<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)

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

                  For the fiscal year ended:  December 31, 1999

                                       OR

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

                  For the transition period from _____________ to _____________

Commission File Number:  0-23220

                               HEALTH POWER, INC.
                  --------- ----------------------------------
             (Exact name of Registrant as specified in its charter)

                DELAWARE                                31-1145640
         -----------------------              ----------------------------
         (State of Incorporation)           I.R.S. Employer Identification No.)

             1209 Orange Street
            Wilmington, Delaware                             19801
--------------------------------------------              ------------
(Address of principal executive office)                    (Zip Code)

       Registrant's telephone number, including area code: (302) 636-7593

           Securities registered pursuant to Section 12(b) of the Act:

                                      None
                                ----------------
                                (Title of Class)

           Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, $0.01 par value
                          -----------------------------
                                (Title of Class)

         Indicate by check mark whether the Registrant (1) has filed all reports
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. [ ]

         On March 3, 2000, the aggregate market value (based on the closing sale
price on that date) of the Common Stock held by nonaffiliates of the Registrant
was $3,972,655. On March 3, 2000, the Registrant had 3,853,719 shares of Common
Stock outstanding.



<PAGE>   2


                               HEALTH POWER, INC.
                                    FORM 10-K

                                     PART I

ITEM 1.  BUSINESS

GENERAL DEVELOPMENT OF BUSINESS

         Health Power, Inc., through its subsidiaries, CompManagement, Inc.
("CompManagement"), CompManagement Health Systems, Inc. ("CompManagement Health
Systems"), and M&N Risk Management, Inc. ("M&N Risk Management"), is an
independent provider of comprehensive cost containment and medical management
services designed to minimize the costs of workers' and unemployment
compensation benefits for employers. Health Power, Inc. and such subsidiaries
are hereinafter collectively referred to as the "Company."

         Through CompManagement and M&N Risk Management, the Company serves as a
third party administrator ("TPA") for workers' and unemployment compensation
claims. The Company offers claims management, risk management, and medical cost
containment services primarily to Ohio employers, as well as to a small number
of employers located in Washington and West Virginia. The Company is one of the
largest workers' compensation TPAs in Ohio, currently serving approximately
19,000 employers located throughout Ohio. M&N Risk Management was acquired by
Health Power, Inc. in December 1998.

         Through CompManagement Health Systems and its division, Integrated
Comp, the Company provides medical management services for workers' compensation
claims primarily to Ohio employers, as well as to a small number of employers
located in Kentucky and Indiana. The Company owns and operates two state-wide
certified managed care organizations ("MCOs") under Ohio's Health Partnership
Program, a managed care workers' compensation program. Together, CompManagement
Health Systems and Integrated Comp currently serve approximately 47,700
employers located throughout Ohio. As a state-wide certified MCO, the Company's
medical management services, include, among other things, a state-wide health
care provider network; treatment guidelines and utilization review procedures;
peer review and quality assurance programs; provider sanction and termination
procedures; medical and vocational case management programs; utilization
management programs; medical bill adjudication and payment procedures; dispute
resolution procedures; provider, employer, and employee relations and education
programs; and health care fraud detection and reporting programs. Because all
workers' compensation claims are reimbursed by the Ohio Bureau of Workers'
Compensation, the Company does not assume any risk for the payment of medical or
disability benefits to employees with respect to their workers' compensation
claims.

         CompManagement Health Systems has offered its MCO services since the
implementation of the Health Partnership Program in March 1997. The business of
Integrated Comp represents the MCO assets acquired on July 16, 1999, from Anthem
Managed Comp, an MCO division of a wholly owned subsidiary of Anthem Insurance
Companies, Inc.

         Health Power HMO, Inc. ("Health Power HMO"), a subsidiary of Health
Power, Inc., operated a health maintenance organization (an "HMO") in Ohio. In
December 1998, the Board of Directors of Health Power, Inc. formally approved a
plan to discontinue the operations of Health Power HMO. On May 1, 1999, the
certificate of authority of Health Power HMO was revoked by the Ohio Department
of Insurance ("ODI") for failure to meet statutory financial requirements. Since
that time, and in accordance with the ODI revocation order, Health Power HMO has
been winding-up its business under the



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<PAGE>   3

supervision of ODI, but without judicial involvement. This windup is
substantially complete, and Health Power HMO is in the process of distributing
all of its assets in payment of the claims of its creditors. Health Power HMO
anticipates that the distribution process will be completed by the end of April
2000. Health Power HMO will not have sufficient assets to pay the claims of all
of its creditors. Health Power, Inc.'s consolidated financial statements reflect
Health Power HMO's operations as discontinued operations.

         Health Power, Inc. was incorporated under Delaware law on March 6,
1985.

FINANCIAL INFORMATION ON INDUSTRY SEGMENTS

         Financial information on industry segments as required by Item 101(b)
of Regulation S-K is set forth in Note 12 of the Notes to the Consolidated
Financial Statements, which Note is part of the financial statements contained
in Item 8 of this Form 10-K, which Note is incorporated herein by reference.

INDUSTRY OVERVIEW

General

         Workers' compensation is a state-mandated, comprehensive insurance
program that requires employers to fund medical expenses, lost wages and other
costs resulting from work-related injuries and illnesses. Since their
introduction in the early 1900s, these programs have been expanded to all fifty
states and the District of Columbia. In addition, federal statutes provide
workers' compensation benefits for federal employees. Each state is responsible
for implementing and regulating its own program. Consequently, workers'
compensation benefits and arrangements vary on a state-by-state basis and are
often highly complex.

         Workers' compensation legislation generally requires employers,
directly or indirectly through an insurance vehicle, to fund all of an
employee's costs of medical treatment and a significant portion of lost wages,
legal fees and other associated costs, with no co-payment or deductible due from
the injured worker. Typically, work-related injuries are broadly defined, and
injured or ill employees are entitled to extensive benefits. Employers are
required directly or indirectly to provide first-dollar coverage with no
co-payment or deductible due from the injured or ill employee for medical
treatment and, in many states, there is no lifetime limit on expenses. However,
in exchange for providing this coverage for employees, employers are not subject
to litigation by employees for benefits in excess of those provided pursuant to
the relevant state statute. In most states, the extensive benefits coverage (for
both medical costs and lost wages) is provided through the purchase of
commercial insurance from private insurance companies, participation in
state-run insurance funds, or employer self-insurance.

         Provider reimbursement methods vary on a state-by-state basis. A
majority of states have adopted fee schedules pursuant to which all health care
providers are uniformly reimbursed. The fee schedules are set by each state and
generally prescribe the maximum amounts that may be reimbursed for a designated
procedure. In states without fee schedules, health care providers are reimbursed
based on usual, customary and reasonable fees charged in the particular state in
which the services are provided.

Ohio's Workers' Compensation System

         Ohio's workers' compensation system is a no-fault state insurance
program whereby injured workers are provided with medical and disability
benefits. Ohio law requires all employers, with certain exceptions, to provide
their employees with workers' compensation coverage. Ohio's system is
administered by the Ohio Bureau of Workers' Compensation ("OBWC"), which is
responsible for


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managing the state insurance fund, determining premium rates and manual
classifications, collecting premiums from employers, and paying benefits to or
on behalf of injured workers. In determining the premium rates, OBWC first
classifies occupations or industries with respect to their degree of hazard and
then determines the risk of the different classes. The workers' compensation
program is funded by premiums paid by employers into the state insurance fund,
which premiums are based upon the classification of an employer's employees and
such employer's specific risk experience. If certain conditions are satisfied,
similar types of employers may participate in plans that group, for rating
purposes, such employers in pools that spread each employer's risk among all of
the employers participating in that group. Under these "group rating plans," the
premium rates are based upon the risk experience of the group and not the
individual employer participating in that group. Employers which generally have
500 or more employees in Ohio and have sufficient financial capabilities may be
granted status by OBWC as a self-insuring employer, which means that such
employers are not required to pay premiums into the state insurance fund, but
instead pay the same compensation, medical, and disability benefits as required
by the Ohio workers' compensation program directly to or for the benefit of
their injured workers.

