increase in deferred taxes                                 316,583         367,955
                                                           ------------    ------------

     Increase in unrealized holding gains                  $    474,876    $    551,933
                                                           ============    ============



See accompanying notes to financial statements 

















                                      -19-

<PAGE>

                    AMERICAN HOSPITAL MANAGEMENT CORPORATION

                      Statements of Cash Flows (concluded)
                    Years ended June 30, 1996, 1995 and 1994


                                                                   1996            1995            1994
                                                                   ----            ----            ----
<S>                                                        <C>            <C>           <C>
Reconciliation of net income to net cash
     provided by operating activities:
Net income                                                 $    223,815    $    593,342    $    502,956
Adjustments to reconcile net income to net
     cash provided by operating activities:
         Depreciation and amortization                        1,169,924       1,092,844         908,644
         Partnership income                                      (2,957)       (149,813)       (175,068)
         Gain on sale of investments                           (113,586)       (170,936)       (192,630)
         Increase in cash surrender value                       (18,621)        (21,924)        (11,108)

Change in assets and liabilities:
         (Increase) decrease in patient receivables, net        (53,082)       (385,725)        295,575
         Increase (decrease) in third-party payors, net         876,594        (363,579)        422,907
         (Increase) decrease in income taxes, net              (229,917)        203,361          27,395
         (Decrease) increase in supplies                         31,842        (100,581)       (125,933)
         (Increase) decrease in prepaid expenses                (19,295)         (1,893)         21,313
         (Decrease) increase in trade accounts payable         (576,265)        189,208         117,822
         Increase in accrued expenses, net                      181,558         219,359         199,876
                                                           ------------    ------------    ------------

Net cash provided by operating activities                  $  1,470,010    $  1,103,663    $  1,991,749
                                                           ============    ============    ============

</TABLE>



See accompanying notes to financial statements.

































                                      -20-

<PAGE>


                    AMERICAN HOSPITAL MANAGEMENT CORPORATION

                          Notes to Financial Statements

                          June 30, 1996, 1995 and 1994

(1)   Summary of Significant Accounting Policies
      ------------------------------------------

      Organization
      ------------
      The Corporation  owns and operates one acute-care  hospital in the Arcata,
      California area. It also operates other health-care related enterprises in
      the same  location.  Most of the  patients  to whom the  hospital  extends
      credit are residents of the area.

      Net Patient Service Revenue
      ---------------------------
      Net patient  service  revenue is reported at the estimated net  realizable
      amounts  from  patients,  third-party  payors,  and  others  for  services
      rendered,    including    estimated    retroactive    adjustments    under
      reimbursement-party  payors.  Retroactive  adjustments  are  accrued on an
      estimated  basis in the period  the  related  services  are  rendered  and
      adjusted in future periods as final settlements are determined.

      Statement of Revenue and Expenses
      ---------------------------------
      Transactions deemed by management to be ongoing,  major, or central to the
      provision of health care  services are reported as revenues and  expenses.
      Peripheral or incidental transactions are reported as other income, net.

      Cash and Cash Equivalents
      -------------------------
      All  cash and cash  equivalents  represent  cash in  checking  and  demand
      savings  accounts.  Cash is  held in  several  banks  with no  significant
      concentration of risk.

      Property and Equipment
      ----------------------
      Property and equipment acquisitions are recorded at cost.

      Depreciation  is provided over the estimated  useful life of each class of
      depreciable asset and is computed on the straight-line  method.  Equipment
      under  capital  leases is amortized on the  straight-line  method over the
      shorter  period  of the lease  term or the  estimated  useful  life of the
      equipment.  Such amortization is included in depreciation and amortization
      in the financial statements.

      Income Taxes
      ------------
      Deferred income taxes are provided for the estimated  income tax effect of
      timing differences between financial and taxable income.

