<PAGE>



                          SECURITIES AND EXCHANGE COMMISSION
                                           
                                Washington, DC  20549
                                           
                                      FORM 10-Q
                                           
               Quarterly report pursuant to Section 13 or 15(d) of the
                          Securities Exchange Act of 1934
                                           
                    For the quarterly period ended March 31, 1997
                                           
                                          OR
                                           
             Transition report pursuant to Section 13 or 15 (d) of the 
                          Securities Exchange Act of 1934
                                           
              For the transition period from ___________ to ____________
                                           
                       Commission file number         0-27502
                                              ______________________

                          HEALTH SYSTEMS DESIGN CORPORATION
                (Exact name of registrant as specified in its charter)
                                           
     DELAWARE                                         94-3235734
(State or other Jurisdiction of          (I.R.S. Employer Identification Number)
 Incorporation or Organization)

                      1330 BROADWAY, OAKLAND, CALIFORNIA  94612
               (Address of principal executive offices)  (Zip code)
                                           
                                    (510) 763-2629
                 (Registrant's telephone number, including area code)
                                           





Indicate by check mark whether the registrant:  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1932 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                  Yes   X    No
                                      -----     -----
The registrant had 6,476,166 shares of common stock outstanding as of March 31,
1997.

Exhibit index is located on page 11


<PAGE>

                          HEALTH SYSTEMS DESIGN CORPORATION
                                           
                                        INDEX
                                           
PART I.    FINANCIAL INFORMATION                                     PAGE 

           Item 1.    Consolidated Financial Statements

                      Consolidated Balance Sheets - 
                      March 31, 1997 and September 30, 1996            2

                      Consolidated Statements of Operations - 
                      Three Months and Six Months ended 
                      March 31, 1997 and 1996                          3

                      Consolidated Statements of Cash Flows - 
                      Six Months ended March 31, 1997 and 1996         4

                      Notes to Consolidated Financial Statements       5


           Item 2.    Management's Discussion and Analysis of 
                      Financial Condition and Results of Operations    6


PART II.   OTHER INFORMATION

           Item 4.    Submission of Matters to a Vote of
                      Security Holders                                 9

           Item 6.    Exhibits and Reports on Form 8-K                10


                                       1


<PAGE>
                       PART I.  FINANCIAL INFORMATION

                        ITEM 1.  FINANCIAL STATEMENTS

                      HEALTH SYSTEMS DESIGN CORPORATION
                         CONSOLIDATED BALANCE SHEETS
                                 (UNAUDITED)

                                   ASSETS
<TABLE>
<CAPTION>
                                                                         MARCH 31,       SEPTEMBER 30,
                                                                           1997              1996
                                                                     --------------    ---------------
<S>                                                                  <C>               <C>

Current Assets:
   Cash and cash equivalents                                         $  13,917,499     $   15,254,042
   Accounts receivable, net of allowance for doubtful
       accounts of $175,000 at March 31 1997, and
       $100,000 at September 30, 1996                                    3,764,623          3,661,984
   Unbilled revenue                                                      1,666,503          1,469,533
   Prepaid expenses                                                        542,222            427,586
                                                                     --------------    ----------------
         Total current assets                                           19,890,847         20,813,145
                                                                     --------------    ----------------

Property and equipment:
     Computer equipment                                                  2,900,936          2,454,204
     Office furniture and other                                          1,048,577            865,725
                                                                     --------------    ---------------
         Total property and equipment                                    3,949,513          3,319,929
Less:  Accumulated depreciation                                         (1,202,910)          (765,203)
                                                                     --------------    ---------------
         Net property and equipment                                      2,746,603          2,554,726
                                                                     --------------    ---------------
Deposits and other assets                                                  118,855             83,211
                                                                     --------------    ---------------
Software development costs, net of accumulated 
  amortization of  $481,874 and $390,508 in 1997 and 1996,
  respectively                                                             574,641            305,970
                                                                     --------------    ---------------
         Total assets                                                $  23,330,946     $   23,757,052
                                                                     --------------    ---------------
                                                                     --------------    ---------------

                     LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
    Current portion of capital lease obligations                     $           -      $       3,505
    Accounts payable                                                       617,605            693,269
    Accrued liabilities                                                    964,222            746,358
    Unearned revenue                                                     2,109,503          1,201,913
                                                                     --------------     -------------
      Total current liabilities                                          3,691,330          2,645,045

