<PAGE>

================================================================================
<TABLE>
<CAPTION>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                              -----------------
                                   FORM 10-K

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

     For the Fiscal Year Ended December 31, 1997
                                      OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

                        Commission File Number 0-27162
                           -----------------------

                        NATIONAL SURGERY CENTERS, INC.
            (Exact name of Registrant as specified in its charter)

<S>                                      <C>                                 <C>
              Delaware                                                          36-3549627
  (State or other jurisdiction of                                            (I.R.S. Employer
   incorporation or organization)                                          Identification Number)

                      30 SOUTH WACKER DRIVE, SUITE 2302, CHICAGO, ILLINOIS  60606
                              (Address of Principal Executive Offices)    (Zip Code)

                   Registrant's telephone number, including area code:  (312) 655-1400
                                        -----------------------
                    Securities registered pursuant to Section 12(b) of the Act:  None

                    Securities registered pursuant to Section 12(g) of the Act:
                                          Title of Each Class
                                          -------------------
                               Common Stock, par value $.01 per share
                          Non-Voting Common Stock, par value $.01 per share
                                        -----------------------
</TABLE>

     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  No
                                             ---   ---
     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [_]

     The aggregate market value of the voting stock of the registrant held by
stockholders who were not affiliates (as defined by regulations of the
Securities and Exchange Commission) of the registrant was approximately
$446,779,338 at March 20, 1998 (based on the closing sale price on the Nasdaq
National Market on March 20, 1998, as reported by The Wall Street Journal
(Midwest Edition)). At March 20, 1998, the registrant had issued and outstanding
an aggregate of 18,567,453 shares of common stock.

                      Documents Incorporated by Reference

     Those sections or portions of the registrant's Annual Report to
Shareholders for the fiscal year ended 1997, described in Part II hereof, are
incorporated by reference in this report.

     Those sections or portions of the registrant's proxy statement for the
Annual Meeting of Stockholders to be held on May 21, 1998, described in Part III
hereof, are incorporated by reference in this report.

================================================================================

<PAGE>

                                    PART I
ITEM 1.  BUSINESS

     The Company owns and operates freestanding ambulatory surgery centers that
provide the medical and administrative support necessary for physicians to
perform non-emergency surgical procedures. The Company also pursues
opportunities to develop new ambulatory surgery facilities with hospitals and
physician groups. As of December 31, 1997, the Company operated a network of 38
surgery centers in 14 states and anticipates expanding its network through
acquisition and development of surgery centers. The Company provides alternate-
site settings for high-quality surgical care that is more cost effective than
hospital-based surgical care and that is increasingly preferred by physicians,
payors and patients.

     The Company believes that many physicians prefer the efficiencies of
freestanding ambulatory surgery centers because they enhance physicians'
productivity by providing them with greater scheduling flexibility, more
consistent nurse staffing and faster turnaround time between cases, allowing
physicians to perform more surgeries in a defined period of time. In addition,
new technology and advances in anesthesia and the addition of overnight recovery
have significantly expanded the number and types of surgical procedures that are
being performed in ambulatory surgery centers.

     The Company's objective is to establish a nationwide organization of
freestanding ambulatory surgery centers in secondary and other selected markets
by acquiring established centers and developing new centers. The Company seeks
to provide a broad range of high-quality surgical services and to collaborate
with other participants in local health care delivery systems. The key
components of the Company's strategy are as follows:

 .    Acquire established ambulatory surgery centers that are seeking affiliation
     with an experienced operator having access to capital and other resources;

 .    Focus on secondary and other selected markets where the Company can
     establish a significant local presence or play an important role in the
     development of local integrated delivery systems;

 .    Develop new ambulatory surgery centers in markets where attractive
     acquisitions are not available or where the opportunity exists to increase
     the Company's presence in its existing markets;

 .    Develop joint ventures with hospitals and other providers to increase
     patient flow through joint marketing, access to managed care contracts and
     participation in a broader network of health care providers; and

 .    Expand the range of services offered to physicians and payors by offering
     state-of-the-art technology, administrative conveniences, flexible pricing
     alternatives and cost-effective care.

                                       2
<PAGE>

The Industry

     The Company believes that overall health care expenditures will continue to
increase with the aging of the population and the extension of health care
coverage to previously uninsured groups. In recent years, government programs,
private insurance companies, managed care organizations and self-insured
employers have implemented various cost-containment measures to limit the growth
of health care expenditures. See "Government Health Care Regulation - Medicare
Payment Rates". These cost-containment measures, together with technological
advances, have resulted in a significant shift in the delivery of health care
services away from traditional inpatient hospitals to more cost-effective
alternate sites, including ambulatory surgery centers.

     Industry sources estimate that in 1997 outpatient surgical procedures
represented approximately 69% of all surgical procedures performed in the United
States, compared with 44% in 1986, and that surgical procedures performed in
freestanding ambulatory surgery centers comprised 22% of total outpatient
surgery, compared with 11% in 1986. As of May 1997, there were approximately
2,425 surgery centers in the U.S., of which approximately 171 were owned by
hospitals and approximately 607 were owned by corporate chains. The remaining
approximately 1,647 centers were independently owned, primarily by physicians.

     Managed care organizations with significant numbers of covered lives are
seeking to direct large numbers of patients to high-quality, low-cost providers
and provider groups. In order to compete for the growing number of managed care
patients, hospitals, physicians and other providers, including alternate site
outpatient providers, are forming integrated delivery systems or provider joint
ventures. The Company believes that there will be opportunities for well-
positioned ambulatory surgery centers to participate in the development of these
delivery systems and joint ventures.

     The Company believes that the following factors contribute to the growth of
ambulatory surgery:

     Cost-Effective Alternative. Ambulatory surgery is generally less expensive
than hospital inpatient surgery. In addition, the Company believes that surgery
performed at a freestanding ambulatory surgery center is generally less
expensive than hospital-based ambulatory surgery for a number of reasons,
including lower facility development costs, more efficient staffing and space
utilization and a specialized operating environment focused on cost containment.

     Managed Care. The Company believes managed care enrollment will continue to
increase and that managed care organizations will seek high-quality, cost-
effective health care services for their enrollees. As a result, the Company
believes that interest in ambulatory surgery will grow as capitation and other
reimbursement arrangements shift the risk for health care costs from traditional
payors to providers such as hospitals and physician groups. "Capitation" is a
reimbursement arrangement in which a health care provider receives a fixed
payment per member per month for the provision of defined health care services
to members of a managed care plan.