         In March 1997, OBWC implemented a managed care system for workers'
compensation claims known as the Health Partnership Program (the "HPP"). This
program applies to all Ohio employers other than self-insured employers. OBWC
has also implemented a similar program for self-insured employers known as the
Qualified Health Plan.

         Under the HPP, participating employers are required to select an
OBWC-certified MCO, or have such an MCO assigned to them by OBWC, to medically
manage their workers' compensation claims. The MCO is primarily responsible to
provide medical management and cost containment services for employers with
respect to their workers' compensation claims. In order to receive OBWC
certification, an MCO is required to have, among other things, a network of
healthcare providers, a quality assurance program, and certain information
system capabilities. The MCO provides, among other things, utilization review
services, medical case management services, dispute resolution, rehabilitation,
peer review, and quality assurance programs with respect to workers'
compensation claims.

Ohio's Unemployment Compensation System

         Ohio's unemployment compensation system provides compensation benefits
to workers who are laid off or involuntarily separated from employment without
just cause. This system is administered by the Ohio Bureau of Employment
Services ("OBES"), which is responsible for managing the unemployment
compensation fund, determining contribution rates, collecting contributions from
employers, maintaining each employer's account, determining eligibility for
benefits, and paying benefits to eligible unemployed workers. Contribution rates
are determined each year by the OBES and then assigned to the individual
employers. Employers are assigned the standard contribution rate (an amount
equal to a specified percentage of wages as determined by the OBES) or the
average contribution rate for its industry, whichever is greater, until they
become eligible for an experience rate. Thereafter, the annual contribution rate
is based upon the specific experience of each employer. The unemployment
compensation program is funded by contributions paid by employers into the
unemployment compensation fund.

BUSINESS

         The Company offers services in two general categories, third party
administration of workers' and unemployment compensation claims, or TPA
services, and medical management of workers' compensation claims, or MCO
services.


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<PAGE>   5

TPA Services

         The Company provides claims management, risk management, and medical
cost containment services to employers with respect to workers' compensation
claims and, to a lesser extent, unemployment compensation claims. The Company's
TPA services for workers' compensation claims include the review and processing
of an employer's workers' compensation claims, the design of individual programs
to improve an employer's experience ratings, representation of employers before
the Ohio Industrial Commission and OBWC, the performance of risk analysis for an
employer's experience rating, the review of premium audits on behalf of
employers, and analysis of employers for inclusion in group rating plans. The
Company also acts as a TPA of workers' compensation claims for self-insured
employers. Each employer selects the types of services it desires and then
enters into a contract with the Company to provide such services. These
contracts are generally for a one-year period.

         In the area of unemployment compensation, the Company's TPA services
are similar to its services in the area of workers' compensation. Such services
include the review and processing of an employer's unemployment compensation
claims and representation of employers before the OBES. Each employer selects
the types of services it desires and then enters into a contract with the
Company to provide such services. These contracts are generally for a one-year
period.

         The Company currently provides its TPA services to approximately 19,000
employers located throughout Ohio, as well as to a small number of employers
located in Washington and West Virginia. A substantial number of the Ohio
employers have entered into contracts with the Company because of their
participation in group rating plans, discussed above, sponsored by trade
associations of which such employers are members.

MCO Services

         The Company provides medical management services for workers'
compensation claims primarily to Ohio employers, as well as to a small number of
employers located in Kentucky and Indiana. The Company owns and operates two
state-wide certified MCOs under Ohio's Health Partnership Program. Together,
CompManagement Health Systems and Integrated Comp currently serve approximately
47,700 employers located throughout Ohio. As a state-wide certified MCO, the
Company provides medical management services for workers' compensation cases
resulting from injuries suffered by employees arising out of the course and
scope of their employment, as required by law. Because all workers' compensation
claims are reimbursed by OBWC, the Company does not assume any risk for the
payment of medical or disability benefits to employees with respect to their
claims.

         The services provided by the Company are offered pursuant to a contract
with OBWC. Under this contract, the Company is responsible to provide, among
other things, a state-wide health care provider network; treatment guidelines
and utilization review procedures; peer review and quality assurance programs;
provider sanction and termination procedures; medical and vocational case
management programs; utilization management programs; medical bill adjudication
and payment procedures; dispute resolution procedures; provider, employer, and
employee relations and education programs; and health care fraud detection and
reporting programs.

         Under its OBWC contract, the Company receives an administrative fee
equal to 4% of the annual workers' compensation premiums for employers assigned
to the Company's MCO. The administrative fee is paid monthly and is subject to
setoffs if the Company does not meet certain criteria with respect to first
report of injuries, bill submissions, or data accuracy or the Company makes a
misfiling of death claims. The Company is also eligible to earn an additional
quarterly incentive fee of up to 3% of the annual


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workers' compensation premiums for employers assigned to the Company's MCO based
upon its attainment of certain return to work measurements established in the
contract.

         The Company has a state-wide health care provider network consisting of
approximately 13,500 physicians, hospitals, and ancillary providers. This
network includes certain occupational health-based physician groups which serve
as its "anchor medical groups." The provider panel is credentialed using a
multi-faceted peer review committee. The Company has a provider services
department which recruits new providers for its state-wide network and offers
educational materials and training seminars.

Customers and Marketing

         The Company's customers principally consist of employers required to
participate in Ohio's insurance fund for workers' compensation claims and, to a
lesser extent, self-insured employers. The Company markets its TPA and MCO
services jointly through both its own sales force of three persons who directly
contact prospective and existing employer groups and its relationships with over
500 insurance agents and brokers. The Company maintains service center locations
in Akron, Cincinnati, Cleveland, and Toledo, Ohio, Seattle, Washington,
Charleston, West Virginia, Lexington, Kentucky, and Indianapolis, Indiana, in
addition to its Dublin, Ohio offices.

Competition

         The workers' compensation cost containment and medical management
industry is highly fragmented and competitive, and the intensity of competition
can be expected to increase. In Ohio, the market share in this industry is
concentrated among a few companies, including the Company. The Company's primary
competitors in Ohio are several TPAs and/or MCOs which offer one or more
services similar to those offered by the Company and numerous independent
companies, typically operated on a regional basis. Some of the Company's
competitors are significantly larger and have greater financial and marketing
resources than the Company. The principal competitive factors are the range of
services offered and responsiveness to customer needs. The Company competes on
the basis of its specialization in the workers' compensation area, breadth of
services, attention to customer service, and independence from insurance
carriers.

Government Regulation

         The Company's TPA business is generally not subject to specific
government regulation or oversight. However, its business is substantially
dependent on the operation of workers' and unemployment compensation systems in
Ohio and the other states in which it operates. The Company believes that its
TPA business is presently in compliance in all material respects with all laws,
regulations, and certification requirements applicable to it.

         The Company's MCOs are certified and regulated by OBWC under Ohio's
Health Partnership Program. The Company's MCOs are not, however, subject to
Ohio's laws governing health insuring corporations, since its MCOs are not
responsible for payment of health care claims or benefits, nor are they
otherwise responsible for risk-bearing activities commonly associated with
organizations licensed under Ohio's insurance laws.

         As participants in the HPP, the Company's MCOs are required to provide
medical management and cost containment services that promote the rendering of
high-quality, cost-effective medical care that focuses on minimizing the
physical, emotional, and financial impact of a work-related injury or illness
and promotes a safe return to work.


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<PAGE>   7

         In order to participate in the HPP, the Company's MCOs must each be
credentialed and certified by OBWC every two years. The certification standards
for an MCO desiring to contract with OBWC include, among other things,
disclosure of the MCO's organizational structure, management and employees,
historical operations, provider network, payment processes, geographic coverage
and provider directories. OBWC also requires an MCO to furnish information
regarding the MCO's satisfaction of OBWC's requirements for MCO policies and
procedures, treatment guidelines, utilization review and quality assurance,
provider profiling, grievance and dispute resolution, information systems, case
management records confidentiality/retention, provider relations, educational
activities, performance data, marketing and liability insurance. All of the
preceding activities of an MCO participating in the HPP are governed or impacted
by the regulations promulgated under the HPP enabling statute, found in Ohio's
Administrative Code. Upon satisfying the preceding certification criteria and
entering into a contract with OBWC, an MCO is certified to provide medical
management and cost containment services under the HPP.