      Investments in Partnerships
      ---------------------------
      Investment  in a  partnership  is carried at the  Company's  equity in the
      partnership's net assets. The partnership was organized in 1968 to provide
      property  sites for the  hospital  and  medical  centers.  The two general
      partners,  the  Company  and its  president,  own 26%  each.  The  limited
      partners, consisting of local doctors, own the remaining 48%.


                                      -21-


<PAGE>

                    AMERICAN HOSPITAL MANAGEMENT CORPORATION

                    Notes to Financial Statements, continued

      Self-insurance Program
      ----------------------
      The Hospital has elected to  self-insure  for health care  benefits to its
      employees.  Amounts charged to expense and transferred  monthly to a trust
      fund to cover such claims are estimated  using rates  comparable to actual
      rates in the  industry.  Management  believes  that  amounts  provided are
      sufficient to cover claims and costs  incurred  through June 30, 1996. The
      rates used to  determine  the  amounts  charged to expense  for claims and
      costs  are  adjusted  periodically,  as  appropriate,  to  reflect  actual
      experience. The Hospital has 100 percent insurance coverage for individual
      claim  expenses in excess of $45,000 and for aggregate  claim  expenses in
      excess of $973,011.

      Health care benefit expense was approximately  $1,190,238,  $1,189,583 and
      $914,288 for the years ended June 30, 1996, 1995 and 1994, respectively.

      Use of Estimates
      ----------------
      Generally  accepted  accounting  principles  require  management  to  make
      estimates and assumptions  that affect the reported  amounts of assets and
      liabilities,  the  disclosure  of  contingent  assets and  liabilities  at
      year-end  and the reported  amounts of revenues  and  expenses  during the
      year.

      Reclassifications
      -----------------
      Certain   accounts  from  prior  years  financial   statements  have  been
      reclassified to be comparable with disclosure for the current year.

(2)   Net Patient Service Revenue
      ---------------------------
      The  Hospital  has  agreements  with  third-party  payors that provide for
      payments to the Hospital at amounts different from its established  rates.
      A summary  of the  payment  arrangements  with  major  third-party  payors
      follows:
      o     Medicare. Inpatient acute care services rendered to Medicare program
            beneficiaries  are  paid  at  prospectively   determined  rates  per
            discharge.  These rates vary  according to a patient  classification
            system that is based on  clinical,  diagnostic,  and other  factors.
            Inpatient  nonacute  services,   certain  outpatient  services,  and
            defined  capital and  medical  education  costs  related to Medicare
            beneficiaries  are paid based on a cost  reimbursement  methodology.
            The  Hospital  is  reimbursed  for  cost  reimbursable  items  at  a
            tentative rate with final settlement  determined after submission of
            annual  cost  reports  by the  Hospital  and  audits  thereof by the
            Medicare  fiscal  intermediary.  The  Hospital's  classification  of
            patients under the Medicare program and the appropriateness of their
            admission  are  subject to an  independent  review by a peer  review
            organization  under  contract  with  the  Hospital.  The  Hospital's
            Medicare  cost  reports  have been  audited by the  Medicare  fiscal
            intermediary through June 30, 1993.
      o     Medicaid.  Inpatient and  outpatient  services  rendered to Medicaid
            program  beneficiaries  are  reimbursed  under a cost  reimbursement
            methodology.  The Hospital is  reimbursed  at a tentative  rate with
            final settlement  determined after submission of annual cost reports
            by  the  Hospital  and  audits   thereof  by  the  Medicaid   fiscal
            intermediary. The Hospital's Medicaid cost reports have been audited
            by the Medicaid fiscal intermediary through June 30, 1993.
      o     Blue Cross.  Inpatient  services  rendered to Blue Cross subscribers
            are  reimbursed  at  prospectively   determined  rates  per  day  of
            hospitalization. The prospectively determined per-diem rates are not
            subject to retroactive adjustment.