Stockholders' equity:
    Preferred stock, $.001 par value, 1,000,000 shares 
          authorized, none outstanding                                           -                  -
    Common stock, $.001 par value, 20,000,000 shares 
         authorized, 6,476,166 and 6,433,766 shares issued and
         outstanding at March 31, 1997 and September 30, 1996,
         respectively                                                        6,476              6,434
    Additional paid-in capital                                          22,895,339         22,842,130
    Treasury stock, 2,054 shares                                           (28,500)           (28,500)
    Deferred compensation                                                  (51,159)           (59,039)
    Retained deficit                                                    (3,182,540)        (1,649,018)
                                                                     --------------      -------------
    Total stockholders' equity                                          19,639,616         21,112,007
                                                                     --------------      -------------
      Total liabilities and stockholders' equity                     $  23,330,946       $ 23,757,052 
                                                                     --------------      -------------
                                                                     --------------      -------------
</TABLE>
                                       2


<PAGE>

                       HEALTH SYSTEMS DESIGN CORPORATION
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                 THREE MONTHS ENDED                   SIX MONTHS ENDED
                                                      MARCH 31,                            MARCH 31,
                                            -------------------------------     ----------------------------
                                                 1997              1996               1997          1996
                                            -------------     ------------      -------------   ------------
<S>                                         <C>               <C>                <C>            <C>
Revenues:
   System sales                             $  3,502,613      $  2,281,464       $  6,360,827   $  4,192,956
   Services and other                            619,682           508,699          1,084,008        852,086
                                            -------------     -------------      -------------  ------------
        Total revenues                         4,122,295         2,790,163          7,444,835      5,045,042
Cost of revenues                               1,391,125           879,975          2,726,898      1,584,047
                                            -------------     -------------      -------------  ------------
        Gross margin                           2,731,170         1,910,188          4,717,937      3,460,995
                                            -------------     -------------      -------------  ------------

Operating expenses:
    General and administrative                 1,443,849           859,789          2,777,707      1,524,650
    Sales and marketing                          977,802           679,056          2,047,533      1,097,752
    Product development                          930,716           806,960          1,787,446      1,496,578
                                            -------------      ------------      -------------   ------------
        Total operating expenses               3,352,367         2,345,805          6,612,686      4,118,980
                                            -------------      ------------      -------------   ------------
        Loss from operations                    (621,197)         (435,617)        (1,894,749)      (657,985)
Interest income (expense), net                   177,764          (326,922)           361,227       (389,321)
                                            -------------      -------------     -------------   ------------

        Loss before provision for
          income taxes                          (443,433)         (762,539)        (1,533,522)    (1,047,306)
Provision for income taxes                             -                 -                  -              -
                                            -------------      ------------      -------------  -------------
Net loss                                    $   (443,433)      $  (762,539)      $ (1,533,522)  $ (1,047,306)
                                            -------------      ------------      -------------  -------------
                                            -------------      ------------      -------------  -------------

Net loss per share                          $      (0.07)      $     (0.14)      $      (0.24)  $      (0.21)
                                            -------------      -------------     -------------  -------------
                                            -------------      -------------     -------------  -------------

Weighted average common and common 
equivalent shares outstanding                  6,456,108         5,270,580          6,446,240      4,997,722
                                            -------------      --------------    -------------  -------------
                                            -------------      --------------    -------------  -------------
</TABLE>

                                       3


<PAGE>

                     HEALTH SYSTEMS DESIGN CORPORATION
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                   SIX MONTHS ENDED 
                                                                                       MARCH 31, 
                                                                         -----------------------------------
                                                                               1997              1996
                                                                         --------------     ----------------
<S>                                                                      <C>                  <C>
Cash flows from operating activities:
  Net loss                                                              $  (1,533,522)       $  (1,047,306)
  Adjustments to reconcile net loss to net cash and cash equivalents
     used in operating activities:
         Depreciation and amortization                                        534,940              218,525
         Loss on asset disposals                                                5,835               (5,000)
         Amortization of deferred compensation                                  7,880                7,880
         Write-off of debt discount                                                 -              350,000
         Changes in current assets and liabilities:
              Accounts receivable                                            (102,639)            (579,201)
              Unbilled revenue                                               (196,970)            (342,723)
              Prepaid expenses                                               (114,636)            (138,792)
              Accounts payable                                                (75,664)            (218,850)
              Accrued liabilities                                             217,864              517,464
              Unearned revenue                                                907,590             (151,952)
                                                                       --------------       --------------
                   Net cash used in operating activities                     (349,322)          (1,389,955)
                                                                       --------------       --------------