         The Company is required to credential its HPP provider network based on
its geographic service area, using objective, non-discriminatory professional
criteria that ensures that the Company is able to provide medical services and
supplies for injured workers in its service area, as well as demonstrate that
the Company provides such persons access to specialized care. At a minimum, a
network provider must be duly licensed or qualified to render in Ohio the types
of services for which the provider is engaged by the Company.

         Upon the filing of a worker injury claim, the Company, in conjunction
with its participating providers and the employer, is required to manage the
medical or rehabilitative care for the injured employee to ensure a safe return
to work. Additionally, the Company is required to review all bills submitted by
its providers to determine that the bills are consistent with the Company's
utilization standards and certification requirements. The Company is required to
maintain a grievance hearing procedure allowing a provider, the employer or the
injured employee to dispute bill payment. The Company is required to pay its
providers the amount paid by OBWC to the Company for provider services submitted
in connection with the injured employee's claim.

         The Company is required to submit electronically to OBWC, on a timely
basis, all bills for payment. The Company is subject to OBWC's electronic
billing policies, formats and systems. Further, the Company must comply with
OBWC requirements for electronic data interchange ("EDI"). The Company is
responsible for submitting bills of its panel providers, as well as those of
OBWC-certified providers in its service area who are not panel members but for
which the Company has medical management responsibility, and bills for initial
or emergency treatment by a non-OBWC-certified provider of an injured employee
in its service area.

         OBWC is required to pay to the Company an administrative fee for its
medical management and administrative services, as well as an incentive payment,
provided that the Company meets the performance criteria required by OBWC. These
performance criteria are established in the MCO contract and primarily relate to
the attainment of certain claim management and return to work measurements. The
administrative and incentive payments to the Company are based on a percentage
of the total premium payments of employers managed by the MCO.

         The compensability and payment of claims submitted to OBWC in
connection with services provided by the Company's panel of providers is
determined solely by OBWC. OBWC claims management and dispute procedures are
governed by regulations promulgated under the HPP enabling statute. The Company
may continue management of a medical claim during adjudication of a disputed
claim. However, the Company will not receive payment from OBWC until the
disputed claim is


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adjudicated; and the Company must inform the injured employee that the claim is
disputed and continued treatment may be at the employee's expense.

         The Company is required to maintain records supporting claims submitted
to OBWC, its electronic billing, as well as any records necessary to perform its
medical management functions or to substantiate the delivery, value, necessity,
and appropriateness of goods and services provided to injured employees.
Additionally, the Company is required to comply with Ohio laws governing
confidentiality of patient/employee records and information, subject to the
exceptions contained in such laws. Failure to create, maintain and retain
adequate records constitutes cause for denial of payment of administrative and
incentive fees from OBWC and/or de-certification by OBWC.

         The Company believes that its MCOs are presently in compliance in all
material respects with all laws, regulations, and certification requirements
applicable to them.


EMPLOYEES

         As of March 1, 2000, the Company had approximately 611 employees, of
which 215 were employed in connection with its TPA operations and 396 were
employed in connection with its MCO operations. The Company's employees are not
represented by a union. The Company believes that its relationship with its
employees is good.


ITEM 2.  PROPERTIES

         The Company leases a 70,000 square foot office building in Dublin,
Ohio, which is used as its principal office facilities. The lease for the
building is for a term of 15 years which began in 1997, provides for annual rent
payments, and requires the Company to pay all operating expenses for the
building. The lease also provides for, among other things, three renewal options
of five years each, an option to purchase the building, and a right of first
offer with respect to the sale of such building. The lease restricts
CompManagement's ability to distribute funds and/or assets to Health Power, Inc.
or another affiliate unless CompManagement meets certain tangible net worth
requirements. The Company also leases office space in Akron, Cincinnati,
Cleveland, and Toledo, Ohio; Seattle, Washington; Charleston, West Virginia;
Lexington, Kentucky; and Indianapolis, Indiana. These spaces are used as
regional offices and service centers for its operations.


ITEM 3.  LEGAL PROCEEDINGS

         On May 1, 1999, the certificate of authority of Health Power HMO was
revoked by ODI for failure to meet statutory financial requirements. Since that
time, and in accordance with the ODI revocation order, Health Power HMO has been
winding-up its business under the supervision of ODI, but without judicial
involvement. This windup is substantially complete, and Health Power HMO is in
the process of distributing all of its assets in payment of the claims of its
creditors. Health Power HMO anticipates that the distribution process will be
completed by the end of April 2000. Health Power HMO will not have sufficient
assets to pay the claims of all of its creditors.

         On July 7, 1998, Health Power HMO initiated a lawsuit against Central
Benefits Administrators, Inc. relating to a claims processing administrative
agreement between the parties. In February 2000, this lawsuit was settled by the
parties, and Health Power HMO received a payment of an immaterial amount in
settlement of the lawsuit.


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<PAGE>   9


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

         No matters were submitted to a vote of security holders during the
fourth quarter of Health Power, Inc.'s fiscal year ended December 31, 1999.



                                     PART II

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

         Health Power, Inc.'s Common Stock is traded under the symbol HPWR. The
Common Stock was traded on the Nasdaq National Market system until June 25,
1999. On that date, the Common Stock was delisted from the Nasdaq National
Market system and began trading on the OTC Bulletin Board. The following table
sets forth the range of the reported high and low sales prices of the Common
Stock by calendar quarter for 1998 and 1999:

<TABLE>
<CAPTION>
                                                     High                               Low
                                                     ----                               ---

         For the quarter ended 1998:

<S>                                                  <C>                                <C>
                  March 31                           $ 7.13                             $ 4.00
                  June 30                            $ 6.75                             $ 4.13
                  September 30                       $ 6.00                             $ 2.50
                  December 31                        $ 3.75                             $ 2.06

         For the quarter ended 1999:

                  March 31                           $3.75                              $1.50
                  June 30                            $3.13                              $1.75
                  September 30                       $2.75                              $1.63
                  December 31                        $2.50                              $0.56
</TABLE>


         Health Power, Inc. has not paid any dividends on its Common Stock to
date, and it intends to retain its earnings to finance the development and
expansion of its business for the foreseeable future. CompManagement's lease for
its principal offices restricts it from distributing funds and/or assets to
Health Power, Inc. or another affiliate unless CompManagement meets certain
tangible net worth requirements. The Company's bank debt does not include
provisions restricting its ability to pay cash dividends. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

         As of March 17, 2000, there were 70 stockholders of record and
approximately 1,000 beneficial owners of Health Power, Inc.'s Common Stock.



                                       8
<PAGE>   10


ITEM 6.  SELECTED FINANCIAL DATA

         The following table sets forth selected consolidated financial data for
Health Power, Inc. and its subsidiaries as of and for each of the years in the
five-year period ended December 31, 1999. This selected consolidated financial
data should be read in conjunction with the consolidated financial statements
and related notes of Health Power, Inc. and subsidiaries and Management's
Discussion and Analysis of Financial Condition and Results of Operation
appearing under Items 8 and 7, respectively, of this Form 10-K. All periods in
this table reflect the operations of Health Power HMO reclassified as
discontinued operations. See Note 14 of the Notes to Consolidated Financial
Statements appearing in Item 8 of this Form 10-K. In addition, all periods in
this table have been restated to reflect the acquisition of CompManagement in
July 1995. This acquisition was accounted for as a pooling of interests.