                                       3
<PAGE>

     Physician and Patient Preference. The Company believes that many physicians
prefer freestanding ambulatory surgery centers. The Company believes that such
centers enhance physicians' productivity by providing them with greater
scheduling flexibility, more consistent nurse staffing and faster turnaround
time between cases, allowing physicians to perform more surgeries in a defined
period of time. In contrast, hospitals generally serve a broader group of
physicians, including those involved with emergency procedures that must be
given priority over scheduled non-emergency procedures, resulting in postponed
or delayed surgeries. Additionally, many physicians choose to perform surgery in
an ambulatory surgery center because their patients prefer the simplified
admissions and discharge procedures and the less institutional atmosphere.

     New Technology. New technology and advances in anesthesia, which have been
increasingly accepted by physicians, have significantly expanded the types of
surgical procedures that are being performed in ambulatory surgery centers.
Lasers, enhanced endoscopic techniques and fiber optics have reduced the trauma
and recovery time of many surgical procedures. Improved anesthesia has shortened
recovery time by minimizing post-operative side effects such as nausea and
drowsiness, thereby avoiding, in some cases, overnight hospitalization.

     Extended Recovery. In recent years, some states have permitted extended
recovery in ambulatory surgery centers. While states typically restrict the time
period a patient may remain in an ambulatory surgery center after surgery, a
number of states, including eight states in which the Company operates, allow
extended recovery stays of up to 24 hours. Longer recovery stays are being
considered in some states. Extended recovery significantly increases the types
of procedures that can be performed in ambulatory surgery centers.

Growth Strategy

     The Company's objective is to establish a nationwide network of ambulatory
surgery centers in secondary and other selected markets by acquiring established
centers and developing new centers. The Company seeks to provide a broad range
of high-quality surgical services and to collaborate with other participants in
the health care delivery system. The key components of the Company's strategy
are as follows:

     Focus on Secondary and Other Selected Markets. The Company plans to focus
on those markets where, either directly or through affiliation with physicians,
payors or hospitals, it can establish a significant local presence or play an
important role in the development of local integrated delivery systems. The
Company generally views secondary markets as those metropolitan areas with fewer
than 250,000 residents and one or two hospitals. The Company believes that in
secondary markets its centers can more easily achieve the scale that allows them
to become a significant local health care provider and a more attractive partner
in such delivery systems.

     Acquire Established Ambulatory Surgery Centers. The Company plans to
continue acquiring established ambulatory surgery centers. The ambulatory
surgery center industry is highly fragmented and is consolidating due to the
increasing complexity of the regulatory and business aspects of health care, the
growing influence of managed care, the rising cost of technology and the need
for capital.

                                       4
<PAGE>

In addition, physician operators of surgery centers are experiencing increasing
practice demands. The Company believes that a significant opportunity exists to
acquire ambulatory surgery centers that are seeking affiliation with experienced
operators having access to capital and other resources. The Company's goal is to
acquire six to eight additional ambulatory surgery centers by the end of 1998.
See "Acquisition and Development Programs."

     Develop New Ambulatory Surgery Centers. The Company plans to develop new
ambulatory surgery centers in selected markets. The Company pursues new center
development in markets where attractive acquisitions are not available or where
the opportunity exists to increase the Company's presence in its existing
markets. In the future, the Company's new center development efforts will
generally be undertaken in partnership with physicians, hospitals and other
local health care participants, including, where the opportunity presents
itself, acquisitions of centers that are currently under development. The
Company believes that such partnerships or acquisitions minimize the time
required to become an established provider. The Company's goal is to start
development of two to four additional ambulatory surgery centers by the end of
1998.

     Develop Joint Ventures with Hospitals, Physicians and Other Providers. The
Company has established joint ventures, limited or general partnerships or
limited liability companies in 34 of its network of 38 centers. The Company
believes that such affiliations increase patient flow through joint marketing,
access to managed care contracts and participation in a broader network of
health care providers. As part of its joint venture strategy, the Company
intends to manage the surgery centers in which it and other health care
providers have an equity interest. See "Acquisition and Development Programs."

     Expand Range of Services. The Company plans to continue to increase the
number and types of surgeries performed at its centers. The Company is committed
to adding programs and services for physicians and payors by providing state-of-
the-art technology, administrative conveniences, flexible pricing alternatives
and cost-effective care. The Company is also committed to offering extended
recovery services wherever possible, enabling its centers to accommodate a wider
range of higher-acuity procedures.

Acquisition and Development Programs

Acquisition Program

     The Company typically targets for acquisition ambulatory surgery centers
that meet certain criteria, including market demographics, size, profitability,
specialty mix, prominence within the local medical community, access to payors
and opportunities for growth. The Company principally targets physician-owned
ambulatory surgery centers. The Company believes that due to the increasing
complexity of the regulatory and business aspects of health care, physicians are
increasingly seeking affiliation with experienced ambulatory surgery center
operators having access to capital and other resources. Approximately 49% of the
approximately 1,647 physician-owned ambulatory surgery centers in the United
States are smaller centers performing fewer than 1,000 cases per year and are
often single specialty centers. The Company believes that, although some of
these smaller centers represent acquisition opportunities, the remaining
approximately 854 centers

                                       5
<PAGE>

represent the more likely universe of acquisition candidates and that in excess
of 200 of these centers meet the Company's acquisition criteria. In addition to
the acquisitions of multi-specialty centers, the Company may take advantage of
other opportunities that present themselves. Opportunities, such as the
acquisition of single specialty centers or ambulatory centers operated by multi-
market chains, may be pursued if those opportunities fit into the Company's
growth strategy and compliment its existing base of centers. During 1997, the
Company acquired six centers each in separate transactions. The Company's goal
is to effect six to eight acquisitions by the end of 1998 and the Company is
currently in various levels of discussion with additional centers regarding
possible acquisition. There can be no assurance that the Company will be able to
acquire additional surgery centers or, if acquired, that they can be operated
profitably.