Cash flows from investing activities:
    Purchases of property and equipment                                      (644,225)            (667,628)
    Proceeds from sale of property and equipment                                2,939                5,000
    Capitalization of software development costs                             (360,037)             (90,440)
    Other assets                                                              (35,644)              85,218
                                                                       --------------       --------------
       Net cash used in investing activities                               (1,036,967)            (667,850)
                                                                       --------------       --------------

Cash flows from financing activities:
    Borrowings from line of credit                                                  -              450,000
    Payments under line of credit                                                   -             (958,427)
    Borrowings from notes payable                                                   -            1,500,000
    Payments under notes payable and capital leases                            (3,505)          (2,458,627)
    Proceeds from issuance of common stock, net of issuance costs                               21,722,965
    Proceeds from exercise of common stock options                             53,251              457,200
                                                                        --------------       --------------
       Net cash provided by financing activities                               49,746           20,713,111
                                                                        --------------       --------------
       Net increase (decrease) in cash and cash equivalents                 (1,336,543)          18,655,306
Cash and cash equivalents at beginning of period                            15,254,042              149,218
                                                                        --------------       --------------
Cash and cash equivalents at end of period                               $  13,917,499        $  18,804,524
                                                                        --------------       --------------
                                                                        --------------       --------------
Supplemental disclosure of cash flow information:
    Interest paid                                                        $          21        $     121,620
    Taxes paid                                                           $         800        $         800
     
Supplemental disclosure of noncash transactions:
    Cancellation of advances from stockholder through issuances
    of notes payable                                                     $           -        $     500,000
    Warrants exercised for common stock                                  $           -        $     475,000
</TABLE>

                                       4
<PAGE>

                        HEALTH SYSTEMS DESIGN CORPORATION
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1997
                                           
1.  BASIS OF PRESENTATION
               
     The accompanying unaudited consolidated financial statements 
have been prepared in accordance with generally accepted accounting 
principles for interim financial information and on substantially the same 
basis as the annual audited financial statements.  Accordingly, they do not 
include all of the information and footnotes required by generally accepted 
accounting principles for complete financial statements.  In the opinion of 
management, all adjustments (consisting only of normal recurring accruals) 
considered necessary for a fair presentation have been included.  Operating 
results for the six month period ended March  31, 1997, are not necessarily 
indicative of the results that may be expected for the year ended September 
30, 1997.  These consolidated financial statements should be read in 
conjunction with the financial statements and footnotes thereto for the year 
then ended September 30, 1996, included in the Company's Form 10-K Annual 
Report.

2.  NET LOSS PER SHARE

     Net loss per common and common equivalent share is based on the weighted 
average number of common and common dilutive equivalent shares outstanding 
during the period.  Pursuant to Securities and Exchange Commission Staff 
Accounting Bulletin No. 83, common equivalent shares include all common 
shares issued and options and warrants to purchase shares of common stock 
granted by the Company at a price less than the initial public offering price 
during the period March 16, 1995, through the initial public offering date 
(using the treasury stock method for options and warrants and based on the 
public offering price of $13.00 per share) as if they were outstanding for 
all periods presented prior to the initial public offering.

3.  INITIAL PUBLIC OFFERING

     On March 5, 1996, the Company sold 1,855,000 shares of its common stock 
through an initial public offering.  As a result, the Company received net 
proceeds of $21,722,965.  A portion of the proceeds were immediately used to 
retire short-term and long-term indebtedness to banks and other creditors.  
In connection with the repayment of the private placement notes payable of 
$2,000,000, the Company recorded a one-time, non-cash charge to interest 
expense of approximately $333,000 in the second quarter of fiscal 1996 to 
reflect the write-off of deferred interest.  A $17,000 non-cash charge to 
interest expense was recorded in the first quarter of fiscal 1996.  Also, in 
February, 1996, the Company reincorporated in the state of Delaware.

                                           
                                           5
<PAGE>
                                           
                       MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                           
OVERVIEW

     The Company provides managed care information systems software to 
healthcare organizations that use managed care techniques to deliver 
services, manage financial risk and control costs.  The Company introduced 
its first internally financed and developed application, Diamond 725, in 
fiscal 1992, followed by Diamond 950C/S and Diamond Objects in fiscal 1995 
and Diamond 725Q in fiscal 1996.                