<TABLE>
<CAPTION>
                                                                         YEARS ENDED DECEMBER 31,
                                                    ------------------------------------------------------------
                                                       1999        1998         1997         1996         1995
                                                    --------     --------     --------     --------     --------
                                                              (in thousands of dollars, except per share data)

<S>                                                    <C>          <C>          <C>          <C>          <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
    Contract                                        $ 38,262     $ 24,861     $ 22,183     $  6,672     $  5,571
Expenses:
   General and administrative                         35,042       21,271       16,559        6,339        5,072
                                                    --------     --------     --------     --------     --------

Income from operations                                 3,220        3,590        5,624          333          499

Interest (expense) income and other, net                (224)         444          532          247          450
                                                    --------     --------     --------     --------     --------

Income from continuing operations before income
   tax expense                                         2,996        4,034        6,156          580          949

Income tax expense (benefit)                          (1,539)       1,570        2,324          185          (75)
                                                    --------     --------     --------     --------     --------

Income from continuing operations                      4,535        2,464        3,832          395        1,024

Discontinued operations
   Loss from discontinued operations                    ----       (4,902)        (818)      (9,878)        (928)
      (net of tax benefits of $-0-,
      $1,030, $3,965, $1,958, and $61,
      respectively)
   Loss on disposal of discontinued operations;
      including $114 and $607 for operating
      losses during phase-out period in 1999
      and 1998 (net of tax (expense) of
      ($535) and $0, respectively)                      (650)      (1,614)        ----         ----         ----
                                                    --------     --------     --------     --------     --------

Net (loss) income                                   $  3,885     $ (4,052)    $  3,014     $ (9,483)    $     96
                                                    ========     ========     ========     ========     ========

EARNINGS PER SHARE (Basic and Diluted):
   Income from continuing operations                $   1.18     $    .64     $   1.00     $    .10     $    .27

   Loss from discontinued operations                   (0.17)       (1.70)        (.21)       (2.59)        (.24)
                                                    --------     --------     --------     --------     --------

   Net income (loss)                                $   1.01     $  (1.06)    $    .79     $  (2.49)    $    .03
                                                    ========     ========     ========     ========     ========

COMMON STOCK AND COMMON STOCK
   EQUIVALENTS OUTSTANDING
  Weighted average shares outstanding (basic)          3,846        3,829        3,818        3,810        3,810
  Weighted average shares outstanding (diluted)        3,846        3,834        3,833        3,810        3,819

BALANCE SHEET DATA:
Total assets                                        $ 31,578     $ 30,669     $ 22,349     $ 21,069     $ 25,723
Long-term obligations                               $  1,586     $  2,000     $   ----    $    ----   $     ----
Stockholders' equity                                $  7,036     $  3,106     $  7,565     $  4,519     $ 14,002
</TABLE>



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<PAGE>   11

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

GENERAL

         The Company is an independent provider of comprehensive cost
containment and medical management services designed to minimize the costs of
workers' and unemployment compensation benefits for employers.

         Through CompManagement and M&N Risk Management, the Company serves as a
TPA for workers' and unemployment compensation claims and provides claims
management, risk management, and medical cost containment services primarily to
Ohio employers, as well as to a small number of employers located in the states
of Washington and West Virginia. The Company is one of the largest workers'
compensation TPAs in Ohio, currently serving approximately 19,000 employers
located throughout Ohio. M&N Risk Management was acquired by Health Power, Inc.
in December 1998. This acquisition was accounted for under the purchase method
of accounting for business combinations.

           Through CompManagement Health Systems and its division, Integrated
Comp, the Company owns and operates two state-wide certified MCO under Ohio's
Health Partnership Program and provides medical management services for workers'
compensation claims. Together, CompManagement Health Systems and Integrated Comp
currently serve approximately 47,700 employers located in Ohio and a small
number of employers located in Kentucky and Indiana. Because all workers'
compensation claims are reimbursed by OBWC, the Company does not assume any risk
for the payment of medical or disability benefits to employees with respect to
workers' compensation claims. The Company has offered its MCO services since the
implementation of the Health Partnership Program in March 1997. The business of
Integrated Comp represents the MCO assets acquired on July 16, 1999, from Anthem
Managed Comp, an MCO division of a wholly owned subsidiary of Anthem Insurance
Companies, Inc. This acquisition was accounted for under the purchase method of
accounting for business combinations. As required by the purchase method of
accounting, the results of operations of Integrated Comp are not included in the
Company's results of operations prior to July 16, 1999.

         On December 29, 1998, the Board of Directors of Health Power, Inc.
formally approved a plan to discontinue the operations of Health Power HMO.
Accordingly, the operating results of Health Power HMO have been segregated from
continuing operations and are reported separately as discontinued operations.

         The Company has two reportable segments for its continuing operations,
TPA services and MCO services, which were determined based upon its method of
internal reporting. Each of these segments is managed separately. The Company
also has an other segment that derives its revenues from management fees and
interest income. See Note 12 of the Notes to Consolidated Financial Statements
appearing in Item 8 of this Form 10-K.

         The following discussion should be read in conjunction with the
consolidated financial statements, notes, and tables included in Item 8 of this
Form 10-K. Readers are cautioned that any forward-looking statements contained
in this Form 10-K or any other reports or documents prepared by Health Power,
Inc. involve risks and uncertainties and are subject to change based on various
factors. Certain of these factors are discussed in greater detail in various
parts of this Item 7.


                                       10
<PAGE>   12

RESULTS OF OPERATIONS

1999 Compared to 1998

         Revenues from continuing operations increased $13.4 million, or 54%, to
$38.3 million during 1999, from $24.9 million for 1998. Revenues from TPA
services increased by 65.8% from the prior year primarily as a result of the
acquisition of M&N Risk Management in December 1998. The acquisition increased
revenues by approximately $6.0 million. Revenues from MCO services increased by
42.8% from the prior year primarily as a result of the acquisition of the MCO
assets of Anthem Managed Comp in July 1999. The acquisition increased revenues
by approximately $5.7 million. In addition, revenues for 1998 were favorably
impacted by the inclusion of a one-time incentive payment of approximately $1.5
million from the Ohio Bureau of Workers' Compensation related to the acceptance
of workers' compensation claims with dates of injury that preceded the
commencement date of the Health Partnership Program.

         General and administrative ("G&A") expenses increased to $35.0 million,
or 91.6% of revenues, for 1999, as compared to $21.3 million, or 85.6% of
revenues, for 1998. G&A expenses increased in 1999 as a percentage of revenue
primarily as a result of one-time expenses relating to the acquisitions of M&N
Risk Management and Anthem Managed Comp. In addition, expenses as a percentage
of revenues increased in 1999 due to 1998 revenues including a one-time
incentive payment received for the acceptance of claims incurred prior to the
commencement date of the Health Partnership Program.

         Interest (expense) income and other decreased $668,000 to a net
interest expense of $224,000 in 1999 from a net interest income of $444,000 in
1998. The decrease was primarily due to investable cash being used to acquire
M&N Risk Management and Anthem Managed Comp. In addition, the Company incurred
interest expense due to borrowings associated with these acquisitions.

         The Company recognized an income tax benefit of $1.5 million in 1999
compared to an income tax expense of $1.6 million in 1998. The tax benefit was
related to the recognition of certain tax assets which were not recognizable in
prior years, but, due to the Company's profitability, became recognizable in
1999. Without recognition of the tax benefit, the Company would have incurred a
tax expense in 1999 of $1.2 million for an effective tax rate of 42.5%.

         As a result of the foregoing, income from continuing operations was
$4.5 million, or basic and diluted earnings per share of $1.18, for 1999, as
compared to income from continuing operations of $2.5 million, or basic and
diluted earnings per share of $0.64, for 1998.

         The net loss from discontinued operations was $650,000, or basic and
diluted earnings per share of $(0.17), for 1999, as compared to a net loss from
discontinued operations of $6.5 million, or basic and diluted earnings per share
of $(1.70), for 1998. The loss was related primarily to an increase in the
reserve for anticipated costs in completing the liquidation of the discontinued
operations.

         The Company earned net income of $3.9 million, or basic and diluted
earnings per share of $1.01, for 1999, as compared to a net loss of $4.1
million, or basic and diluted earnings per share of $(1.06), for 1998.

