UNITED STATES
                SECURITIES AND EXCHANGE COMMISSION
                      WASHINGTON, D.C. 20549

                            FORM 10-Q                            


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

           For quarterly period ended December 31, 1995


                  COMMISSION FILE NO. 0-17490


                       IN HOME HEALTH, INC.
      (Exact name of registrant as specified in its charter)


    Minnesota                                41-1458213
  (State or other jurisdiction of            I.R.S. Employer Identification No.)
    incorporation or organization)             



                   Carlson Center, Suite 500
                     601 Lakeshore Parkway
               Minnetonka, Minnesota  55305-5214
            (Address of principal executive offices)
                           (Zip Code)

                           612-449-7500

      (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 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  x (1) No    


  As of January 31, 1996, the number of shares outstanding of
the registrant's common stock, $.01 par value was 16,290,137
shares. 

<PAGE>
<PAGE>1
                       IN HOME HEALTH, INC.
                              INDEX



                                                                 PAGE NO.


PART I.        FINANCIAL INFORMATION

     ITEM 1.   FINANCIAL STATEMENTS

                 Consolidated Balance Sheets -                       2-3
                 December 31, 1995 and September 30, 
                 1995

                 Consolidated Statements of Operations -               4
                 For the three months ended December 31, 
                 1995 and 1994

                 Consolidated Statements of Cash Flows -               5
                 For the three months ended December 31, 
                 1995 and 1994

                 Notes to Unaudited Consolidated                    6-10
                 Financial Statements

       ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS              11-15
                 OF THE FINANCIAL CONDITION AND RESULTS
                 OF OPERATIONS

PART II.         OTHER INFORMATION










                                


<PAGE>
<PAGE>2
                       IN HOME HEALTH, INC.
                   CONSOLIDATED BALANCE SHEETS
                      (Amounts in thousands)
                                      
                              ASSETS
<TABLE>
<CAPTION>

                                              Dec. 31, 1995   Sept. 30, 
                                                (Unaudited)        1995 
                                                 ----------      ------ 
<S>                                                     <C>         <C> 
Current Assets: 
 Cash and cash equivalents                          $21,723      $3,665 
 Accounts receivable (net of allowances
  of $917 and $867 in December and
  September 1995, respectively)                      14,533      14,130 
 Deferred income tax                                  2,856       2,129 
 Prepaid expenses and other current assets            1,657       1,470 
                                                     ------      ------ 
  Total current assets                               40,769      21,394 
                                                     ------      ------ 
Property:
 Furniture and equipment                              9,811       9,997 
 Computer equipment and software                      7,747       7,480 
 Leasehold improvements                                 778         807 
                                                     ------      ------ 
  Total                                              18,336      18,284 
 Accumulated depreciation                            (7,648)     (7,163)
                                                     ------      ------ 
   Property - net                                    10,688      11,121 
                                                     ------      ------ 
Other Assets:
 Accounts receivable                                 18,443      17,592 
 Goodwill, net                                        5,708       5,748 
 Deposits                                               550         558 
 Other assets                                           618       1,146 
                                                     ------      ------ 
  Total other assets                                 25,319      25,044 
                                                     ------      ------ 
Total Assets                                        $76,776     $57,559 
                                                     ======      ====== 
</TABLE>




    See Notes to Unaudited Consolidated Financial Statements.

<PAGE>
<PAGE>3
                       IN HOME HEALTH, INC.
             CONSOLIDATED BALANCE SHEETS (continued)
                      (Amounts in thousands)

               LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
           Dec. 31, 1995                           Sept. 30,
                                                 (Unaudited)        1995
                                                  ---------      -------
<S>                                                     <C>          <C>
Current Liabilities:
 Current maturities of long-term debt                $1,998       $2,041
 Accounts payable                                     4,807        4,468
 Accrued liabilities:
  Third party                                         5,063        4,480   
  Compensation                                        4,665        4,142
  Insurance                                           5,361        5,127
  Income tax                                            759          240
  Other                                                 755          791
                                                     ------       ------
   Total current liabilities                         23,408       21,289
                                                     ------       ------
Long-Term Debt                                        1,979        2,443   
Deferred Revenue                                      1,136        1,242
Deferred Rent Payable                                   313          351
Deferred Income Tax                                   1,769        1,725
Commitments and Contingencies                           --           -- 

Redeemable Convertible Preferred Stock -
 $1.00 par value authorized 200 shares; 
 issued and outstanding 
 December 31 - 200 shares; 
 September 30 - none                                 18,548          -- 

Shareholders' Equity:
 Preferred stock - authorized 800 shares                --           -- 
 Common stock - $.01 par value:  
   authorized - 40,000 shares;
   issued and outstanding -
   December 31 - 16,290 shares;
  September 30 - 16,277 shares                          163          163   
 Additional paid-in capital                          23,748       24,230
 Retained earnings                                    5,712        6,116
                                                     ------       ------
   Total shareholders' equity                        29,623       30,509
                                                     ------       ------
Total Liabilities and Shareholders' Equity          $76,776      $57,559
                                                     ======       ======
</TABLE> 

    See Notes to Unaudited Consolidated Financial Statements.