     Acquisition pricing has varied widely in recent years. In the late 1980's
and early 1990's, large amounts of capital were being directed at many new
ventures in the ambulatory surgery center industry. The Company believed that
establishing scale and credibility were primary considerations to ensure its
future access to capital. As a result, from mid-1991 through 1992, the Company
acquired ten centers. However, during this period, the purchase prices for
surgery centers escalated due to the large amounts of capital available to
acquirers, the increased number of new acquirers in the market and the
relatively low cost of capital to the publicly traded acquirers. The Company
believes that during 1993, because of problems encountered by the non-surgery
center operations of certain of its larger competitors and the uncertainty
surrounding the changes in the health care industry, the capital available to
acquirers of surgery centers began to shrink. However, sellers' expectations
remained high. In light of this, the Company's management chose to (i) impose a
stricter pricing discipline upon its proposed acquisitions and (ii) review
carefully the position in existing markets of each center that the Company
proposed to acquire to evaluate the likelihood of each center's continued growth
and viability, taking into account the likely effects of the various federal and
state health care reform efforts. Although the Company continued to make
acquisition proposals during this period, the Company consummated only two
acquisitions in 1993 and 1994.

     The Company believes that more recently, the pricing environment for
acquisitions of ambulatory surgical centers has improved and it appears that
significant government reform of the U.S. health care delivery system is
unlikely. The Company believes that the current pricing environment for
acquisitions is attractive and that acquisitions prices have declined for
several reasons, including a reduction in potential sellers' expectations and a
reduction in the potential universe of buyers as many of the early acquirers of
surgery centers have either been unable to raise additional capital or have been
acquired themselves.

Development Program

     The Company develops new centers in markets where attractive acquisitions
are not available or where the Company seeks to increase its presence in markets
in which it already operates. In its development efforts, the Company targets
markets that have attractive size and demographic characteristics and a high
level of interest on the part of local physicians, hospitals or payors.
Historically, the Company's development strategy was based on a structure
involving majority Company ownership through joint venture arrangements with
local physicians. In the future, the Company's development strategy may also
included joint venture arrangements with local hospitals,

                                       6
<PAGE>

physicians and other providers. In some cases, this also includes instances of
minority ownership by the Company. In light of the Company's experience and the
slower than anticipated startup of the development centers opened by the Company
prior to 1995, the Company believes that this broadened development strategy has
provided greater access to patients and minimized the time required to become an
established provider.

Operation of Surgery Centers

     The Company operates a network of 38 surgery centers in fourteen states.
The Company's surgery center network has a total of 109 operating rooms and 52
treatment rooms. The Company's surgery centers are typically owned through
limited or general partnerships in which a wholly owned subsidiary of the
Company owns a general partnership interest and is the managing general partner
of the surgery center. Local physicians and the subsidiary generally own the
limited partnership interests and, in five instances, hospitals also own limited
partnership interests. Recently, the Company has also owned surgery centers
through limited liability companies ("LLC") in which a wholly owned subsidiary
of the Company owns a portion of the LLC and is its managing member.

     The Company's typical multi-specialty surgery center is a freestanding
facility with three to five fully equipped operating rooms, one or two treatment
rooms and ancillary areas for reception, pre-operative preparation, recovery and
administration. The Company's typical endoscopy center, which performs primarily
gastroenterological procedures, has two treatment rooms and ancillary areas for
reception, pre-operation preparation, recovery and administration and may also
have an operation room. The Company's surgery centers are generally located in
close proximity to physicians' offices. Each of the Company's surgery centers is
available for use only by licensed physicians who have been approved by the
center's medical credentialling committee.

                                       7
<PAGE>

     The following table sets forth information regarding each of the centers
operated by the Company as of December 31, 1997:

<TABLE>
<CAPTION>

                                Date                         Number of      Number of      Extended
                             operations      Percentage      operating      treatment      recovery
        Location            began by NSC     ownership(1)      rooms         rooms         service
---------------------      --------------   --------------   ---------     ----------      --------
<S>                       <C>              <C>              <C>           <C>             <C>
Bremerton, WA                October 1991           91.0         3             1              X
Brownsville, TX             November 1991           59.0         4             1
Fayetteville, NC            November 1991           50.2         9            --              X
Norman, OK                  November 1991           50.5         4             1              X
Greensboro, NC                  June 1992          100.0        11             3              X
Seattle, WA                     June 1992           52.5         7            --              X
Provo, UT                    October 1992          100.0         5            --              X
Elizabethtown, KY           November 1992           78.5         3             1              X
Bakersfield, CA              January 1993           87.0         2             1
Somerset, KY                November 1993           88.0         2             1              X
Las Vegas, NV                 August 1994           69.2         4             3              X
Santa Monica, CA              August 1994           88.9         5             3              X
Las Vegas, NV               February 1995           10.0         2             1
Oxnard, CA                    August 1995           88.2         4             1              X
Greensboro, NC               October 1995           80.3         2            --
Chula Vista, CA             February 1996           51.0        --             2
Ft. Worth, TX               February 1996           51.0        --             2
Long Beach, CA              February 1996           50.0        --             3
Newport Beach, CA           February 1996           70.0        --             2
San Diego, CA               February 1996           51.3        --             3
Thousand Oaks, CA           February 1996           51.0        --             2
Kent, OH                       April 1996           83.5         2             1
Atlanta, GA                      May 1996           67.0         3            --
Billings, MT                 January 1996          100.0         4            --
Cincinnati, OH                   May 1996           58.0         1             1
Houston, TX                      May 1996           64.7         3             1              X
Miami, FL                        May 1996           51.0         4             3
Sarasota, FL                     May 1996           55.5         1             2
Humble, TX                 September 1996           65.0         4             2              X
Auburn, CA                  November 1996           88.2         2             2
San Mateo, CA               December 1996           38.5        --             2
Port St. Lucie, FL           January 1997           80.0         2             1
Bakersfield, CA                 June 1997           80.0         2             -
South Oklahoma City, OK         June 1997           60.0         4             2              X
Edmond, OK                    August 1997           60.0         4             1              X
Hartford, CT                  August 1997          100.0         2             1
Midwest City, OK           November, 1997           90.0         2             1
Manahawkin, NJ              December 1997           50.0         2             1
</TABLE>

(1)  Includes general partnership, limited partnership or limited liability
     company units

     The Company provides services to a wide range of specialties including:
ophthalmology, orthopedic surgery, otorhinolaryngology (ear, nose and throat),
gynecology, general surgery, gastroenterology, anesthesiology, neurosurgery,
oral surgery, plastic surgery, podiatry and urology. Medicare currently approves
over 2,400 types of surgical procedures that may be performed in

                                       8
<PAGE>

ambulatory surgery centers, up from 1,500 types in 1992. Common procedures
performed in the Company's surgery centers include knee and shoulder
arthroscopy, laparoscopy, hernia repair, tubal ligations and removal of
cataracts.