1998 Compared to 1997

         Revenues from continuing operations increased $2.7 million, or 12.1%,
to $24.9 million during 1998, from $22.2 million for 1997, primarily as a result
of a 15% increase in revenues from MCO services. This increase was primarily the
result of the Company's MCO subsidiary being operational for


                                       11
<PAGE>   13

all of 1998 as compared to ten months in 1997. Revenues from TPA services
increased by 9% from the prior year primarily as a result of an increase in the
number of employers participating in the Company's group rating plans. Revenues
from MCO services included one-time incentive payments of approximately $4.0
million related to the acceptance of workers' compensation claims with dates of
injury which preceded the commencement date of the Health Partnership Program.
The acceptance of these claims, known as beta and gamma claims, occurred during
the fourth quarter of 1997. The Company recognized approximately $2.5 million of
these one-time incentive payments in 1997 and $1.5 million in 1998.

         G&A expenses increased to $21.3 million, or 85.6% of revenues, for
1998, as compared to $16.6, or 74.6% of revenues, for 1997. G&A expenses
increased in 1998 as a percentage of revenues primarily due to 1997 revenues
including significant one-time incentive payments related to the acceptance of
beta and gamma claims in 1998 and the decrease in the amount of the 1998
incentive fees.

         Interest income and other decreased $88,000 to $444,000 for 1998, from
$532,000 for 1997. This decrease resulted primarily from a decrease in other
income related to the discontinuance of a private label managed care product
managed by Health Power Management Corporation.

         Income tax expense was $1.6 million in 1998, or an effective tax rate
of 39%, as compared to $2.3 million in 1997, or an effective tax rate of 38%.

         As a result of the foregoing, income from continuing operations was
$2.5 million, or basic and diluted earnings per share of $0.64, for 1998, as
compared to income from continuing operations of $3.8 million, or basic and
diluted earnings per share of $1.00, for 1997.

         The net loss from discontinued operations was $6.5 million, or basic
and diluted earnings per share of $(1.70), for 1998, as compared to a net loss
from discontinued operations of $0.8 million, or basic and diluted earnings per
share of $(0.21), for 1997. The 1998 results included a $4.9 million loss from
discontinued operations, net of taxes, which included a charge for a valuation
allowance on deferred federal income tax assets of $2.8 million, along with a
$1.6 million loss on disposal of discontinued operations, net of taxes.

         The Company incurred a net loss of $4.1 million, or basic and diluted
earnings per share of $(1.06), for 1998, as compared to net income of $3.0
million, or basic and diluted earnings per share of $0.79, for 1997.

LIQUIDITY AND CAPITAL RESOURCES

         CONTINUING OPERATIONS

         The Company finances its continuing operations through internally
generated funds, and its principal sources of cash for continuing operations are
revenues from TPA and MCO services. The Company's principal capital needs for
continuing operation are to fund expenditures for continued growth and for
possible acquisitions.

         A working capital deficit of $2.1 million from continuing operations
existed at December 31, 1999, as compared to a working capital deficit of $1.0
million from continuing operations at December 31, 1998. The Company originally
incurred a $3.0 million demand loan from its bank and a $2.5 million promissory
payable to the seller for the acquisition of M&N Risk Management in December
1998. As of December 31, 1999, the Company had used cash generated from
continuing operations to pay down $1.5 million of the bank debt plus all of the
seller's promissory note (after adjustments for amounts guaranteed


                                       12
<PAGE>   14

by the seller). The Company also has short term debt of $1.2 million payable to
the seller for acquisition of Anthem Managed Comp. The foregoing events were the
primary cause of the working capital deficit. The Company believes that the cash
generated by continuing operations will be sufficient to cure the working
capital deficit during 2000. However, there can be no assurance that cash
generated from continuing operations will be sufficient to cure the working
capital deficit. The Company intends to payoff the remaining balance of the bank
demand note by the end of the third quarter 2000. The Company believes that cash
generated from operations will be sufficient to pay this entire amount, but
there can be no assurance that it will or that the bank will not make a demand
for payment prior to the end of the third quarter. While the Company believes
the bank will not make such a demand, if it does, such a demand could have an
adverse effect on the Company's financial condition.

         At December 31, 1999, cash and cash equivalents from continuing
operations were $6.8 million, a decrease of $2.4 million from $9.2 million at
December 31, 1998. The decrease in cash and cash equivalents was primarily
related to the retirement of the debt associated with the M&N Risk Management
acquisition and the initial payment made for the acquisition of Anthem Managed
Comp.

         As previously described, CompManagement Health Systems acquired all of
the MCO assets of Anthem Managed Comp in July 1999. The purchase price for this
acquisition, after an adjustment based on the results of the open enrollment
caused by the transaction, was $4.6 million. The Company paid $1.6 million of
the purchase price at the closing, and the balance of the purchase price was
financed by the seller and payable, including principal and interest, as
follows: $249,000 on February 1, 2000; $1.0 million on July 16, 2000; $561,000
due on February 1, 2001, 2002, 2003 and 2004; and $124,000 on July 1, 2004.
These amounts due are offset by amounts paid to the seller under a network
access fee agreement. The amounts due the seller are not secured by any assets
of the Company.

         CompManagement leases a 70,000 square foot building in Dublin, Ohio.
The lease restricts CompManagement's ability to distribute funds and/or assets
to Health Power, Inc. or another affiliate unless CompManagement meets certain
tangible net worth requirements.

         The Company believes that cash generated from continuing operations
will be sufficient to fund its anticipated cash needs for working capital and
expenditures for continuing operations for the next 12 months, including working
capital requirements caused by the bank making demand for payment of the $1.5
million balance on the demand loan. As discussed above, the Company had a
working capital deficit from continuing operations of $2.1 million as of
December 31, 1999.

         DISCONTINUED OPERATIONS

         As previously described, on May 1, 1999, the certificate of authority
of Health Power HMO was revoked by ODI for failure to meet statutory financial
requirements. Since that time, and in accordance with the ODI revocation order,
Health Power HMO has been winding-up its business under the supervision of ODI,
but without judicial involvement. This windup is substantially complete, and
Health Power HMO is in the process of distributing all of its assets in payment
of the claims of its creditors. Health Power HMO anticipates that this
distribution process will be completed by the end of April 2000. Health Power
HMO will not have sufficient assets to pay the claims of all of its creditors.
Health Power, Inc. believes that neither it nor any of its other subsidiaries
are liable for any claims against Health Power HMO. Furthermore, Health Power,
Inc. does not intend to fund, or cause any other subsidiary to fund, any
deficits of Health Power HMO.




                                       13
<PAGE>   15


YEAR 2000 MATTERS

         In prior years, the Company discussed the nature and progress of its
plans to become Year 2000 compliant. In the latter part of 1999, the Company
completed its remediation and testing of systems. As a result of those planning
and implementation efforts, the Company experienced no significant disruptions
in its information and non-information technology systems and believes those
systems successfully responded to the Year 2000 date change. The Company is not
aware of any material problems resulting from Year 2000 issues, either with its
internal systems or those of its third party vendors. The Company will continue
to monitor its computer applications throughout the current year to ensure that
any latent Year 2000 matters that may arise are addressed promptly. The Company
expensed less than $100,000 during 1999 in connection with its Year 2000
compliance efforts.

INFLATION

         The Company's operations are not significantly affected by inflationary
pressures. Although inflation does affect salaries, employee benefits, and other
operating expenses, after considering general inflationary trends, total
revenues of the Company produced growth in real terms in 1999 and 1998. Revenues
increased largely due to increased TPA and MCO services rather than increases in
inflation.

FORWARD LOOKING STATEMENTS; CERTAIN FACTORS AFFECTING FUTURE RESULTS

         Statements contained in this Form 10-K or any other reports or
documents prepared by Health Power, Inc. or made by management of Health Power,
Inc. may be "forward-looking" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are subject to
certain risks and uncertainties that could cause Health Power, Inc.'s operating
results to differ materially from those projected. The following factors, among
others, in some cases have affected and in the future could affect Health Power,
Inc.'s actual financial performance.