<PAGE>
<PAGE>4
                       IN HOME HEALTH, INC.
        CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
      For the Three Months Ended December 31, 1995 and 1994
         (Amounts in thousands except per share amounts)
<TABLE>
<CAPTION>
                                                       1995        1994 
                                                     ------      ------ 
<S>                                                     <C>         <C> 
Revenue (net of Medicare reserves of
 $450 and $281 in 1995 and 1994, 
 respectively)                                      $32,468     $32,334 
                                                     ------      ------ 
Operating Expenses:                                         
 Direct costs of revenue 
  (primarily payroll related costs)                  17,886      18,210 
 General, administrative and 
  selling expenses                                   14,473      13,129 
                                                     ------      ------ 
   Total operating expenses                          32,359      31,339 
                                                     ------      ------ 
Income From Operations                                  109         995 
                                                     ------      ------ 
Interest:
 Interest income                                        205         --  
 Interest expense                                      (134)       (213)
                                                     ------      ------ 
  Net interest income (expense)                          71        (213)
                                                     ------      ------ 
Income Before Income Taxes                              180         782 
Income Tax Expense                                       82         360 
                                                     ------      ------ 
Net Income                                          $    98     $   422 
                                                     ======      ====== 
Earnings (Loss) Applicable to Common Stock$            (404)    $   422 
                                                     ======      ====== 
Earnings (Loss) Per Common and 
  Common Equivalent Share                           $  (.02)    $   .03 
                                                     ======      ====== 
Weighted Average Common and 
  Common Equivalent Shares Outstanding               16,473      16,149 

</TABLE>





    See Notes to Unaudited Consolidated Financial Statements.<PAGE>
<PAGE>5                IN HOME HEALTH, INC.
        CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
      For the three months ended December 31, 1995 and 1994
                      (Amounts in thousands)
<TABLE>
<CAPTION>
                                                       1995        1994 
                                                     ------      ------ 
<S>                                                     <C>         <C> 
Cash Flows From Operating Activities:
 Net income                                         $    98     $   422 
 Adjustments:
  Depreciation and amortization                         842         810 
  Accounts receivable                                (1,254)     (1,699)
  Prepaid expenses and other assets                     261        (146)
  Accounts payable                                      339        (104)
  Accrued liabilities                                 1,823       1,911 
  Deferred liabilities                                 (827)       (632)
                                                     ------      ------ 
   Net cash provided by operating 
     activities                                       1,282         562 
                                                     ------      ------ 
Cash Flows from Investing Activities:
 Acquisition of property                               (300)       (235)
 Advances to officers and employees                      19          17 
                                                     ------      ------ 
  Net cash used by investing activities                (281)       (218)
                                                     ------      ------ 
Cash Flows from Financing Activities:
 Payment of long term debt                             (507)       (543)
 Issuance of common stock                                31           6 
 Issuance of preferred stock and warrants            17,987         --  
 Preferred dividends paid                              (454)        --  
                                                     ------      ------ 
  Net cash provided (used) by 
   financing activities                              17,057        (537)
                                                     ------      ------ 
Cash and Cash Equivalents:
 Net increase (decrease)                             18,058        (193)
 Beginning of period                                  3,665         911 
                                                     ------      ------ 
  End of period                                      $21,723    $   718 
                                                     ======      ====== 
Supplemental Cash Flow Information:
 Cash paid during the period for:
  Interest                                          $   134     $   226 
                                                     ======      ====== 
  Income taxes                                      $   246     $    21 
                                                     ======      ====== 
Noncash Investing and Financing Activities:
 Property acquired by capital lease                 $   --      $   441 
                                                     ======      ====== 
</TABLE>

    See Notes to Unaudited Consolidated Financial Statements.<PAGE>
<PAGE>6
                       IN HOME HEALTH, INC.
       NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


1. FINANCIAL STATEMENTS
  In the opinion of management of the Company, the accompanying
unaudited consolidated financial statements contain all adjustments
(consisting of only normal, recurring accruals) necessary to
present fairly the financial position of the Company and its
subsidiaries as of December 31, 1995 and the results of operations
and its cash flows for the three month periods ended December 31,
1995 and 1994.  The results of operations for any interim period
are not necessarily indicative of the results for the year.  These
interim consolidated financial statements should be read in
conjunction with the Company's annual financial statements and
related notes in the Company's Form 10-K.

2. EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE 
  Primary earnings per common and common equivalent share is
computed by dividing the earnings applicable to common stock, as
adjusted for the dividends and accretion on the Preferred Stock
(see Note 4) by the weighted average number of shares of common
stock and common stock equivalents, consisting of dilutive stock
options and warrants, outstanding during the period.  Earnings per
share assuming full dilution would be substantially the same.

Primary EPS for the three months ended December 31, 1995 and 1994
are as follows:
<TABLE>
<S>                                                     <C>          <C>
                                                       1995         1994
                                                       ----         ----
  Shares outstanding:
   Weighted average outstanding                      16,286       15,952
   Shares issuable in connection with stock
     options and warrants less shares
     purchasable from proceeds                          187          197
                                                     ------       ------
   Adjusted outstanding                              16,473       16,149
                                                     ======       ======
  Adjusted net income applicable to common
  stockholders:                                                            
   Net income                                       $    98     $    422
   Dividends on preferred stock                        (454)         -- 
   Preferred stock accretion                            (48)         -- 
                                                     ------       ------
   Earnings (loss) applicable to 
     common stock                                   $  (404)    $    422
                                                     ======       ======
  Earnings (loss) per common and 
   common equivalent share                          $  (.02)    $    .03
                                                     ======       ======
</TABLE>
3. COMMITMENTS AND CONTINGENCIES   
  Approximately 74% of revenue for the three months ended December
31, 1995 was derived from services provided to Medicare
beneficiaries.  Payment for these services is made by the Medicare
program based on reimbursable costs incurred in rendering the
services.  Payments are made via an interim payment rate as
services are rendered.  Cost reports are filed with Medicare on an
annual basis, which are subject to audit and retroactive adjustment
by Medicare.  The Company reports revenue only for those costs that
it believes are probable (as defined in Statement of Financial
Accounting Standards No. 5) of recovery under the applicable
Medicare statutes and regulations and reports its accounts
receivable balances at net realizable value.  The Company utilizes
an extensive system of internal controls to ensure such proper
reporting of revenues.  The Company employs personnel with
significant Medicare reimbursement experience to prepare its cost
reports and to monitor its operations on an ongoing basis to
identify and minimize those costs which are not reimbursed.  As a
part of its system of internal controls, the Company uses a
detailed analysis process in calculating its Medicare revenue at
the time services are rendered.  This process considers the nature
and amounts of the disputed costs (as described in more detail
below) along with several authoritative, legal and historical
sources of information including:

- Applicable statutes and regulations, such as those contained in
the Title XVIII of the Social Security Act, particularly Sec. 1861
(V) (1) (A) "Reasonable Cost" and 42 C.F.R. 413.9 "Cost Related to
Patient Care", Health Care Financing Administration (HCFA)
Publication 11 "Home Health Agency Manual", applicable sections of
HCFA Publication 15-1 "Provider Reimbursement Manual" and
intermediary letters and program memoranda issued by HCFA.

- Administrative decisions and rulings on related issues by the
Provider Reimbursement Review Board and Administrative Law Judges.

- Judicial decisions from Federal District Courts on relevant
cases.

- Consultation with independent industry experts such as Medicare
Cost Reimbursement Consultants.

- Opinions of outside legal counsel who specialize in dealing with
Medicare reimbursement issues.

- Historical knowledge gained internally from past Medicare audits.

- Meetings and other communication with Medicare Intermediaries,
Blue Cross Association and HCFA.

  This detailed analysis process is updated on a quarterly basis,
taking into account any new information (such as decisions relating
to the Company's disputed costs, and administrative and judicial
decisions relating to similar issues) that may affect the
determination of the net realizable value of accounts receivable or
of liabilities to repay amounts received for disputed costs. 
Results of this detailed analysis process are extrapolated to other
unaudited cost reporting years for all of the Company's operations,
including operations that have not yet been audited by Medicare, to
estimate the gross amount of reimbursement that would be affected. 
The Company, through this ongoing control and monitoring process,
provides a reserve (by means of a revenue reduction) for any costs
incurred which the Company believes are not probable of recovery. 
This reserve is reported as a reduction of accounts receivable for
disputed costs for which the Company may not ultimately receive
payment.  The Company has also reported as a liability disputed
costs for which it has received payment, which may have to be
returned to Medicare.  Accordingly, the Company believes that its
accounts receivable are stated at net realizable value, and that it
has recorded all probable liabilities for repayment of disputed
costs.