     Fifteen of the Company's multi-specialty surgery centers currently provide
for extended recovery stays. The Company intends to offer extended recovery
services at its multi-specialty facilities if permitted by state law. The
Company's ability to develop such recovery care facilities is dependent on state
regulatory environments. Extended recovery capability generally permits higher
acuity and higher revenue procedures to be performed, including the following:

         Specialty               Higher Acuity Procedures
         ---------               ------------------------
         Orthopedic surgery      Anterior cruciate ligament repair, shoulder
                                 surgery, total knee replacements, micro
                                 discectomies and laminectomies (back surgery)

         Gynecology              Laparascopically assisted vaginal
                                 hysterectomies

         General surgery         Laparascopically assisted hernia repair and
                                 laparascopic cholecystectomy

     After a physician determines that surgery is necessary and can be
appropriately performed in an ambulatory surgery center, the physician and
patient schedule the surgery and, if appropriate, request extended recovery
services. The surgery center's staff subsequently contacts the patient by
telephone to obtain payor and other patient information and to ensure that the
patient has arranged to be transported home following the recovery period.
Patients generally arrive at the center approximately one hour before scheduled
surgery to allow time for admission and a review of their medical history. A
local or general anesthetic is administered and the surgery is performed. After
surgery, patients generally spend three hours in the recovery area before being
discharged by the center's anesthesiologist or being transferred to the surgery
center's extended recovery area.

     The Company's multi-specialty surgery centers generally employ a staff of
between 15 and 30 and its endoscopy centers generally employ a staff of between
five and fifteen, depending on the size of the facility and the volume of cases.
The staff includes a center administrator, a business manager, a clinical
director, registered nurses, operating room technicians and clerical workers.
The center administrator is responsible for general oversight of the center's
operations, including liaison with physicians and coordination of marketing
efforts and reports to a regional manager or corporate vice president. The
business manager is responsible for the center's financial records and patient
billing and collections. The clinical director is responsible for providing
leadership and coordination for the professional and support staff and ensuring
efficient scheduling and staffing for the physicians.

     The Company provides each of its surgery centers with a full range of
financial, marketing and operating services as well as data processing support
both for internal operational control and for the orderly conduct of business
office functions. This includes a financial reporting and accounting package, a
billing and accounts receivable system, inventory and accounts payable

                                       9
<PAGE>

systems and a patient record-keeping system. Corporate management also supports
local marketing activities, including the analysis of market conditions and
patient utilization patterns and the development of prices and services which
are competitive with those offered by other local health care providers. The
Company, where appropriate, executes master agreements for purchasing equipment
and supplies enabling each center to realize the economies of scale available
through volume purchases. In addition, the Company provides support for Medicare
certification, local regulatory licensure and accreditation efforts.

Quality Assurance

     The Company's surgery centers implement quality assurance procedures to
ensure a high level of care provided at the surgery centers. Each center has a
medical advisory committee comprised of three to ten physicians that reviews the
professional credentials of physicians applying for medical staff privileges at
the center. In addition, each center has a medical director who supervises and
is responsible for the quality of medical care provided at the center. The
medical director, who is generally a practicing surgeon or anesthesiologist,
reports directly to the center's medical advisory committee. The center
administrator or clinical director, in conjunction with the medical director,
reviews and monitors surgical outcomes along with procedures performed and the
quality of the logistical, medical and technological support provided to the
physician. In addition, the patient is contacted by a center nurse on the day
following discharge to check on the patient's condition and to survey the
patient as to the quality of care provided. The Company believes that this
direct, systematic feedback from both physician and patient is an effective way
to monitor the level of care at each center. All of the Company's centers are
Medicare certified, which certification is required to obtain Medicare
reimbursement. Additionally, the Company's surgery centers seek approval by
either the Joint Commission for Accreditation of Health Care Organizations
("JCAHO") or the Accrediting Association of Ambulatory Health Care ("AAAHC"),
which are industry-based, self-regulatory organizations which grant
accreditation of surgery centers based on established criteria as an additional
indication of a center's quality. The Company is seeking accreditation in all of
its centers that have not been approved by either the JCAHO or the AAAHC.

Marketing

     Marketing activities directed at physicians and other health care providers
are coordinated locally by the individual center and are supplemented by
corporate management. These activities generally emphasize advantages offered by
the Company's surgery centers, such as the proximity of surgery centers to
physicians' offices, the ability to schedule consecutive cases without
preemption by inpatient or emergency procedures, the rapid turnaround time
between cases, the high technical capability and low turnover and consistency of
nurse staffing, state-of-the-art surgical equipment and the simplified
administrative procedures. A target list of physicians is developed at each
local surgery center. Although the center administrator is the primary point of
contact, physicians who utilize the Company's surgery centers are important
sources of recommendation to other physicians regarding the benefits of using
the Company's surgery centers. The Company periodically reviews each center's
physician marketing list and its progress in contacting and successfully
attracting local physicians.

                                      10
<PAGE>

          The Company also markets its surgery centers directly to payors,
including HMOs, PPOs, other managed care organizations, employers and other
payor-groups. Payor-group marketing activities conducted by the Company's
management and center administrators emphasize the high quality of care, cost
advantages and convenience of the Company's surgery centers and are focused on
making each center an approved provider under local managed care plans. In
addition, the Company is pursuing relationships with physician groups in its
markets in order to promote jointly its surgery centers and the physician groups
to payors. In some instances, this may involve invoicing the centers' charges,
on a case rate basis, with the surgeon, anesthesiologist, lab, x-ray and
pathology charges combined to provide the payor with one all-inclusive bill to
cover an episode of care.

Competition

          In each of its markets, the Company competes principally with
hospitals and other operators of freestanding surgery centers to attract
physicians and patients to its ambulatory surgery centers and for inclusion in
managed care programs. In developing new surgery centers and acquiring existing
surgery centers the Company competes with other surgery center companies and
local hospitals. In competing for physicians and patients, important competitive
factors are convenience, cost, quality of service, physician loyalty and
reputation. Hospitals have many competitive advantages in attracting physicians
and patients, including established standing in the community, historical
physician loyalty and convenience for physicians making rounds or performing
inpatient surgery in the hospital. However, the Company believes that many
physicians prefer to utilize and affiliate with freestanding ambulatory surgery
centers due to greater scheduling flexibility, more consistent nurse staffing
and faster turnaround time between cases, thereby allowing a physician to
perform more surgeries in a defined period of time.