POTENTIAL LEGAL ACTIONS RELATED TO HEALTH POWER HMO AND ITS DISCONTINUED
OPERATIONS

        On May 1, 1999, the certificate of authority of Health Power HMO was
revoked by ODI for failure to meet statutory financial requirements. Since that
time, and in accordance with the ODI revocation order, Health Power HMO has been
winding-up its business under the supervision of ODI, but without judicial
involvement. This windup is substantially complete, and Health Power HMO is in
the process of distributing all of its assets in payment of the claims of its
creditors. However, Health Power HMO will not have sufficient assets to pay the
claims of all of its creditors. Health Power, Inc. believes that neither it nor
any of its other subsidiaries are liable for any claims against Health Power
HMO. Furthermore, Health Power, Inc. does not intend to fund, or cause any other
subsidiary to fund, any deficits of Health Power HMO. However, there can be no
assurance that creditors of Health Power HMO will not initiate legal actions
against Health Power, Inc. or any of its other subsidiaries seeking satisfaction
of their unpaid claims against Health Power HMO. The legal fees and other costs
of defending such legal actions could be significant. Furthermore, due to the
fact-intensive nature of these actions and the unpredictability of courts in
this area of the law, there can be no assurance that Health Power, Inc. or its
other subsidiaries will be successful in defending any such legal actions. Any
such legal actions having an unfavorable outcome to Health Power, Inc. or any of
its other subsidiaries could have a material adverse affect on their financial
condition and results of operations.




                                       14
<PAGE>   16


DEPENDENCE UPON HEALTH PARTNERSHIP PROGRAM

         Each of the Company's MCOs has a contract with OBWC enabling that MCO
to participate in Ohio's Health Partnership Program. These contracts are each
for a two-year term expiring on December 31, 2000. There can be no assurance
that OBWC will renew either or both of these contracts when they expire. In
addition, there can be no assurance that OBWC will not modify these contracts in
the future in a manner unfavorable to the Company. Furthermore, OBWC may at any
time initiate proceedings to decertify one of the Company's MCOs if that MCO
fails to substantially perform its duties under its respective contract, and if
such decertification occurs, the effected contract will automatically terminate.
Finally, approximately 43% of the fees payable under these contracts are subject
to the attainment of certain return to work measurements established in the
contracts. There can be no assurance that the Company will be able to meet any
or a significant portion of these performance measurements. These contracts
account for all of the revenues associated with MCO services, which revenues
were $18.5 million and $13.0 million in 1999 and 1998, respectively. For 1999
and 1998, the Company's MCO revenues represented approximately 48% and 52%,
respectively, of the Company's consolidated revenues. The loss or unfavorable
modification of these contracts or the failure to significantly satisfy the
performance measurements under these contracts would have a material adverse
effect on the Company's business, financial condition, and results of
operations.

DEPENDENCE UPON GROUP RATING PROGRAM; GOVERNMENT REGULATION

         The Company is significantly dependent upon plans or programs
administered by governmental agencies pursuant to state statutes and
regulations. In particular, the Company is significantly dependent on Ohio's
group rating program and, as described above, Ohio's Health Partnership Program.
The Company provides TPA services for group rating plans for approximately 100
trade associations, which include approximately 17,920 employers. Each
association and employer administrative agreement is typically for a one-year
service period. The Company's MCOs are subject to extensive regulation by OBWC
relating to their operations. Any changes to Ohio's statutes or regulations
applicable to group rating plans or the Health Partnership Program, or
interpretations of these statutes and regulations by OBWC, could have a material
adverse effect upon the revenues and operations of the Company. The Company
believes that its continuing operations are presently in compliance, in all
material respects, with all laws, regulations and certification requirements
applicable to such operations. However, there can be no assurance that the
Company will be able to continue to maintain required regulatory authority or
that regulatory changes will not have an adverse impact on the Company in the
future.

RISKS ASSOCIATED WITH ACQUISITIONS

         During the past year the Company has invested, and may continue to
invest, a substantial amount of capital for acquisitions. Acquisitions involve
numerous risks, including the failure to retain key employees and contracts and
the inability to integrate businesses without material disruption. In addition,
some competitors of the Company have similar acquisition strategies. There can
be no assurance that any future acquisitions will be successfully integrated
into the Company's operations, that competition for acquisitions will not
intensify, or that the Company will be able to complete such acquisitions on
acceptable terms and conditions. In addition, the costs of unsuccessful
acquisition efforts may adversely affect the Company's results of operations.

COMPETITION

         The workers' compensation cost containment and medical management
industry is highly fragmented and competitive, and the intensity of competition
can be expected to increase. In Ohio, the market share in this industry is
concentrated among a few companies, including the Company. The


                                       15
<PAGE>   17

Company's primary competitors in Ohio are several TPAs and/or MCOs which offer
one or more services similar to those offered by the Company and numerous
independent companies, typically operated on a regional basis. Some of the
Company's competitors are significantly larger and have greater financial and
marketing resources than the Company. Although the Company believes its
specialization in the workers' compensation area, breadth of services, attention
to customer service, and independence from insurance carriers will enable it to
compete successfully, there can be no assurance that the Company will be able to
compete effectively against existing competitors or that additional competitors
will not enter the Company's areas of operations in the future.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The following discussion about the Company's risk-management activities
includes "forward-looking statements" that involve risk and uncertainties.
Actual results could differ materially from those projected in the
forward-looking statements.

         The Company's primary market risk exposure is to changes in the level
or volatility of interest rates primarily due to its borrowing activities. The
Company's interest rate risk arises primarily due to a variable rate demand note
owed to a bank. The Company currently has fixed rate financial instruments
entered into in connection with certain acquisitions. The Company does not
expect changes in interest rates to have a material impact on projected cash
flows of the Company.

         The Company does not enter into financial instruments for trading or
speculative purposes, nor does it own any derivative financial instruments. The
Company has no exposure to foreign currency exchange rate risk. The Company does
not maintain a trading portfolio.

         The Company does not anticipate significant changes in the Company's
primary market risk exposures or in how these exposures are managed in future
reporting periods based upon what is known or expected to be in effect in future
reporting periods.

Interest Rate Risk Management

This table presents descriptions of the financial instruments that are held by
the Company at December 31, 1999, and which are sensitive to changes in interest
rates. The Company does not use derivative financial instruments to manage
interest rate risk and does not enter into derivative financial instrument
transactions for speculative purposes.

The table presents principal calendar year cash flows that exist by maturity
date and the related average interest rate. The variable rates are estimated
based on the prime rate.

All amounts are reflected in U.S. Dollars (thousands).

<TABLE>
<CAPTION>
                                                                                                                           FAIR
                              2000          2001        2002       2003          2004         2005          TOTAL          VALUE
<S>                        <C>            <C>         <C>         <C>          <C>          <C>           <C>             <C>
Long Term Debt
  Variable rate            $1,500,000                                                                     $1,500,000      $1,500,000
  Average interest rate          8.75%                                                                          8.75%

  Fixed rate               $1,165,000     $500,000    $463,000    $429,000     $397,000     $84,000       $3,038,000       3,002,000
  Average interest rate          8.00%        8.00%       8.00%       8.00%        8.00%       8.00%            8.00%
</TABLE>
                                       16
<PAGE>   18


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


HEALTH POWER, INC.
AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEARS ENDED
DECEMBER 31, 1999, 1998 AND 1997
AND SUPPLEMENTAL FINANCIAL
INFORMATION FOR THE YEAR ENDED
DECEMBER 31, 1999




























                                       17
<PAGE>   19

                        REPORT OF INDEPENDENT ACCOUNTANTS



Board of Directors and Shareholders
Health Power, Inc.
Columbus, Ohio


In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of stockholders' equity and of cash flows
present fairly, in all material respects, the financial position of Health
Power, Inc. and its subsidiaries at December 31, 1999 and 1998, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1999 in conformity with accounting principles
generally accepted in the United States. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.