  Over the years, Medicare auditors employed by the Medicare fiscal
intermediaries have, in connection with their retrospective audit
process, taken certain positions with respect to certain types of
costs, claiming that they are not reimbursable and thus not
recoverable by the Company from the Medicare program.  These
positions are based on interpretations promulgated after the period
covered by the cost reports and applied retroactively, on
interpretations of cost reimbursement principles that are contrary
to the Company's interpretations, or on what the Company believes
to be misapplications of specific reimbursement principles, that
could not have been foreseen at the time services were rendered and
revenue recorded.  These positions taken by Medicare auditors are
usually determined from Medicare's Notice of Program Reimbursement
("NPR") which typically are not received until two to three years
after the services are rendered.  In those situations where the
Company decides to not challenge an NPR finding, any revenue
relating to these costs, as well as the extrapolated impact, if
any, on other open costs reporting years, if not written off or
provided for earlier, is written off as a revenue reduction at that
time.  The results of all NPRs are included in the analysis process
in calculating net Medicare revenue as described above.

  The Company has received NPRs challenging $13.4 million of costs
as of December 31, 1995.  There was an additional $15.2 million of
costs at December 31, 1995 related to open cost reporting years
that are similar to the costs that have been challenged on NPRs. 
Together these amounts ($28.6 million at December 31, 1995)
comprise the total amount the Company considers to be disputed
costs.  The major cost category in dispute, accounting for
approximately half of total disputed costs, is the treatment of
certain personnel costs relating to the Company's community liaison
positions, which Medicare auditors allege are unreimbursable sales
costs; other costs in dispute relate to the cost of physical
therapists employed by the Company, the method of allocation of
administrative and general costs to branch operations, certain
corporate expenses, and cost transfers within branch operations. 
These disputed costs (including the extrapolated impact) of $28.6
million at December 31, 1995 arose in the fiscal years ended
September 30, 1995 ($6.0 million), 1994 ($8.2 million), 1993 ($6.5
million), 1992 ($4.4 million), and 1991 ($2.1 million) and $1.4
million for the three months ending December 31, 1995.  The amount
of disputed costs has increased over the last several years as the
Company's operations have grown,  Medicare auditors have taken
positions to disallow certain costs in certain cost reports as non-
reimbursable, and the Company has extrapolated that amount of costs
that may be challenged to other unaudited cost reporting years. 
The normal Medicare administrative appeal process may take several
years to resolve these types of disputes.

  The Company disagrees with the positions taken by the Medicare
fiscal intermediaries' auditors and the Health Care Financing
Administration, and is vigorously pursuing these matters through
administrative and legal channels.  The disputed cost analysis
process related to the community liaison and physical therapist
positions (which comprise 60% of disputed costs) encompassed all of
the authoritative, legal and historical sources discussed above. 
Based on this review the Company believes that the majority of the
community liaison costs are probable of recovery, and that a
relatively small portion of these costs are not probable of
recovery.  The Company has established, and is continuing to add
to, a reserve for the portion of these costs not considered
probable of recovery.  Since the reserves have been established,
the Company has continued to review whether their level is
appropriate.  Nothing has occurred in the legal or administrative
process which the Company is pursuing concerning the disputes which
has caused the Company to conclude that the reserve should be
changed.  Therefore, no change has been made in the rate of reserve
used to record additional reserves on community liaison related
costs incurred on an ongoing basis.  On the physical therapist
issue, the Company believes Medicare has no basis in the
regulations for its disallowance of certain costs related to
physical therapists employed by the Company, and therefore the
Company has not established a reserve for these disputed costs. 
The Company has filed two suits against the U.S. Department of
Health and Human Services ("HHS") and several members of the Blue
Cross Association which act as fiscal intermediaries to administer
the Medicare program.  The two suits related to the community
liaison and physical therapist issues discussed above allege that
the defendants have unjustly withheld payments that are owed to the
Company for services it provided to Medicare beneficiaries from
fiscal 1989 through fiscal 1994.  Legal opinions have been received
on both the community liaison and physical therapist issues from an
attorney specializing in Medicare reimbursement issues indicating
that it is probable that the Company will prevail in both issues.

  The Company, based on its analysis process, believes that
recovery of $6,846,000 of total disputed costs (including the
extrapolated impact) may not be probable and, accordingly, has
established reserves which totaled that amount as of December 31,
1995.  The net amount of disputed costs which the Company believes
is probable of recovery has been included in revenues in the
respective years in which services were rendered and, to the extent
not paid to the Company, is included in accounts receivable.  Total
accounts receivable (net of reserves) due from Medicare at December
31, 1995 were $26,405,000, including the receivables (net of
reserves) for disputed costs of $21,720,000.    As of December 31,
1995 the Company had received $5,063,000 in payments from Medicare
for disputed costs.  Medicare may seek repayment for such amounts
and accordingly, the potential liability for repayments is recorded
as Accrued Liabilities - Third Party.  The Company believes it is
probable that it has not incurred any other liability to repay
disputed costs.  In view of the expectation that resolution of the
disputed costs will not likely be accomplished within the next
twelve months, related net receivables of $18,443,000 as of
December 31, 1995 have been classified as a non-current asset.  