Government Health Care Regulation

Health Care Reform

          In recent years, a variety of legislative proposals designed to change
access to and payment for health care services in the United States have been
introduced. Although no comprehensive health reform proposal has been passed by
Congress to date, other proposed health care reform legislation, including the
regulation of patient referral practices, reimbursement of health care
providers, formation and operation of physician joint ventures and tort reform,
has been and may be considered by Congress and the legislatures of many of the
states in which the Company operates. No predictions can be made as to whether
health care reform legislation or similar legislation will be enacted or, if
enacted, its effect on the Company. Any federal or state legislation
prohibiting, among other things, the referral to or treatment of patients at
surgery centers by health care providers with an investment interest in the
surgery centers may have a material adverse effect on the Company. In the event
that Federal or state regulations prohibit the ownership of surgery centers by
physicians, the Company would seek to purchase the interests held by its limited
partner physicians. Some of the Company's limited partnership agreements contain
a provision which allows the Company to purchase the interest of each limited
partner for an amount equal to a multiple of the partner's allocation of taxable
income in the most recent calendar year. The

                                       11
<PAGE>

Company may, at its option, issue cash, notes, or stock, including unregistered
stock, to purchase such limited partners' interests. The Company believes that
it would be able to buy out all of its limited partners if required.

Regulatory Environment

          The Company's surgery centers and the physicians utilizing its centers
are subject to numerous regulatory, accreditation and certification
requirements, including requirements related to licensure, certificate of need,
reimbursement from insurance companies and other private third-party payors,
Medicare and Medicaid participation and reimbursement, and utilization and
quality review organizations. The grant and renewal of these licenses,
certifications and accreditations are based upon governmental and private
regulatory agency inspections, surveys, audits, investigations or other reviews,
including self-reporting requirements. An adverse review or determination by any
regulatory authority could result in denial of a center's plan of development or
proposed expansion of facilities or services, the loss or restriction of
licensure by a center or one of its practitioners, or loss of center
certification or accreditation. A regulatory authority could also reduce, delay
or terminate reimbursement to a center or require repayment of reimbursement
received. The loss, denial or restriction of any such licensure, accreditation,
certification (including certificates of need or exemption therefrom) or
reimbursement through changes in the regulatory requirements, an enforcement
action, or otherwise, could have a material adverse effect on the Company.

          Medicare Payment Rates.  Medicare is a federally funded and
administered health insurance program that consists of Parts A and B. Part B
provides for payment of a facility fee for services furnished by Medicare
certified ambulatory surgical centers in connection with designated covered
surgical procedures. Each Medicare covered surgical procedure is assigned to a
payment group. Currently, there are eight payment groups. The Health Care
Financing Administration ("HCFA") assigns a base payment rate to each payment
group, which rate remains until revised by HCFA. The Company understands that
the number of payment groups and the base payment rates are currently under
discussion and the Company is unable to predict the outcome of these discussions
or its effect on the Company. Depending upon the nature and context of any
regulatory action, if any, which is taken, the Company could experience a
decrease in revenues from Medicare, which could have a material adverse change
on the Company's business, financial condition, cash flows or results of
operations.

          Federal Fraud and Abuse Statute.  Under the Medicare and Medicaid
programs, the federal government enforces a federal statute (the "Fraud and
Abuse Statute") that prohibits the offer, payment, solicitation or receipt of
any remuneration, directly or indirectly, overtly or covertly, in cash or in
kind to induce or in exchange for (i) the referral of patients covered by the
programs, or (ii) the leasing, purchasing, ordering, or arranging for or
recommending the lease, purchase, or order of any item, good, facility or
service covered by the programs. The federal courts have held that an
arrangement violates the Fraud and Abuse Statute if one purpose of a transaction
which results in the payment of remuneration (including the distribution of
profits) is to induce the referral of patients covered by the Medicare and
Medicaid programs, even if another purpose of the payment is to compensate an
individual for professional services. Violations of such statute can result in
criminal penalties, civil monetary penalties and exclusion from the Medicare and
Medicaid programs. In an attempt to clarify which arrangements are exempt from
program exclusion, civil sanctions or

                                       12
<PAGE>

criminal prosecution under the Fraud and Abuse Statute, the Department of Health
and Human Services published in 1991 a set of "safe harbor" regulations
outlining practices that are deemed not to violate the Fraud and Abuse Statute.
Although compliance with one of the safe harbors assures participants that an
arrangement does not violate the Fraud and Abuse Statute, failure of an
arrangement to fit within a safe harbor provision does not necessarily mean that
arrangement violates the Fraud and Abuse Statute. Although the Company has
determined that the current ownership structure of its surgery centers does not
fit within any of the safe harbors applicable to investments in health care
providers by physicians who are in a position to make or influence referrals, it
believes that its arrangements with physicians do not fall within the activities
prohibited by the Fraud and Abuse Statute. However, no assurances can be given
that regulatory authorities might not assert a contrary position or that new
laws, or the interpretation of existing laws, might not adversely affect
relationships established by the Company with physicians or other health care
providers or result in the imposition of penalties on the Company or its
facilities.

          "Stark Laws." The Company's surgery centers and their physicians,
dentists and podiatrists are also subject to the Ethics in Patient Referrals Act
of 1989 (the "Stark Law"). Unless excepted, a physician, dentist or podiatrist
may not make a referral of a Medicaid or Medicare patient to any clinical
laboratory services provider with whom he or she has a financial relationship
(either investment or compensation) for such restricted services and any
provider who accepts such a referral may not bill for the service provided
pursuant to the referral. Sanctions for violating the Stark Law can include
civil monetary penalties and exclusion from Medicare and Medicaid. Unlike the
Fraud and Abuse Statute in which an activity may fall outside a safe harbor and
still not violate the law, a referral under the Stark Law that does not fall
within an exception is strictly prohibited. In August 1993, Congress passed
legislation ("Stark II") that, effective January 1, 1995, expanded the self-
referral ban to include a number of health care services provided by entities
with which the physicians may have an ownership interest or a financial
relationship, although it does not specifically prohibit referrals by physicians
with an ownership interest in, or financial relationship with, an ambulatory
surgery center, provided that the surgery services are not provided as
"outpatient hospital services." Ambulatory surgery is not included in the list
of restricted services and the Company does not believe that ambulatory surgery
is subject to the Stark restrictions.

          AMA Restrictions. In June 1994, the American Medical Association
severely restricted the ability of physicians to refer to entities in which such
physicians have an ownership interest, except when the physician directly
provides care or services at a facility that is an extension of the physician's
practice and in very limited circumstances such as in rural areas where there is
lack of available capital from non-physician sources. If the American Medical
Association changes its ethical requirements to preclude all referrals by
physicians, physician referrals to the Company's ambulatory surgery centers
could be adversely affected. It is possible that a prohibition on physician
ownership could adversely affect the Company's future operations, although the
Company believes that the majority of physicians would continue to perform
surgery at the surgery centers even if they were no longer limited partners.