                                      -22-

<PAGE>

                    AMERICAN HOSPITAL MANAGEMENT CORPORATION

                    Notes to Financial Statements, continued


      The  Hospital  has also  entered  into  payment  agreements  with  certain
      commercial  insurance  carriers,  health  maintenance  organizations,  and
      preferred  provider  organizations.  The basis for payment to the Hospital
      under  these  agreements  includes  prospectively   determined  rates  per
      discharge,   discounts  from  established   charges,   and   prospectively
      determined daily rates.

      At June 30, 1996 and 1995, accounts receivable are primarily  concentrated
      in federal and state governmental entities and other patients in which the
      Company does not believe there is any undue credit risk.


(3)   Investments
      -----------

      For the year  ended  June 30,  1995,  the  Company  adopted  Statement  of
      Financial  Accounting Standard No. 115 (SFAS 115),  Accounting for Certain
      Investments  in Debt and  Securities.  SFAS 115 requires that  securities,
      which are available for sale, be recorded at their fair value.  Unrealized
      holding  gains  and  losses  are  reported  in  a  separate  component  of
      shareholders' equity, net of tax effect, until realized.  The total amount
      recorded in stockholder's  equity was $1,026,809 of which $474,876 relates
      to the change in unrealized  gain in securities  for the current year, net
      of the income tax effect.

      Short-term investments at June 30, 1996 consists of the following:

                                           Fair     Unrealized  Unrealized
                                           Value       Gain        Loss
                                           -----       ----        ----

            Equity securities           $5,260,968  $1,680,334  $ (82,381)

      Gain or loss from sale of securities  is based on specific  identification
      of the securities  sold. For the year ended June 30, 1996,  realized gains
      and realized losses were $170,507 and $(56,921), respectively.



(4)   Capital Lease Obligations
      -------------------------

      A portion of the Hospital's  equipment is leased under capital leases that
      expire at various dates through 1999. Property and equipment,  at June 30,
      1996 and 1995,  respectively,  includes the following amounts for property
      leased under capital leases:

                                                         1996            1995
                                                         ----            ----
 
            Equipment                              $1,374,581      $1,347,827
               Less accumulated amortization          774,850         502,610
                                                   ----------      ----------
                                                   $  599,731      $  845,217
                                                   ==========      ==========






                                      -23-


<PAGE>

                    AMERICAN HOSPITAL MANAGEMENT CORPORATION

                    Notes to Financial Statements, continued



(4)   Capital Lease Obligations (continued)
      -------------------------------------

      Annual future minimum lease payments under capitalized  leases at June 30,
      1996 are as follows:

                        1997                                $294,008
                        1998                                 119,804
                        1999                                  25,985
                                                             -------

            Total minimum lease payments                     439,797
            Less amount representing interest                (36,216)
                                                             -------


            Present value of minimum lease payments          403,581
            Less current maturity                            276,660
                                                             -------
                                                            $126,921
                                                             =======

(5)   Net Patient Service Revenue
      ---------------------------

      Gross  patient  service  revenue and  related  provision  for  contractual
      allowances for the years ended June 30 are summarized as follows:

                                             1996          1995          1994
                                             ----          ----          ----

      Gross patient service revenue     $ 40,617,321  $ 39,002,465  $ 38,120,076
         Less contractual allowances      13,807,912    13,638,180    13,929,013
                                        ------------  ------------  ------------

      Net patient service revenue       $ 26,809,409  $ 25,364,285  $ 24,191,063
                                        ============  ============  ============






















                                      -24-

<PAGE>

                    AMERICAN HOSPITAL MANAGEMENT CORPORATION

                    Notes to Financial Statements, continued

(6)   Income Taxes
      ------------

      At June 30, income tax expense consisted of the following:

                                                      1996
                                      --------------------------------------

                                       Federal      California        Total
                                       -------      ----------        -----

            Current                  $139,977      $  54,424       $194,401
            Deferred                   (8,447)        (3,798)       (12,245)
                                      -------        -------        -------

                                     $131,530      $  50,626       $182,156
                                      =======        =======        =======


                                                       1995
                                      --------------------------------------