4. REDEEMABLE CONVERTIBLE PREFERRED STOCK
  Redeemable convertible preferred stock was issued to Manor
Healthcare Corp. on October 24, 1995.  The preferred shares may be
redeemed in cash at the option of the holder or the Company on and
after the fifth anniversary of their issuance.  The redeemable
preferred shares have voting rights on an as-if converted basis,
and are initially convertible into 10 million common shares at an
initial conversion price of $2.00 per share.  The redeemable
preferred shares bear dividends payable quarterly at 12% per annum. 
The redeemable preferred stock will accrete over five years from
its fair value of $18,500,000 on the date of issuance to its
redeemable value of $20,000,000 as of the redemption date.



5. RELATED PARTY TRANSACTIONS
  On October 24, 1995 the Company closed an agreement with Manor
Healthcare Corp., a wholly owned subsidiary of Manor Care, Inc., a
national health care and international lodging firm.  Pursuant to
this agreement, the Company conducted a cash self-tender offer and
purchased 6,750,000 shares of its common stock (41% of outstanding)
at $3.40 per share and Manor Healthcare purchased 6,750,000 shares
from the Company at $3.40 per share.  In addition, Manor Healthcare
Corp. invested $20 million to purchase redeemable convertible
preferred shares and a warrant to purchase 6,000,000 shares of
common stock at an exercise price of $3.75 per share.

  The Purchase Agreement with Manor Healthcare Corp. also
contemplated that the Company and Manor Healthcare would enter into
agreements or arrangements which they deem prudent and mutually
beneficial for the provision of services between them on terms that
are fair to each party.  Although no such arrangements have been
finalized, it is contemplated that the Company and Manor Healthcare
will enter into an agreement whereby Manor Healthcare or its parent
company, Manor Care, Inc. will provide to the Company certain
administrative services, financial and treasury management
services, reimbursement matter services, legal services, accounting
services and other similar types of services.  Since no such
agreement has been finalized, administrative fees of $556,000 were
accrued based on a time allocation method which Manor Healthcare
Corp. utilized to charge administrative services to all of its
subsidiaries.  Management believes that the foregoing charges are
reasonable allocations of the costs incurred by Manor Healthcare
Corp. on the Company's behalf.  Based solely on this accrual,
$556,000 was payable (but not paid) to Manor Healthcare Corp. at
December 31, 1995.



<PAGE>
<PAGE>11
Item 2.   

        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL                  
               CONDITION AND RESULTS OF OPERATIONS


  The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding
of the Company's level of operation and financial condition.  This
discussion should be read with the consolidated financial
statements appearing in Item 1.

Results of Operations

  Revenue for the three months ended December 31, 1995, was even
with the same period in the prior year.  Revenue increased 3% as a
result of pricing and mix changes which is offset by a 3% reduction
in units of services provided.

  Direct costs of revenue, as a percentage of sales, were 55% for
the three months ended December 31,  1995 as compared to 56% for
the comparable prior year period.  The decrease was due to reduced
volume within our Visit division along with growth in general,
administrative and selling expenses.

  Total operating expenses increased 3% for the three months ended
December 31, 1995 as compared to no increase in revenue.  The
increase in operating expenses is principally a result of absorbing
Manor Healthcare management personnel within In Home Health
operations (see Note 5 to the accompanying financial statements)
and increased costs associated with establishment of our Hospice
program.  The reduced Visit Division volume accompanied by
increased costs, has resulted in costs exceeding Medicare allowable
reimbursement ceilings in certain markets.  As a result, the
increase in revenue is not proportionate with the increase in
operating expenses.

  The increases in general and administrative and selling expenses,
combined with the decreased volume in our Visit division, resulted
in an increase in gross profit for the three months ended December
31, 1995 to 45% as compared to 44% for the comparable prior year
period.

  General administrative and selling expenses, as a percent of
revenue, increased to 45% of revenue for the three months ended
December 31, 1995 compared to 41% for the comparable prior year
period.  This increase is principally a result of absorbing Manor
Healthcare management personnel within In Home Health operations
and increased costs associated with establishment of our Hospice
program.

  Net interest income was $71,000 for the three months ended
December 31, 1995 compared to net interest expense of $213,000 for
the comparable prior year period.  Interest earnings are a result
of earnings on the cash proceeds from the investment by Manor
Healthcare Corp. on October 24, 1995 (see Note 5 to the
accompanying financial statements).

  Net income totaled $98,000 for the three months ended December
31, 1995 compared to $422,000 in the comparable prior year period. 
Net income was lower due primarily to costs exceeding Medicare
allowable reimbursement ceilings in certain markets.