     The Company's revenues are derived from licensing Diamond 725, Diamond 
725Q, Diamond 950C/S and Diamond Objects, providing the associated 
implementation, modification, support and consulting services, and reselling 
hardware and third party products.  License revenues are recognized on a 
percentage of completion basis based on the labor hours required to implement 
the system.  Implementation, modification, support and consulting fees are 
billed either on an hourly or monthly basis and are recognized as services 
are rendered.  Hardware and third party software fees are typically billed 
and recognized as revenues when delivered to the client. 

RESULTS OF OPERATIONS

     REVENUES

     Total revenues were $4,122,000 and $2,790,000 for the three months ended 
March 31, 1997 and 1996, respectively, representing an increase of 48%.  
Total revenues were $7,445,000 and $5,045,000 for the six months ended March 
31, 1997 and 1996, respectively, representing an increase of 48%.  The growth 
in total revenues is attributable primarily to an increase in the number and 
size of Diamond 950C/S implementations in progress during the period, as well 
as an increase in hardware and third party software sales.
               
     During the three months ended March 31, 1997, the Company executed its 
largest contract to date with Blue Cross/Blue Shield of North Carolina, which 
includes a license to use Diamond 950C/S, as well as implementation and 
product modification services.  The relationship with Blue Cross and Blue 
Shield of North Carolina contributed approximately $280,000 in revenues for 
the three months ended March 31, 1997.  
               
     The Company's relationship with Blue Cross and Blue Shield of Florida, 
which commenced in November 1995, contributed approximately $803,000 in 
revenues for the three months ended March 31, 1997 compared with $1,000,000 
in the prior year period.  The relationship with Shared Medical Systems (SMS) 
accounted for approximately $186,000 in revenues for the three months ended 
March 31, 1997, compared with approximately $348,000 in the year earlier 
period.  

     SYSTEM SALES.  System sales revenues, which includes license, 
implementation, modification and third party hardware and software fees, were 
$3,503,000 and $2,281,000 for the three months ended March 31, 1997 and 1996, 
respectively, representing an increase of 54%.  System sales revenues were 
$6,361,000 and $4,193,000 for the six months ended March 31, 1997 and 1996 
respectively, representing an increase of 52%.  Revenues associated with 
Diamond 950C/S were partially responsible for the increase in systems sales 
revenues, with the Company experiencing significant increases in Diamond 
950C/S implementation and modification fees for the three and six months 
ended March 31, 1997 compared to the year earlier periods.  A significant 
increase in hardware and third party software revenues associated with these 
sales was also partly responsible for the increase in system sales revenues.

     SERVICES AND OTHER.  Services and other revenues, which includes support 
fees, were $620,000 and $509,000 for the three months ended March 31, 1997 
and 1996, respectively, representing an increase of 22%.  Services and other 
revenues were $1,084,000 and $852,000 for the six months ended March 31, 1997 
and 1996, respectively, representing an increase of 27%.  Support fees 
continued to account for the majority of services and other revenues.  The 
increase in services and other revenues was due primarily to the expansion of 
the installed base for Diamond 725.

     COST OF REVENUES.  Cost of revenues was $1,391,000 and $880,000 for the 
three months ended March 31, 1997 and 1996, respectively, representing an 
increase of 58%.  Cost of revenues was $2,727,000

                                       6
<PAGE>

and $1,584,000 for the six months ended March 31, 1997 and 1996, 
respectively, representing an increase of 72%.  Cost of revenues increased 
primarily as a result of the increased number of personnel, both HSD 
employees and independent contractors, required to implement and support the 
larger client base.  Additionally, the cost of hardware and third party 
software increased significantly over the comparable period proportionate 
with an increase in hardware and third party software revenues.  Cost of 
revenues increased from 32% of total revenues in the three months ended March 
31, 1996 to 34% of total revenues in the three months ended March 31, 1997, 
although no long-term trend should be implied from this quarter to quarter 
comparison.  The cost of revenues as a percentage of sales is dependent on 
the mix of license, service, and third party hardware and software revenues, 
and may fluctuate over time as these revenue sources fluctuate.

     OPERATING EXPENSES.  