                                       Federal      California        Total
                                       -------      ----------        -----

            Current                  $141,990     $   53,808       $195,798
            Deferred                  184,833         48,196        233,029
                                      -------        -------        -------

                                     $326,823       $102,004       $428,827
                                      =======        =======        =======


                                                       1994
                                      --------------------------------------

                                       Federal      California        Total
                                       -------      ----------        -----

            Current                  $124,720      $  56,088       $180,808
            Deferred                   30,502        (10,430)        20,072
                                      -------        -------        -------

                                     $155,222      $  45,658       $200,880
                                      =======        =======        =======


      Deferred tax expenses  (credits) for 1996,  1995, and 1994 result from the
      following timing differences:

                                        1996           1995           1994
                                        ----           ----           ----

      California franchise tax      $  19,494      $  21,203      $  32,139
      Depreciation and amortization    26,532         38,112         89,605
      Allowance for bad debts            (229)       189,582        (43,885)
      Vacation accrual                (26,387)        (8,464)       (22,005)
      Gain on sale of investments     (49,099)            --             --
      Other                            17,444         (7,404)       (35,782)
                                      -------        -------        -------
                                    $ (12,245)      $233,029      $  20,072
                                      =======        =======        =======



                                      -25-

<PAGE>

                    AMERICAN HOSPITAL MANAGEMENT CORPORATION

                    Notes to Financial Statements, concluded

      Recorded  income tax expense  differs  from that  computed by applying the
      statutory income tax rates for the following reasons:

                                               1996        1995        1994
                                               ----        ----        ----

      Computed tax at statutory rate        $175,785    $442,600    $304,761
      Increases (decreases) resulting from:
          California franchise tax           (13,671)    (32,548)    (22,063)
          Domestic dividend exclusion
             allowance                       (24,661)    (25,466)    (31,729)
          Cash surrender value                 8,063       4,620      (3,740)
          Prior year under (over) accrual     36,640      39,621     (46,349)
                                             -------     -------     -------

                                            $182,156    $428,827    $200,880
                                             =======     =======     =======

(7)   Preferred Stock
      ---------------

      The preferred stock provides for cumulative  dividends of $2 per share per
      year.  The stock has a  redemption  and  liquidating  value of $27.50  per
      share,  plus dividends in arrears.  Total redemption and liquidating value
      of the  outstanding  shares at June 30, 1996 and 1995,  was $1,398,368 and
      $1,419,650, respectively. In the event of redemption, two shares of common
      stock can be issued for each share of preferred  stock redeemed (if option
      is exercised by preferred stockholder). Redemption of the preferred stock,
      in total only, is at the option of the Company.

(8)   Income per Common Share
      -----------------------

      Income per common  share,  assuming no dilution,  was computed by dividing
      the net income after deduction of preferred stock dividend requirements of
      $101,699,  $103,247 and $103,536, by the weighted average number of common
      shares  outstanding  (234,846,  237,529 and 238,904) for 1996,  1995,  and
      1994, respectively.

      Income per common share, assuming full dilution,  was computed by dividing
      net income by the weighted  average  number of common shares  outstanding,
      after redemption of preferred stock, (334,912, 339,726, 342,115) for 1996,
      1995 and 1994, respectively. (Note 7)

(9)   Malpractice Insurance Arrangements
      ----------------------------------

      The Hospital  maintains medical  malpractice  insurance coverage through a
      commercial  insurance  carrier on a claims-made  basis.  Under claims-made
      policies,  all accidents reported to the insurer are covered. On the basis
      of the Hospital's current  experience,  neither an accrual for a potential
      extended period reporting policy, which could be necessary if the Hospital
      ceases to purchase  claims-made  coverage,  nor an accrual for  unreported
      incidents has been made.

(10)  401(k) Plan
      -----------

      The Plan is a defined  contribution  plan to which employees are permitted
      to make salary deferrals under the 401(k)  provision.  Such  contributions
      are credited directly to their accounts.  Based on the Plan document,  the
      Employer can make  discretionary  contributions for the  participants.  No
      contribution was made for any of the three years ended June 30, 1996.