Liquidity and Capital Resources

  The Company's cash and cash equivalents increased $18,058,000 to
$21,723,000 at December 31, 1995.  The increase in cash was
principally a result of the issuance of preferred stock and common
stock warrants to Manor Healthcare Corp.  Approximately 74% of
revenue for the three months ended December 31, 1995 was derived
from services provided to Medicare beneficiaries.  Payment for
these services is made by the Medicare program based on
reimbursable costs incurred in rendering the services.  Payments
are made via an interim payment rate as services are rendered. 
Cost reports are filed with Medicare on an annual basis, which are
subject to audit and retroactive adjustment by Medicare.  The
Company reports revenue only for those costs that it believes are
probable (as defined in Statement of Financial Accounting Standards
No. 5) of recovery under the applicable Medicare statutes and
regulations and reports its accounts receivable balances at net
realizable value.  The Company utilizes an extensive system of
internal controls to ensure such proper reporting of revenues.  The
Company employs personnel with significant Medicare reimbursement
experience to prepare its cost reports and to monitor its
operations on an ongoing basis to identify and minimize those costs
which are not reimbursed.  As a part of its system of internal
controls, the Company uses a detailed analysis process in
calculating its Medicare revenue at the time services are rendered. 
This process considers the nature and amounts of the disputed costs
(as described in more detail below) along with several
authoritative, legal and historical sources of information
including:

- Applicable statutes and regulations, such as those contained in
the Title XVIII of the Social Security Act, particularly Sec. 1861
(V) (1) (A) "Reasonable Cost" and 42 C.F.R. 413.9 "Cost Related to
Patient Care", Health Care Financing Administration (HCFA)
Publication 11 "Home Health Agency Manual", applicable sections of
HCFA Publication 15-1 "Provider Reimbursement Manual" and
intermediary letters and program memoranda issued by HCFA.

- Administrative decisions and rulings on related issues by the
Provider Reimbursement Review Board and Administrative Law Judges.

- Judicial decisions from Federal District Courts on relevant
cases.

- Consultation with independent industry experts such as Medicare
Cost Reimbursement Consultants.

- Opinions of outside legal counsel who specialize in dealing with
Medicare reimbursement issues.

- Historical knowledge gained internally from past Medicare audits.

- Meetings and other communication with Medicare Intermediaries,
Blue Cross Association and HCFA.

  This detailed analysis process is updated on a quarterly basis,
taking into account any new information (such as decisions relating
to the Company's disputed costs, and administrative and judicial
decisions relating to similar issues) that may affect the
determination of the net realizable value of accounts receivable or
of liabilities to repay amounts received for disputed costs. 
Results of this detailed analysis process are extrapolated to other
unaudited cost reporting years for all of the Company's operations,
including operations that have not yet been audited by Medicare, to
estimate the gross amount of reimbursement that would be affected. 
The Company, through this ongoing control and monitoring process,
provides a reserve (by means of a revenue reduction) for any costs
incurred which the Company believes are not probable of recovery. 
This reserve is reported as a reduction of accounts receivable for
disputed costs for which the Company may not ultimately receive
payment.  The Company has also reported as a liability disputed
costs for which it has received payment, which may have to be
returned to Medicare.  Accordingly, the Company believes that its
accounts receivable are stated at net realizable value, and that it
has recorded all probable liabilities for repayment of disputed
costs.

  Over the years, Medicare auditors employed by the Medicare fiscal
intermediaries have, in connection with their retrospective audit
process, taken certain positions with respect to certain types of
costs, claiming that they are not reimbursable and thus not
recoverable by the Company from the Medicare program.  These
positions are based on interpretations promulgated after the period
covered by the cost reports and applied retroactively, on
interpretations of cost reimbursement principles that are contrary
to the Company's interpretations, or on what the Company believes
to be misapplications of specific reimbursement principles, that
could not have been foreseen at the time services were rendered and
revenue recorded.  These positions taken by Medicare auditors are
usually determined from Medicare's Notice of Program Reimbursement
("NPR") which typically are not received until two to three years
after the services are rendered.  In those situations where the
Company decides to not challenge an NPR finding, any revenue
relating to these costs, as well as the extrapolated impact, if
any, on other open costs reporting years, if not written off or
provided for earlier, is written off as a revenue reduction at that
time.  The results of all NPRs are included in the analysis process
in calculating net Medicare revenue as described above.