          State Anti-Referral Laws. In addition to the federal Fraud and Abuse
Statute and the Stark Laws, certain states in which the Company operates have
enacted similar patient referral legislation.

                                       13
<PAGE>


The Company believes its surgery centers' operations are consistent with
applicable statutes of the states in which they operate because either the state
statute (i) excludes from the definition of referral the recommendation by a
health care provider that a patient utilize the types of services provided at
the center, (ii) exempts health care provider investors who directly provide
services at the facility and are personally involved in the rendering of care to
the referred patient, or (iii) does not encompass the provider specialty or
services rendered at the center.

          Infectious Waste. As generators of infectious waste, the Company's
surgery centers are required to satisfy all federal, state and local waste
disposal requirements. If any regulatory agency finds a center to be in
violation of waste laws, penalties and fines may be imposed for each day of
violation, and the affected center could be forced to cease operations. The
Company believes its surgery centers dispose of such waste properly.

Insurance

          The Company maintains medical malpractice insurance under one
insurance policy in the amount of $1.0 million per occurrence and $3.0 million
in the aggregate, with retention limits of $100,000 per occurrence and $200,000
in the aggregate. In addition, the Company maintains excess medical malpractice
and general liability insurance in the amount of $25.0 million.

Employees

          As of December 31, 1997, the Company had 688 full-time, 32 of whom
were corporate personnel, and 752 part-time or per diem employees. Most of the
full-time employees are nurses and office personnel who work at the surgery
centers. None of the Company's employees is covered by a collective bargaining
agreement. The Company considers relations with its employees to be good.

Recent Developments

          Subsequent to December 31, 1997, the Company has acquired a specialty
endoscopy center in Norman, Oklahoma, the Company's fifth center in the Oklahoma
City market area, and a multi-specialty surgery center in Lancaster, California.

ITEM 2.  PROPERTIES

     The Company's multi-specialty surgery centers range from 4,900 to 26,000
square feet, with the typical surgery center occupying approximately 13,000
square feet, while the endoscopy centers range from 2,600 to 4,800 square feet.
The Company's surgery centers typically lease their facilities pursuant to long-
term lease agreements expiring from 1997 to 2015, most of which contain options
to extend the lease period for up to ten additional years. In certain instances,
the Company has financed the surgery center facility through long-term mortgages
or other financing arrangements in which the lender has a secured or
collateralized interest. The Company's principal executive officers are situated
in approximately 8,500 square feet located at 30 South Wacker Drive, Suite 2302,
Chicago, Illinois 60606. The Company leases this property and the current lease
expires in 2002. See "Operation of Surgery Centers" above for a list of the
Company's surgery centers.


                                       14
<PAGE>

<TABLE>
<CAPTION>

                                Expiration               Type of
Location                           Date                Encumbrance
-----------------------       --------------          -------------
<S>                           <C>                     <C>
Billings, MT                  Month to Month              Lease
Greensboro, NC                   May 1999                 Lease
Auburn, CA                       June 1999                Lease
Bakersfield, CA                January 2000               Lease
Chula Vista, CA                January 2000               Lease
Humble, TX                      April 2000                Lease
Bremerton, WA                   August 2000               Lease
Atlanta, GA                    November 2000              Lease
San Mateo, CA                   March 2001                Lease
Houston, TX                      May 2002                 Lease
Norman, OK                       June 2002                Lease
Midwest City, OK               October 2002               Lease
Seattle, WA                    November 2002              Lease
San Diego, CA                  January 2003               Lease
Somerset, KY                     June 2003                Lease
Port St. Lucie, FL              August 2003               Lease
Greensboro, NC                 January 2004               Lease
Sarasota, FL                    March 2004                Lease
Newport Beach, CA               April 2004                Lease
Santa Monica, CA                April 2004                Lease
Kent, OH                         May 2004                 Lease
Long Beach, CA                   May 2004                 Lease
Fort Worth, TX                   June 2004                Lease
Cincinnati, OH                 October 2004               Lease
Miami, FL                      December 2004              Lease
Thousand Oaks, CA              January 2005               Lease
Manahawkin, NJ                September 2007              Lease
Bakersfield, CA                  May 2008                 Lease
Las Vegas, NV                    June 2008                Lease
Las Vegas, NV                    July 2009                Lease
Provo, UT                     September 2012              Lease
Fayetteville, NC                 July 2015                Lease
Brownsville, TX                November 2001          Collateralized
Elizabethtown, KY              February 2008             Mortgage
Edmond, OK                     October 2009              Mortgage
South Oklahoma City, OK          June 2010               Mortgage
Hartford, CT                        ---                   Owned
Oxnard, CA                          ---                   Owned
</TABLE>



                                       15
<PAGE>


ITEM 3.  LEGAL PROCEEDINGS

     The Company is party to certain claims and litigation in the ordinary
course of business. The Company is not involved in any legal proceeding that it
believes will result, individually or in the aggregate, in a material adverse
effect upon its financial condition or results of operations.


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

     No matters were submitted to the Company's security holders during the
fourth quarter of fiscal 1997.


                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCK HOLDER MATTERS

     The common stock of the Company ("Common Stock") has been included for
quotation in the National Market tier of The Nasdaq Stock Market ("Nasdaq")
under the symbol "NSCI" since the Company's initial public offering of Common
Stock on November 10, 1995. Prior to that time, there was no public market for
the Common Stock. On December 31, 1997, the last reported sale price of the
Common Stock on Nasdaq was $26.25. At December 31, 1997, there were
approximately 3,500 record holders of the Common Stock. The following table sets
the high and low closing prices for the Common Stock for the periods indicated
as reported by Nasdaq.

<TABLE>
<CAPTION>
                                               High         Low
                                              -------     --------
           <S>                                <C>         <C>
           Year Ended December 31, 1996
               First Quarter/(1)(2)/          $14-2/3     $ 9-6/10
               Second Quarter/(1)(2)/          21          12-4/10
               Third Quarter/(1)/              20-1/6      15
               Fourth Quarter/(1)/             25-1/3      16-1/2

           Year Ended December 31, 1997
               First Quarter/(1)/             $24         $18-1/3
               Second Quarter/(1)/             25-2/3      17-2/3
               Third Quarter                   23-1/3      18
               Fourth Quarter                  26-3/8      21-3/4
--------------------
</TABLE>

/(1)/ Adjusted to reflect the 3-for-2 stock split of the Common Stock effected
      August 1997.