                                      -26-

<PAGE>

Item 9.  Changes in and disagreements with accountants on
-------  ------------------------------------------------
         Accounting and Financial Disclosure
         -----------------------------------

         None.











































                                      -27-

<PAGE>

Item 10.    Directors and Executive Officers of the Registrant
--------    --------------------------------------------------

<TABLE>
<CAPTION>


Name and principal occupation
during last five years            Since     Age    Office         Occupation
----------------------            -----     ---    ------         ----------
<S>                               <C>       <C>    <C>            <C>                           
Lawrence V. Blashaw               1970      70     Director       President of
                                                                  Freight For-
                                                                  warding Co.


Charles F. Forbes, Attorney       1968      66     Secretary &    Attorney
Musick, Peeler & Garrett                           Director

Allen E. Shaw, President          1960      78     President &    President of
of the Company                                     Director       Company

Douglas A. Shaw, Vice President   1981      45     Vice President Hospital
(son of president)                                 & Director     Administrator

Richard J. Stanczak               1977      70     Director       Business
Business Consultant                                               Consultant

Michael Young, Controller         1978      48     Treasurer      Hospital
Administrator                                                     Controller

Scott L. Holmes, M.D.             1988      59     Director       Physician

Donald J. Krpan, D.O.             1988      60     Director       Dean of Students
                                                                  College of Medicine


</TABLE>

























                                      -28-

<PAGE>

Item 11. Executive Compensation
-------- ----------------------

         The following table sets forth the aggregate direct  remuneration  paid
         or accrued by the Company for services in all capacities for the fiscal
         year ended June 30, 1996,  to each  director and officer of the Company
         whose  aggregate  direct  remuneration  exceeded  $100,000,  and to all
         directors  and  officers  (as a group) who were such at any time during
         the last fiscal year.

                                                  Cash and cash equivalent
                                                    forms of remuneration
                                                    ---------------------

Name of individual                               Salaries, fees,
or number of         Capacities in which         directors' fees    Insurance
persons in group     remuneration was received     and bonuses      benefits
----------------     -------------------------     -----------      --------

Allen E. Shaw        President and Chairman of      $100,000
                     the Board

Douglas A. Shaw      Vice President, Administrator    43,204           --

Michael Young        Treasurer and Controller of      64,500           --
                     Mad River Community Hospital

All other directors
   and officers as a
   group (5 persons)                                   6,700
                                                     -------

(8 persons)                                         $214,404
                                                     =======



Note:    There  was  no  contractual  agreement  with  any  directors  regarding
         compensation,  pensions, or stock option. Directors, from time to time,
         are   compensated   for   attendance  at  meetings  for  their  general
         administrative  duties  although  there is no required  payment.  Total
         director  compensation  for 1996 was  $6,700.  There  have not been any
         payments made to officers or directors for severance of relationship.



















                                      -29-

<PAGE>

Item 12. Security Ownership of Certain
-------- -----------------------------
         Beneficial Owners and Management
         --------------------------------

         Owners of 5% or more of outstanding voting securities at June 30, 1996,
         were as follows:

                                                 Amount and
                                                  nature of
                                    Title of     beneficial           Percent
Name of beneficial owner              class      ownership           of class
------------------------              -----      ---------           --------

Allen E. Shaw Family                Common        118,079             50.6%
San Clemente, California            Preferred       2,327              4.6%


Arcata Hospital Corporation*        Common         20,898              8.9%
Palos Verdes Estates, California    Preferred      11,481             22.6%



Security ownership of management as a group
-------------------------------------------

All directors and officers as       Common        120,579             51.7%
   a group
All directors and officers as       Preferred       2,327              4.6%
   a group


Security ownership of management is as follows:
-----------------------------------------------

                                                         Number of shares
                                                         ----------------

         Name                                         Common      Preferred
         ----                                         ------      ---------

         Lawrence V. Blashaw                           2,500             --
         Allen E. Shaw Family                        118,079          2,327
                                                     -------        -------

                                                     120,579          2,327
                                                     =======        =======



*  Arcata Hospital Corporation is 98% owned by shareholders of the Company.