     GENERAL AND ADMINISTRATIVE.  General and administrative expenditures were
$1,444,000 and $860,000 for the three months ended March 31, 1997 and 1996,
respectively, representing an increase of 68%.  General and administrative
expenditures were $2,778,000 and $1,525,000 for the six months ended March 31,
1997 and 1996, respectively, representing an increase of 82%.  The increase in
general and administrative expenses was due primarily to staff additions and
investment in infrastructure to support the Company's expanded operations, as
well as fulfilling the obligations of being a public company.

     SALES AND MARKETING.  Sales and marketing expenditures were $978,000 and 
$679,000 for the three months ended March 31, 1997 and 1996, respectively, 
representing an increase of  44%.  Sales and marketing expenditures were 
$2,048,000 and $1,098,000 for the six months ended March 31, 1997 and 1996, 
respectively, representing an increase of 87%.  The increase in sales and 
marketing expenses was due to the Company's  continued emphasis on the 
expansion of its sales and marketing department to better address market 
demand for its products.

     PRODUCT DEVELOPMENT.  Product development expenditures, net of software 
capitalization, were $931,000 and $807,000 for the three months ended March 
31, 1997 and 1996, respectively, representing an increase of 15%.  Product 
development expenditures, net of software capitalization, were $1,787,000 and 
$1,497,000 for the six months ended March 31, 1997 and 1996, respectively, 
representing an increase of 19%.  The Company capitalized $221,000 and 
$49,000 of product development costs in the three months ended March 31, 1997 
and 1996, respectively, and  $360,000 and $90,000 in the six months ended 
March 31, 1997 and 1996, respectively.  The increase in product development 
expenditures, net of capitalization, is due primarily to the continued 
development of Diamond 950C/S and Diamond 725, including increased staffing 
and the hiring of technical consultants to assist such efforts.  Although the 
product development costs decreased as a percentage of revenues for the 
quarter, the Company believes that research and development expenditures are 
essential to maintaining its competitive position and expects these costs to 
continue to constitute a significant percentage of total revenues in the near 
future.

     INTEREST INCOME AND EXPENSE.  Interest income was $178,000 and interest 
expense was $327,000 for the three months ended March 31, 1997 and 1996, 
respectively.  Interest income was $361,000 and interest expense was $389,000 
for the six months ended March 31, 1997 and 1996, respectively.
               
     The interest income for the three months and six months ended March 31, 
1997, was the result of the cash proceeds from the initial public offering 
completed on March 5, 1996.  Interest expense for the comparable year earlier 
periods related to capital leases and interest on notes payable, all of which 
were substantially paid off during the first quarter of fiscal 1996.

LIQUIDITY AND CAPITAL RESOURCES

     Net cash used in operating activities was $349,000 and $1,390,000 in the 
six months ended March 31, 1997 and 1996, respectively.   In the six months 
ended March 31, 1997, net cash used in operating activities resulted 
primarily from the net loss for the period, partially offset by the increase 
in unearned revenue. The increase in unearned revenue was due primarily to 
the execution of several contracts during the period.

                                       7
<PAGE>

     Net cash used in investing activities was $1,037,000 and $668,000 in the 
six months ended March 31, 1997 and 1996, respectively, and consisted 
primarily of  purchases of computer equipment and furniture related to the 
expansion of the corporate offices and an increase in software capitalization 
due to new product development projects.
               
     Net cash provided by financing activities was $50,000 and $20,713,000 in 
the six months ended March 31, 1997 and 1996, respectively.   In the six 
months ended March 31, 1997, net cash provided by financing activities 
consisted primarily of proceeds from the exercise of common stock options by 
employees. In the six months ended March 31, 1996, net cash provided by 
financing activities consisted primarily of proceeds from the initial public 
offering on March 5, 1996.

     As of March  31, 1997 and 1996, the Company had cash and cash 
equivalents in the amounts of $13,917,000 and $18,805,000, respectively.  The 
company believes that available funds and its cash flow from operations will 
be adequate to fund its presently anticipated working capital requirements 
for at least the next 12 months.
               
     "Safe Harbor" Statement under the Private Securities Litigation Reform 
Act of 1995:  The statements contained in this report which are not 
historical facts are forward-looking statements that are subject to risks and 
uncertainties that could cause actual results to differ materially from those 
set forth in or implied by forward-looking statements, including the 
Company's dependence on a single product line, the recent introduction of 
Diamond 950C/S, which is based on client/server technology, dependence of the 
Company's results of operations on its relationship with SMS, Blue Cross and 
Blue Shield of Florida, Blue Cross and Blue Shield of North Carolina and 
other large customers, the variable nature of the Company's operating 
results, the length of the Company's sales cycle, the Company's dependence on 
key personnel, intense competition, and other risks described in the 
Company's Securities and Exchange Commission filings. 