/(2)/ Adjusted to reflect the 3-for-2 stock split of the Common Stock effected
      in May 1996.

     The Company has never paid cash dividends on its common stock and the Board
of Directors intends to continue a policy of retaining any earnings for use in
the Company's operations and to fund the Company's and its area developers'
expansion program. The Company does not anticipate paying any cash dividends in
the foreseeable future. In addition, the Company's loan agreement contains a
prohibition on the payment of any cash dividends. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources".


                                      16

<PAGE>


ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

     The information contained in the Company's Annual Report to
Shareholders for the fiscal year ended 1997 (the "Annual Report"), under the
caption "Selected Consolidated Financial Highlights," and only such information,
is incorporated herein by reference.


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

     The information contained in the Company's Annual Report to Shareholders,
under the caption "Management's Discussion and Analysis of Financial Condition
and Results of Operations," and only such information, is incorporated herein by
reference.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The information contained in the Company's Annual Report to Shareholders,
under the captions "Consolidated Balance Sheets," "Consolidated Statements of
Income," "Consolidated Statements of Shareholders' Equity," "Consolidated
Statements of Cash Flows," "Notes to Consolidated Financial Statements" and
"Report of Independent Auditors," and only such information, is incorporated
herein by reference.


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH THE ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

     None


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Directors

     The information appearing under the captions "Election of Class III
Directors" and "Class I and Class II Directors" in the Company's proxy statement
for the Annual Meeting of the Stockholders scheduled for May 21, 1998 (the
"Proxy Statement") is incorporated herein by reference.


                                       17

<PAGE>

Executive Officers

     Set forth below are the names of the executive officers of the Company,
their ages as of December 31, 1997, the positions they held with the Company,
and summaries of their business experience. An officer is elected by the Board
of Directors and serve pursuant to annual employment agreements between such
officers and the Company.

<TABLE>
<CAPTION>
                                                                           Officer
Name                 Age                Position(s)                         Since
------------------   ---   ---------------------------------------------   -------
<S>                  <C>   <C>                                             <C>
E. Timothy Geary      47   Chairman of the Board of Directors, Chief        1987
                           Executive Officer and President
Bryan S. Fisher       39   Senior Vice President of Finance, Chief          1993
                           Financial Officer, Secretary and Treasurer
Dennis D. Solheim     46   Senior Vice President of Business Development    1991
Dennis J. Zamojski    40   Senior Vice President of Operations              1992
Richard D. Pence      43   Vice President of Operations                     1991
</TABLE>

     Mr. Geary, has served as the Company's Chief Executive Officer, President
and Chairman of the Board since its founding in 1987. Mr. Geary served as a Vice
President of Operations and Development, respectively, with Medical Care
International, Inc. ("Medical Care"), a large owner and operator of freestanding
ambulatory surgery centers, from 1983 to 1987. Mr. Geary is a graduate of the
College at the University of Chicago and the University of Chicago Graduate
School of Business. Mr. Geary serves on the Board of Directors of Dianon
Systems, Inc., a provider of pathology testing services, and the Federated
Ambulatory Surgery Association ("FASA"), an industry association.

     Mr. Fisher joined the Company in 1991 as Controller, served as a Vice
President of the Company from 1993 to 1997, as the Company's Chief Financial
Officer since 1996, and as the Company's Senior Vice President of Finance,
Treasurer and Secretary since 1997. Mr. Fisher was an Accounting Manager and
Assistant Controller for Medical Care and, prior to that, an auditor for KPMG
Peat Marwick from 1984 to 1989. Mr. Fisher is a graduate of Brigham Young
University and is a certified public accountant.

     Mr. Solheim joined the Company as Project Manager in 1988 and served as a
Vice President of the Company from 1991 to 1997 and as Senior Vice President of
Business Development since 1997. Mr. Solheim was a Regional Director for Medical
Care from 1983 to 1988. Mr. Solheim is a graduate of Iowa State University.

     Mr. Zamojski joined the Company in 1992 and served as a Vice President of
the Company from 1992 to 1997, and as Senior Vice President of Operations since
1997. Mr. Zamojski was a Vice President with Medical Care from 1983 to 1992. Mr.
Zamojski is a graduate of the nursing program of Erie Community College, the
State University of New York and the Masters of Health Care Administration
program of the Medical College of Virginia/Virginia Commonwealth University.


                                       18

<PAGE>

     Mr. Pence joined the Company as a Vice President in 1991. Mr. Pence was a
Vice President and, previously Controller, for Medical Care from 1982 to 1991.
Mr. Pence is a graduate of the University of Alabama and the Masters of Business
Administration Program of Southern Methodist University.

ITEM 11.  EXECUTIVE COMPENSATION.

     The information appearing under the caption "Executive Compensation" in the
Proxy Statement is incorporated herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The information appearing under the caption "Principal Stockholders and
Securities Ownership of Management" in the Proxy Statement is incorporated
herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The information appearing under the captions "Director Compensation" and
"Compensation Committee Interlocks and Insider Participation" in the Proxy
Statement are incorporated herein by reference.

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K.

(a)(1) Financial Statements

     Reference is made to the information set forth in Part II, Item 8 of this
Report, which information is incorporated herein by reference.

(a)(2) Financial Statement Schedules

    (i)   Schedule II -- Valuation of Qualifying Accounts         S-1
    (ii)  Report of Independent Auditors on Schedules       See Exhibit 23.1

    All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission have been omitted because
the required information is not significant or is included in the financial
statements or the notes thereto, or is not applicable.

 (a)(3) Exhibits

     The exhibits to this report are listed in the Exhibit Index included
elsewhere herein. Included in the exhibits listed therein are the following
exhibits which constitute management contracts or compensatory plans or
arrangements:

                                       19
<PAGE>

     10.1   Amended and Restated 1992 Stock Option Plan of the Company
     10.2   Employee Stock Purchase Plan of the Company
     10.9   Form of Employment Agreement between the Company and E. Timothy
            Geary
     10.10  Form of Employment Agreement between the Company and Bryan S. Fisher
     10.11  Form of Employment Agreement between the Company and Dennis D.
            Solheim
     10.12  Form of Employment Agreement between the Company and Richard D.
            Pence
     10.13  Form of Employment Agreement between the Company and Dennis J.
            Zamojski
     10.14  Management Agreement dated November 22, 1991 among Physicians
            Ambulatory Management Corp., NSC Fayetteville, Inc. and Fayetteville
            Ambulatory Surgery Center Limited Partnership
     10.27  1997 Non-Employee Directors Stock Option Plan

(b)  Reports on Form 8-K

     The Company did not file any reports on Form 8-K during the fourth quarter
of 1997.