                                      -30-

<PAGE>


Item 13. Certain Relations and
-------- ---------------------
         Related Transactions
         --------------------

         None.














































                                      -31-

<PAGE>


PART IV

Item 14.  Exhibits, Financial Statement
--------  -----------------------------
          Schedules and Reports on Form 8-K
          ---------------------------------

Page
----

(a)      (1) The following financial statements are included in Part II, Item 8:

           Report of Independent Auditors'

           Financial Statements:

              Balance Sheets
                 June 30, 1996 and 1995

              Statements of Income and Retained  Earnings  Years  ended June 30,
                 1996, 1995 and 1994

              Statements of Cash Flows -
                 Years ended June 30, 1996, 1995, and 1994

              Notes to Financial Statements

(2)     The following financial schedules for the Years 1996, 1995, and 1994 are
        submitted herewith:

              Schedule I - Short-Term Investments

              Schedule V - Property, Plant & Equipment

              Schedule VI - Accumulated Depreciation and Amortization
                             of Property, Plant & Equipment

              Schedule VIII - Valuation and Qualifying Accounts


              All other  schedules are omitted  because they are  not applicable
              or not required,  or because the required information  is included
              in the financial statements or notes hereto.

(3)     Exhibits included herein:

        Exhibit 27 - Financial Data Schedule (Electronic filing only).

(b)     Registrant did not file any reports on Form 8-K during the quarter ended
        June 30, 1996.

















                                      -32-

<PAGE>

                                  Schedule I

                    AMERICAN HOSPITAL MANAGEMENT CORPORATION

                                   Investments

                    Years ended June 30, 1996, 1995 and 1994

                                                                     Amount at  
                                                    Market value        which
                                                    of each issue    each issue
                                        Cost of       at balance     is carried
Name of Issuer                        each issue      sheet date      on books
--------------                        ----------      ----------      --------

1996:
     Equity securities                $3,663,015      $5,260,928      $5,260,928
                                      ==========      ==========      ==========


1995:
     Equity securities                $3,460,694      $4,380,582      $4,380,582
                                      ==========      ==========      ==========


1994:
     Money Market                     $  284,454      $  284,454      $  284,454
     Equity securities                 2,869,398       3,665,885       2,869,398
                                      ----------      ----------      ----------

                                      $3,153,852      $3,950,339      $3,153,852
                                      ==========      ==========      ==========

































                                      -33-

<PAGE>


                                   Schedule V

                    AMERICAN HOSPITAL MANAGEMENT CORPORATION

                          Property, Plant and Equipment

                    Years ended June 30, 1996, 1995 and 1994
<TABLE>
<CAPTION>

                               Balance,
                               beginning    Additions                  Other Charges,     Balance,
                                of year      at cost      Retirements   add (deduct)     end of yr
                                -------      -------      -----------   ------------     ---------
<S>                         <C>            <C>           <C>               <C>        <C>    
1996:
     Land &
        Improvements        $    36,000    $    8,500                                 $     44,500
     Buildings                4,233,728                                                  4,233,728
     Equipment                5,158,618       601,497    $   32,245                      5,727,870
     Construction in
        progress                  1,674            --         1,674              --             --
                              ---------      --------       -------         -------      ---------

                            $ 9,430,020    $  609,997    $   33,919              --    $10,006,098
                              =========      ========       =======         =======      =========

1995:
     Land &
        Improvements        $   138,121                  $  102,121                    $    36,000
     Buildings                4,233,728                                                  4,233,728
     Equipment                8,066,583       830,047     3,750,400      $   12,388      5,158,618
     Construction in
        progress                     --        14,062            --         (12,388)         1,674
                              ---------      --------     ---------         -------      ---------