                                       8
<PAGE>

PART II.  OTHER INFORMATION

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

         (a)  The annual meeting of shareholders was held on March 24, 1997.

         (b)  The following directors were elected at the meeting:

                              Richard Auger
                              Catherine Roth
                              J. Matthew Mackowski
                              Arthur M. Southam, M.D.

              The foregoing constitute all members of the Board of Directors 
              of the Company.
               
         (c)  At the annual meeting, the shareholders voted to approve 
              proposals to adopt the Nonemployee Director Stock Option Plan, 
              to approve the Employee Stock Purchase Plan and to approve the 
              amendment of the 1996 Omnibus Equity Incentive Plan.

              Set forth below is a tabulation with respect to the matters voted
              on at the meeting:  



                                    AGAINST OR                  BROKER NON-
                            FOR      WITHHELD     ABSTENTIONS     VOTES
                            ---     ----------    -----------   -----------

PROPOSAL TO ADOPT THE
NONEMPLOYEE DIRECTOR
STOCK OPTION PLAN        5,314,770    259,100         -0-          393,814

PROPOSAL TO APPROVE
THE EMPLOYEE STOCK
PURCHASE PLAN            5,321,970    251,900         -0-          393,814

PROPOSAL TO AMEND THE 
1996 OMNIBUS EQUITY
INCENTIVE PLAN           4,860,545    709,700        1,000         396,439


                         FOR ALL 
                         NOMINEES    ABSTENTIONS     WITHHELD FROM ALL NOMINEES
                         ---------   -----------    --------------------------
ELECTION OF DIRECTORS:
     
     RICHARD AUGER       5,898,584     1,000                 68,100

     CATHERINE ROTH      5,898,584     1,000                 68,100

     J. MATTHEW                  
     MACKOWSKI           5,898,584     1,000                 68,100

     ARTHUR M. 
     SOUTHAM, M.D.       5,898,584     1,000                 68,100


                                       9
<PAGE>

Item 6.  Exhibits and reports on Form 8-K

               (a)  Exhibits

                    10.27   Master Agreement dated January 24, 1997 between 
                            the Registrant and Blue Cross/Blue Shield of 
                            North Carolina *+

                    11.1    Statement re:  computation of earnings per share

               (b)  Reports on Form 8-K

                    No reports on Form 8-K have been filed during the quarter 
                    for which this report is filed.


* The exhibits to this agreement, as set forth in the List of Exhibits 
  located on page (i), have not been filed herewith. The Registrant agrees to 
  furnish supplementally a copy of any omitted exhibit to the Commission upon
  request.

+ Certain portions of this exhibit have been omitted and filed separately with
  the Securities and Exchange Commission pursuant to a request for 
  confidential treatment.



                                      SIGNATURES
                                           
     Pursuant to the requirements of the Securities and Exchange Act of 1934, 
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                           Health Systems Design Corporation


Date:  May 14, 1997                                                    

                                           By:  /s/ Richard C. Auger  
                                                ------------------------------
                                                Richard C. Auger, Chairman and
                                                Chief Executive Officer

                                           By:  /s/ Steven J. Correia      
                                                ------------------------------
                                                Steven J. Correia,   
                                                Chief Financial Officer



                                       10
<PAGE>
                           HEALTH SYSTEMS DESIGN CORPORATION
                                  INDEX TO EXHIBITS
                                                       
EXHIBIT                                 DESCRIPTION
-------                                 -----------

10.27   Master Agreement, dated January 24, 1997 between the Registrant
        and Blue Cross/Blue Shield of North Carolina +*
11.1    Computation of net loss per share

                                       11
<PAGE>

_____

+   Certain portions of this exhibit have been omitted and filed separately 
    with the Securities and Exchange Commission pursuant to a request for
    confidential treatment.
 
*   The exhibits to this agreement, as set forth in the List of Exhibits 
    located on page (i), have not been filed herewith. The Registrant agrees 
    to furnish supplementally a copy of any omitted exhibit to the Commission 
    upon request.


                                       12