  The Company has received NPRs challenging $13.4 million of costs
as of December 31, 1995.  There was an additional $15.2 million of
costs at December 31, 1995 related to open cost reporting years
that are similar to the costs that have been challenged on NPRs. 
Together these amounts ($28.6 million at December 31, 1995)
comprise the total amount the Company considers to be disputed
costs.  The major cost category in dispute, accounting for
approximately half of total disputed costs, is the treatment of
certain personnel costs relating to the Company's community liaison
positions, which Medicare auditors allege are unreimbursable sales
costs; other costs in dispute relate to the cost of physical
therapists employed by the Company, the method of allocation of
administrative and general costs to branch operations, certain
corporate expenses, and cost transfers within branch operations. 
These disputed costs (including the extrapolated impact) of $28.6
million at December 31, 1995 arose in the fiscal years ended
September 30, 1995 ($6.0 million), 1994 ($8.2 million), 1993 ($6.5
million), 1992 ($4.4 million), and 1991 ($2.1 million) and $1.4
million for the three months ending December 31, 1995.  The amount
of disputed costs has increased over the last several years as the
Company's operations have grown,  Medicare auditors have taken
positions to disallow certain costs in certain cost reports as non-
reimbursable, and the Company has extrapolated that amount of costs
that may be challenged to other unaudited cost reporting years. 
The normal Medicare administrative appeal process may take several
years to resolve these types of disputes.
  
  The Company disagrees with the positions taken by the Medicare
fiscal intermediaries' auditors and the Health Care Financing
Administration, and is vigorously pursuing these matters through
administrative and legal channels.  The disputed cost analysis
process related to the community liaison and physical therapist
positions (which comprise 60% of disputed costs) encompassed all of
the authoritative, legal and historical sources discussed above. 
Based on this review the Company believes that the majority of the
community liaison costs are probable of recovery, and that a
relatively small portion of these costs are not probable of
recovery.  The Company has established, and is continuing to add
to, a reserve for the portion of these costs not considered
probable of recovery.  Since the reserves have been established,
the Company has continued to review whether their level is
appropriate.  Nothing has occurred in the legal or administrative
process which the Company is pursuing concerning the disputes which
has caused the Company to conclude that the reserve should be
changed.  Therefore, no change has been made in the rate of reserve
used to record additional reserves on community liaison related
costs incurred on an ongoing basis.  On the physical therapist
issue, the Company believes Medicare has no basis in the
regulations for its disallowance of certain costs related to
physical therapists employed by the Company, and therefore the
Company has not established a reserve for these disputed costs. 
The Company has filed two suits against the U.S. Department of
Health and Human Services ("HHS") and several members of the Blue
Cross Association which act as fiscal intermediaries to administer
the Medicare program.  The two suits related to the community
liaison and physical therapist issues discussed above allege that
the defendants have unjustly withheld payments that are owed to the
Company for services it provided to Medicare beneficiaries from
fiscal 1989 through fiscal 1994.  Legal opinions have been received
on both the community liaison and physical therapist issues from an
attorney specializing in Medicare reimbursement issues indicating
that it is probable that the Company will prevail in both issues.

  The Company, based on its analysis process, believes that
recovery of $6,846,000 of total disputed costs (including the
extrapolated impact) may not be probable and, accordingly, has
established reserves which totaled that amount as of December 31,
1995.  The net amount of disputed costs which the Company believes
is probable of recovery has been included in revenues in the
respective years in which services were rendered and, to the extent
not paid to the Company, is included in accounts receivable.  Total
accounts receivable (net of reserves) due from Medicare at December
31, 1995 were $26,405,000, including the receivables (net of
reserves) for disputed costs of $21,720,000.    As of December 31,
1995 the Company had received $5,063,000 in payments from Medicare
for disputed costs.  Medicare may seek repayment for such amounts
and accordingly, the potential liability for repayments is recorded
as Accrued Liabilities - Third Party.  The Company believes it is
probable that it has not incurred any other liability to repay
disputed costs.  In view of the expectation that resolution of the
disputed costs will not likely be accomplished within the next
twelve months, related net receivables of $18,443,000 as of
December 31, 1995 have been classified as a non-current asset. 

  The Company's line of credit with a commercial bank expired in
December 1995.  Simultaneously, therewith, in December 1995, the
Company obtained a new letter of credit facility for $4,520,000. 
The letter of credit is collateralized by secured investments and
will expire on December 12, 1996.

  The Company's current cash and cash equivalents are expected to
provide sufficient capital to fund the Company's operations and
expansion plans through fiscal 1996. 

  On October 24, 1995 the Company consummated a Securities Purchase
and Sale Agreement with Manor Healthcare Corp. under which the
Company received net cash proceeds of $18 million.  These proceeds
will be available to the Company for general corporate purposes. 
The Company anticipates that it will principally use the proceeds
to invest in the expansion of Company operations into the eight
geographic areas where Manor Healthcare is present and the Company
is not, and to finance the Company's continued operations.