                            $12,438,432     $ 844,109    $3,852,521              --    $ 9,430,020
                              =========      ========     =========         =======      =========

1994:
     Land &
        Improvements        $   138,121                                                $   138,121
     Buildings                4,198,149                                  $   35,579      4,233,728
     Equipment                6,902,239    $1,164,344            --              --      8,066,583
     Construction in
        progress                 27,176         8,403                       (35,579)            --
                              ---------      --------       -------         -------      ---------

                            $11,265,685    $1,172,747            --              --    $12,438,432
                              =========     =========       =======         =======      =========
</TABLE>














                                      -34-

<PAGE>

                                   Schedule VI

                    AMERICAN HOSPITAL MANAGEMENT CORPORATION

                    Accumulated Depreciation and Amortization
                        of Property, Plant and Equipment

                    Years ended June 30, 1996, 1995, and 1994
<TABLE>
<CAPTION>

                                Balance,                                      Balance,
                                beginning                                        end
                                 of year        Provision     Retirements      of year
                                 -------        ---------     -----------      -------
<S>                            <C>            <C>            <C>             <C>    
1996:
       Buildings               $2,195,915     $  209,321                     $2,405,236
       Equipment                2,751,338        886,142     $   32,245       3,605,235
       Improvements                    --            283             --             283
                                 --------       --------       --------        --------

           Total               $4,947,253     $1,095,746     $   32,245      $6,010,754
                                 ========       ========       ========        ========


1995:
       Buildings               $2,007,448     $  188,467                     $2,195,915
       Equipment                5,669,708        832,030     $3,750,400       2,751,338
       Improvements               102,121             --        102,121              --
                                 --------       --------       --------        --------

           Total               $7,779,277     $1,020,497     $3,852,521      $4,947,253
                                 ========       ========       ========        ========


1994:
       Buildings               $1,799,313     $  208,135                     $2,007,448
       Equipment                5,032,874        636,834             --       5,669,708
       Improvements               102,121             --                        102,121
                                 --------       --------       --------        --------

           Total               $6,934,308     $  844,969             --      $7,779,277
                                 ========       ========       ========        ========

</TABLE>




















                                      -35-

<PAGE>




                                  Schedule VII

                    AMERICAN HOSPITAL MANAGEMENT CORPORATION

                        Valuation and Qualifying Accounts

                    Years ended June 30, 1996, 1995, and 1994


                      Balance,     Charged     Charged                Balance,
                      beginning      to       to other                   end
                       of year     income     accounts   Deductions    of year
                       -------     ------     --------   ----------    -------

Allowance for
   doubtful receivables:

     1996              $217,709  $5,804,777              $5,819,836    $202,650
     1995               655,845   4,669,157               5,107,293    $217,709
     1994               554,494   3,914,061               3,812,710     655,845






























                                      -36-

<PAGE>

                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized:

                                      AMERICAN HOSPITAL MANAGEMENT CORPORATION



                                      By: /s/ Allen E. Shaw
                                         ---------------------------------------
                                              Allen E. Shaw, President


                                      Date: 12-27-96
                                           -------------------------------------

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the principal  Executive Officer,  principal  Financial
Officer, Secretary and majority of Board Members on behalf of the Registrant and
in the capacities and on the dates indicated:


      Signature                        Capacity                        Date
      ---------                        --------                        ----


/s/ Allen E. Shaw                      President and Director        12-27-96
-------------------------
Allen E. Shaw



/s/ Charles F. Forbes                  Secretary and Director        12-27-96
--------------------------
Charles F. Forbes



                                       Treasurer and Chief
/s/ Michael J. Young                   Accounting Officer            12-27-96 
--------------------------
Michael J. Young

/s/ Donald J. Krpan                    Director                      12-27-96  
--------------------------
Donald J. Krpan


/s/ Doug Shaw                          Director                      12-27-96  
--------------------------
Doug Shaw