March 8, 2000

                                              /s/ PricewaterhouseCoopers LLP
                                              ------------------------------
<PAGE>   20






HEALTH POWER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                1999                1998
                                                             -----------        -----------
<S>                                                         <C>                <C>
                             ASSETS

Current assets:
    Cash and cash equivalents                                $ 6,815,578        $ 9,202,654
    Accounts receivable, net                                   4,094,365          5,671,074
    Prepaid expenses and other                                   332,988            239,900
    Current assets of discontinued operations                  4,273,765          5,566,639
    Deferred income taxes                                      2,107,984             80,669
                                                             -----------        -----------

        Total current assets                                  17,624,680         20,760,936
                                                             -----------        -----------

Property and equipment:
    Leasehold improvements                                       198,810            188,068
    Furniture, equipment and software                          5,886,343          3,974,319
                                                             -----------        -----------

                                                               6,085,153          4,162,387

      Less accumulated depreciation                            2,195,916          1,230,973
                                                             -----------        -----------

                                                               3,889,237          2,931,414
                                                             -----------        -----------

Goodwill (net of accumulated amortization of $392,560
    and $0 for 1999 and 1998, respectively)                    9,510,984          5,526,736
Noncurrent assets of discontinued operations                           -          1,403,344
Deposits and other assets                                        553,371             46,905
                                                             -----------        -----------

        Total assets                                         $31,578,272        $30,669,335
                                                             ===========        ===========
</TABLE>

CONTINUED
                                      - 2 -







<PAGE>   21

HEALTH POWER, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                       1999                 1998
                                                                   ------------         ------------
<S>                                                               <C>                  <C>
                  LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Deferred revenues                                               $10,527,550          $ 8,378,113
    Accounts payable                                                  1,023,945            1,323,684
    Taxes payable                                                       215,215            2,788,701
    Current liabilities of discontinued operations                    6,734,980            9,163,635
    Accrued expenses and other current liabilities                      965,476              160,442
    Current portion of capital lease obligations                         99,133                   --
    Current portion of notes payable                                  2,665,403            3,526,736
                                                                    -----------          -----------

        Total current liabilities                                    22,231,702           25,341,311
                                                                    -----------          -----------

Notes payable                                                         1,873,443            2,000,000
Capital lease obligations                                               213,017                   --
Deferred income taxes                                                   224,131              222,481
                                                                    -----------          -----------

        Total liabilities                                            24,542,293           27,563,792
                                                                    -----------          -----------

Commitments and contingencies

Stockholders' equity:
    Preferred stock, par value of $.01 per share, 5,000,000
      shares authorized; none issued                                         --                   --
    Common stock, par value of $.01 per share, 10,000,000
      shares authorized; 3,853,719 and 3,834,829 shares
      issued and outstanding, respectively                               38,537               38,348
    Additional paid-in capital                                       10,854,153           10,809,475
    Accumulated deficit                                              (3,856,711)          (7,742,280)
                                                                    -----------          -----------

        Total stockholders' equity                                    7,035,979            3,105,543
                                                                    -----------          -----------

        Total liabilities and stockholders' equity                  $31,578,272          $30,669,335
                                                                    ===========          ===========
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                      - 3 -


<PAGE>   22

HEALTH POWER, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                 1999                 1998                 1997
                                                             ------------         ------------         ------------
<S>                                                         <C>                  <C>                  <C>
Contract revenues                                             $38,262,363          $24,861,454          $22,182,644
                                                              -----------          -----------          -----------

General and administrative expenses                            35,042,691           21,271,804           16,558,530
                                                              -----------          -----------          -----------

     Income from operations                                     3,219,672            3,589,650            5,624,114

Interest (expense) income and other, net                         (223,527)             444,290              531,919
                                                              -----------          -----------          -----------

     Income from continuing operations
       before income taxes                                      2,996,145            4,033,940            6,156,033

Federal, state and local income tax benefit (expense)           1,539,329           (1,570,204)          (2,324,163)
                                                              -----------          -----------          -----------

Income from continuing operations                               4,535,474            2,463,736            3,831,870

Discontinued operations
   Loss from discontinued operations (net of
     tax (expense) benefits of $0, $(1,030,443), and
     $3,965,073, respectively)                                         --           (4,902,232)            (818,082)
   Loss on disposal of discontinued operations;
     including $114,591 and $607,000 for operating losses
     during phase-out period in 1999 and 1998 (net of tax
     (expense) of ($535,314) and $0, respectively)               (649,905)          (1,613,493)                  --
                                                              -----------          -----------          -----------

         Net income (loss)                                    $ 3,885,569          $(4,051,989)         $ 3,013,788
                                                              ===========          ===========          ===========

Earnings per share (basic and diluted):
   Income from continuing operations, per share               $      1.18          $       .64          $      1.00
   Loss from discontinued operations, per share                      (.17)               (1.70)                (.21)
                                                              -----------          -----------          -----------

Net income (loss) per share                                   $      1.01          $     (1.06)         $       .79
                                                              ===========          ===========          ===========
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                      - 4 -



<PAGE>   23

HEALTH POWER, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                  COMMON STOCK              ADDITIONAL                               TOTAL
                                            ------------------------         PAID-IN           ACCUMULATED        STOCKHOLDERS'
                                             SHARES          AMOUNT           CAPITAL            DEFICIT             EQUITY
                                            ---------        -------        -----------        -----------         -----------
<S>                                        <C>              <C>            <C>                <C>                 <C>
Balance at December 31, 1996                3,810,331        $38,104        $10,711,292        $(6,230,815)        $ 4,518,581

    Issuance of common stock--
      director stock award plan                10,167            101             32,351                 --              32,452

    Net income                                     --             --                 --          3,013,788           3,013,788
                                            ---------        -------        -----------        -----------         -----------

Balance at December 31, 1997                3,820,498         38,205         10,743,643         (3,217,027)          7,564,821

    Issuance of common stock--
      director stock award plan
      and exercise of stock options            14,331            143             65,832                 --              65,975

    Excess of liabilities assumed in
      acquisition                                  --             --                 --           (473,264)           (473,264)

    Net loss                                       --             --                 --         (4,051,989)         (4,051,989)
                                            ---------        -------        -----------        -----------         -----------

Balance at December 31, 1998                3,834,829         38,348         10,809,475         (7,742,280)          3,105,543

    Issuance of common stock--
      director stock award plan                18,890            189             44,678                 --              44,867

    Net income                                     --             --                 --          3,885,569           3,885,569
                                            ---------        -------        -----------        -----------         -----------

Balance at December 31, 1999                3,853,719        $38,537        $10,854,153        $(3,856,711)        $ 7,035,979
                                            =========        =======        ===========        ===========         ===========
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                      - 5 -



<PAGE>   24

HEALTH POWER, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                 1999                 1998                 1997
                                                                             ------------         ------------         ------------
<S>                                                                         <C>                  <C>                  <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
    Net income from continuing operations                                    $  4,535,474         $  2,463,736         $  3,831,870
    Adjustments to reconcile net income to net cash
      provided by operating activities of
      continuing operations:
        Depreciation and amortization                                           1,357,504              431,031              228,952
        (Increase) decrease in deferred income taxes                           (2,025,665)              49,479               45,400
        Issuance of common stock for director stock award plan                     44,867               65,975               32,452
        Changes in current assets and current liabilities
           of continuing operations:
             Accounts receivable                                                  558,326            1,580,777           (3,152,377)
             Prepaid expenses and other                                           (99,554)             181,143             (193,611)
             Deferred revenues                                                  2,149,437            4,715,345             (530,138)
             Accounts payable                                                    (527,701)            (481,731)             435,315
             Taxes payable                                                     (2,573,486)            (648,983)           2,009,209
             Accrued expenses and other liabilities                               805,034              (99,683)              95,578
                                                                             ------------         ------------         ------------
               Cash provided by continuing operating activities                 4,224,236            8,257,089            2,802,650
               Cash provided by (used in) discontinued operations                  62,530           (4,954,610)          (6,515,633)
                                                                             ------------         ------------         ------------
                  Net cash provided by (used in) operating activities           4,286,786            3,302,479           (3,712,983)
                                                                             ------------         ------------         ------------