<PAGE>
<PAGE>16
PART II - OTHER INFORMATION


ITEM 1 -  LEGAL PROCEEDINGS - None

ITEM 2 -  CHANGES IN SECURITIES - None

ITEM 3 -  DEFAULTS UPON SENIOR SECURITIES - None

ITEM 4 -  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 

     The Company held a Special Meeting of Shareholders on October
     24, 1995.  The shareholders present in person or in proxy
     voted to approve the partnership with Manor Healthcare Corp. 
     Pursuant to this partnership, In Home Health completed a
     tender offer in which it purchased 6,750,000 shares for $3.40
     in cash per share.  Manor Healthcare Corp., a wholly-owned
     subsidiary of Manor Care, purchased 6,750,000 common shares
     from In Home Health for $3.40 in cash per share for an
     aggregate purchase price of $22,950,000.  In addition, Manor
     Healthcare invested $20 million in In Home Health to purchase
     redeemable convertible preferred stock (with voting rights on
     an as-if converted basis) and a 3-year warrant to purchase an
     additional 6 million shares of common stock.

     On the proposal to approve the Securities Purchase and Sale
     Agreement between the Company and Manor Healthcare Corp.,
     8,949,552 shares were voted in favor, 287,359 shares were
     voted against, 131,374 shares abstained, and zero shares
     broker non-voted.

     On the proposal to approve an amendment to Article III or the
     Company's Articles of Incorporation to allow for the voting
     rights of Preferred Stock, 8,412,828 shares were voted in
     favor, 603,091 shares were voted against, 352,666 shares
     abstained, and zero shares broker non-voted.

     On the proposal to approve amendments to the Company's 1987
     and 1995 Stock Option Plans to (i) provide that the options of
     non-employee directors of the Company will vest upon a change
     in control of the Company and that upon a change of control,
     the Board may grant certain options that depart from the terms
     of the Plans; (ii) increase the total number of shares
     available under the 1995 Stock Option Plan from 650,000 to
     1,300,000; and (iii) impose a limit of 300,000 shares that can
     be issued to any participant under each Plan during any fiscal
     year; 13,177,301 shares were voted in favor, 1,136,339 shares
     were voted against, 455,873 shares abstained, and zero shares
     broker non-voted.

ITEM 5 -  OTHER INFORMATION - None

ITEM 6 -  EXHIBITS AND REPORTS ON FORM 8-K 

          (a)  Exhibits
                    (11) Computation of Per Share Earnings

          (b)  Reports on Form 8-K
                    None


<PAGE>17       
                            SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this Form 10-Q report to be
signed on its behalf by the undersigned thereunto duly authorized.



                                      In Home Health, Inc.  
                                          Registrant



Date:  February 13, 1996               /s/Mark L. Gildea     
                                          Mark L. Gildea
                                     Chief Executive Officer




Date:  February 13, 1996              /s/Kenneth J. Figge    
                                        Kenneth J. Figge
                                     Executive Vice President
                                      Chief Financial Officer















<PAGE>
<PAGE> 18                                                   EXHIBIT (11)


                       IN HOME HEALTH, INC.
                COMPUTATION OF PER SHARE EARNINGS
      For the three months ended December 31, 1995 and 1994
         (Amounts in thousands except per share amounts)
<TABLE>                                                     
<CAPTION>

                                          
                                                       1995         1994
                                                     ------       ------
<S>                                                     <C>          <C>             
PRIMARY:
Net Income                                          $    98     $    422   

Preferred stock accretion                               (48)         -  
Dividends on preferred stock                           (454)         -  
                                                     ------       ------
Earnings (loss) applicable to common stock          $  (404)    $    422
                                                     ======       ======

Shares:
  Weighted average number of shares 
     outstanding during the period                   16,286       15,952
  Shares issuable in connection with 
     stock options and warrants less 
     shares purchasable from proceeds                   187          197
                                                     ------       ------
Total Shares                                         16,473       16,149
                                                     ======       ======
Earnings (Loss) per Common and Common
  Equivalent Share                                  $  (.02)    $    .03
                                                     ======       ======

ASSUMING FULL DILUTION:
Net Income                                          $    98     $    422

Preferred stock accretion                               (48)         -  
Dividends on preferred stock                           (454)         -  
                                                     ------       ------
Earnings (loss) applicable to common stock          $  (404)    $    422
                                                     ======       ======
Shares:
  Weighted average number of shares 
     outstanding during the period                   16,286       15,952   
  Shares issuable in connection with 
     stock options and warrants less 
     shares purchasable from proceeds                   187          197
                                                     ------       ------
Total Shares                                         16,473       16,149
                                                     ======       ======
Earnings (Loss) per Common and Common
  Equivalent Share                                  $  (.02)    $    .03
                                                     ======       ======
</TABLE>