(c)  Exhibits
<TABLE>
<CAPTION>
     Exhibit
     Number        Description of Exhibit
     ------        ----------------------
     <S>           <C>
      3.1*         Certificate of Incorporation of the Company
      3.2**        Bylaws of the Company
      4.1*         Specimen certificate representing shares of Common Stock
      4.2***       Rights Agreement, dated as of December 22, 1997, between
                   the Company and Harris Trust and
                   Savings Bank as rights agent,
                   which includes Exhibit B thereto
                   the Form 8 Rights Certificate
     10.1**        Amended and Restated 1992 Stock Option Plan of the Company
     10.2****      Employee Stock Purchase Plan of the Company
     10.3*         Lease dated December 22, 1988 between Surgical Center
                   Investors, Ltd. ("SCI") and Surgical Center of Greensboro,
                   Inc. ("SCE")
     10.4*         Agreement dated June 23, 1992 among SCI, Surgical Care and
                   SCE
     10.5*         Second Amendment to Lease dated September 24, 1992 between
                   SCI and NSC Greensboro, Inc.
     10.6*****     Agreement dated April 22, 1997 between the Company and John
                   G. Rex-Waller
     10.7          Credit Agreement dated as of November 17, 1997 among National
                   Surgery Centers, Inc. and Bank of America National Trust and
                   Savings Association as Agent and other financial institutions
                   parties hereto
     10.9*         Form of Employment Agreement between the Company and E.
                   Timothy Geary
     10.10         Form of Employment Agreement between the Company and Bryan S.
                   Fisher
     10.11*        Form of Employment Agreement between the Company and Dennis
                   D. Solheim
     10.12*        Form of Employment Agreement between the Company and Richard
                   D. Pence
     10.13*        Form of Employment Agreement between the Company and Dennis
                   J. Zamojski
     10.14*        Management Agreement dated November 22, 1991 among
</TABLE>
                                       20
<PAGE>
<TABLE>
     <C>           <S>
                   Physicians Ambulatory Management Corp. ("PAM"), NSC
                   Fayetteville, Inc. and Fayetteville Ambulatory Surgery Center
                   Limited Partnership
     10.27**       1997 Non-Employee Directors Stock Option Plan
     11.1          Computation of Income Per Common Share
     13.1          Registrant's Annual Report to Shareholders for the fiscal
                   year ended 1997 (for the information of the Commission and
                   not deemed "filed" with the Commission, except for the
                   portions expressly incorporated by reference in this report).
     21.1          Subsidiaries of the Company
     23.1          Consent of Ernst & Young LLP
     27.1          Financial Data Schedule
</TABLE>

        *   Incorporated by reference to the corresponding exhibit to the
            Company registration statement on Form S-1 Registration No. 33-
            96996.

       **   Incorporated by reference to the corresponding exhibit to the
            Company's Form 10-K for the fiscal year ended December 31, 1996.

      ***   Incorporated by reference to Exhibit 4 to the Company's Form 8-A
            dated December 24, 1997.

     ****   Incorporated by reference to the corresponding exhibit to the
            Company's registration statement on Form S-1 Registration No. 333-
            12927.

    *****   Incorporated by reference to Exhibit 10 to the Company's Form 10-Q
            for the quarter period ended March 31, 1997.

                                       21
<PAGE>

                                   SIGNATURES


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

                                  NATIONAL SURGERY CENTERS, INC.
                                  By: /s/ E. Timothy Geary
                                     ----------------------------------------
                                      E. Timothy Geary
                                      Chairman of the Board of Directors,
                                      Chief Executive Officer and President

                                  Date: March 27, 1998
                                        -------------------------------------


     Pursuant to the requirements of the Securities Act of 1934, this report has
been signed below by the following persons on behalf of the registrant in the
capacities and on the dates indicated.

            Signature                                   Title
            ---------                                   -----

  Principal Executive Officer:

     /s/ E. Timothy Geary                 Chairman of the Board of Directors,
--------------------------------         Chief Executive Officer and President
        E. Timothy Geary


         March 27, 1998
--------------------------------
              Date


 Principal Financial Officer and
  Principal Accounting Officer:

       /s/ Bryan S. Fisher                 Senior Vice President of Finance,
---------------------------------          Chief Financial Officer, Secretary
          Bryan S. Fisher                             and Treasurer


          March 27, 1998
---------------------------------
               Date

                                      22
<PAGE>

Directors:


       /s/ John K. Carlyle
---------------------------------          Director
         John K. Carlyle


         March 27, 1998
---------------------------------
              Date



      /s/ Russell L. Carson
---------------------------------          Director
        Russell L. Carson


         March 27, 1998
---------------------------------
              Date



  /s/ John T. Henley, Jr., M.D.
---------------------------------          Director
    John T. Henley, Jr., M.D.


         March 27, 1998
---------------------------------
              Date



   /s/ Donald E. Linder, M.D.
---------------------------------          Director
     Donald E. Linder, M.D.


         March 27, 1998
---------------------------------
              Date



      /s/ Rocco A. Ortenzio
---------------------------------          Director
        Rocco A. Ortenzio


         March 27, 1998
---------------------------------
              Date

                                       23
<PAGE>

Schedule II - Valuation of Qualifying Accounts
(in thousands)

<TABLE>
<CAPTION>
                                                   Charge to              Charged to
                                                   Beginning  Costs and      Other                    Ending
                                                    Balance    Expenses   Accounts/1/  Deductions/2/  Balance
                                                   ---------  ----------  -----------  -------------  -------
<S>                                                   <C>         <C>          <C>            <C>      <C>
Allowance for Uncollectible Accounts Receivable

Year ended December 31, 1995                        $1,098      $1,166       $   46       $1,143       $1,167

Year ended December 31, 1996                         1,167       2,674           94        2,212        1,723

Year ended December 31, 1997                         1,723       3,275        2,581        3,552        4,027
</TABLE>

----------------
/1/    Represents allowances for uncollectible accounts of acquired centers net
       of centers divested.

/2/    Represents charges off of accounts receivable net of recoveries.

                                       24