CASH FLOWS USED IN INVESTING ACTIVITIES:
    Purchase of property and equipment, net                                    (1,061,704)            (869,173)          (1,230,105)
    Acquisition of businesses, net of cash acquired                            (1,610,576)          (2,647,087)                  --
    Deposits and other assets                                                    (500,000)             495,379             (497,658)
                                                                             ------------         ------------         ------------
      Cash used in continuing operations                                       (3,172,280)          (3,020,881)          (1,727,763)
      Cash provided by (used in) discontinued operations                        1,102,591                5,088              (60,411)
                                                                             ------------         ------------         ------------
                  Net cash used in investing activities                        (2,069,689)          (3,015,793)          (1,788,174)
                                                                             ------------         ------------         ------------

CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
    Payment of notes payable                                                   (3,008,353)                  --                   --
    Payment of capital lease obligations                                          (48,335)                  --                   --
    Proceeds from note payable                                                         --            3,000,000                   --
    Restricted cash                                                            (4,058,980)                  --                   --
                                                                             ------------         ------------         ------------
                  Net cash (used in) provided by financing activities          (7,115,668)           3,000,000                   --
                                                                             ------------         ------------         ------------

Net (decrease) increase in cash and cash equivalents                           (4,898,591)           3,286,686           (5,501,157)

Cash and cash equivalents, beginning of year                                   11,714,169            8,427,483           13,928,640
                                                                             ------------         ------------         ------------

Cash and cash equivalents, end of year                                       $  6,815,578         $ 11,714,169         $  8,427,483
                                                                             ============         ============         ============

           SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Income taxes paid                                                            $         --         $         --         $    309,838
                                                                             ============         ============         ============
Issuance of promissory notes for acquisitions                                $  3,038,846         $  2,526,736         $         --
                                                                             ============         ============         ============
Interest paid                                                                $    375,085         $         --         $         --
                                                                             ============         ============         ============
Capital lease obligations                                                    $    360,485         $         --         $         --
                                                                             ============         ============         ============
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                      - 6 -


<PAGE>   25

HEALTH POWER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------

1.       DESCRIPTION OF OPERATIONS

         Health Power, Inc. (the Company) is a Delaware holding company that
         provides full-service workers' and unemployment compensation consulting
         services through its CompManagement, Inc. (CompManagement) subsidiary
         to employers primarily located in the State of Ohio. Effective March 1,
         1997, CompManagement Health Systems, Inc., a subsidiary of
         CompManagement, began operations as a managed care organization (MCO)
         for the Ohio Bureau of Workers' Compensation (OBWC). Effective December
         31, 1998, CompManagement purchased M&N Risk Management, Inc. and M&N
         Enterprise, Inc., companies providing compensation consulting services.
         Effective July 16, 1999, CompManagement Health Systems, Inc. purchased
         the MCO assets of Anthem Managed Comp, a division of Anthem Insurance
         Company.

         The Company also operated Health Power HMO, Inc. (HPHMO), a health
         maintenance organization (HMO), in and around the Columbus, Cincinnati
         and Dayton, Ohio areas for Medicaid recipients primarily enrolled in
         the Ohio Works First/Healthy Start (OWF) programs, as well as for
         commercial members. HPHMO ceased business operations effective April
         30, 1999.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         The following is a summary of significant accounting policies followed
         in preparation of these consolidated financial statements:

         Basis of presentation. The accompanying consolidated financial
         statements are presented in accordance with generally accepted
         accounting principles (GAAP) and reflect the reclassification of the
         HMO segment as discontinued operations for all periods presented.
         Assets and liabilities of the discontinued operations are shown
         separate from the continuing operations in the consolidated balance
         sheet. The results of discontinued operations have been adjusted for
         the effect of the allocation of certain general corporate overhead
         costs associated with continuing operations. All intercompany balances
         and transactions have been eliminated in consolidation.

         Unless otherwise stated, the notes to the financial statements disclose
         information related to continuing operations. See note 14 for
         disclosure of discontinued operations and related notes.

         Cash and cash equivalents. For purposes of the consolidated statements
         of cash flows, the Company classifies investments with original
         maturities of three months or less as cash equivalents. Restricted cash
         balances of HPHMO of $4,058,980 at December 31, 1999 have been included
         in current assets of discontinued operation.

         Property and equipment. Property and equipment are stated at cost.
         Depreciation is computed using the straight-line method over the
         estimated useful lives of the assets as follows:


              Computer equipment                       3-5 years
              Furniture and fixtures                  5-10 years
              Office equipment                         5-7 years
              Leasehold improvements                 10-20 years




                                      - 7 -
<PAGE>   26

HEALTH POWER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------

         Expenditures for major betterments are capitalized, and expenditures
         for repairs and maintenance are charged to operations, as incurred.
         When property and equipment are retired or sold, the cost and related
         accumulated depreciation and amortization are removed from the
         accounts, with any gain or loss reflected in operations. Depreciation
         expense was $964,943, $431,031 and $228,952 for 1999, 1998 and 1997,
         respectively.

         Goodwill. The Company records goodwill for the excess of cost over fair
         value of net assets acquired. Goodwill is amortized on a straight-line
         basis over a twenty year period. Goodwill is evaluated periodically as
         events or circumstances indicate a possible inability to recover their
         carrying amount.

         Revenues. Contract revenues are derived from claims management,
         administrative, consulting services and managed care administration
         services which are recorded as earned based on the requirements and
         duration of the related contract. Revenue from the managed care
         administration services are recognized on a monthly basis based on the
         contracted administrative fee with the OBWC. In addition, contract
         revenue is recorded for certain incentive awards when the claims are
         processed to which the incentive is related and a bonus award is
         recorded in the year earned. Revenue on certain contracts has been
         deferred and is recognized in income on a pro rata basis over the
         related contract periods, which typically range between 3 and 12
         months. Commission expense associated with these contracts is also
         deferred and recognized as an expense on a pro rata basis over the
         related contract periods. For services related to group rating
         contracts, fees are paid to the group's sponsor and netted against
         contract revenues. Contract revenues received in advance are included
         in deferred revenues.

         Income taxes. Income taxes are accounted for on the liability method.
         Under this method, deferred income tax assets and liabilities are
         recognized for the tax consequences of differences between the
         financial statement carrying amounts and the tax bases of existing
         assets and liabilities by applying enacted statutory tax rates
         applicable to future years. The effect on deferred tax assets and
         liabilities of a change in tax rates is recognized as income or expense
         in the period that includes the enactment date.

         Stock-based compensation. The Company applies APB Opinion No. 25,
         Accounting for Stock Issued to Employees (APB No. 25), and related
         interpretations in accounting for its stock-based compensation plans in
         the accompanying financial statements. The Company applies the
         disclosure requirements of Statement of Financial Accounting Standards
         (SFAS) No. 123, Accounting for Stock-Based Compensation (see Note 10).

         The Company provides a director stock award plan to non-employee
         directors of Health Power, Inc., Health Power HMO, Inc. and
         CompManagement, Inc. Under this plan, the directors elect percentages
         of their directors' fees to be paid in cash or in stock of Health
         Power, Inc. Payment of the directors' fees is made subsequent to
         attendance of the respective meetings. Under this plan, the Company
         issued 18,890, 13,831, and 10,167 shares of common stock with a market
         value of $44,867, $65,975 and $32,452 for the years ended December 31,
         1999, 1998 and 1997, respectively. The Company records the expense in
         the year the stock is earned.

         Use of estimates. The preparation of financial statements in conformity
         with GAAP requires management to make estimates and assumptions that
         affect the reported amounts of assets and liabilities and disclosure of
         contingent assets and liabilities at the dates of the financial
         statements and the reported amounts of revenues and expenses during the
         reporting periods. Actual results could differ from those estimates.


                                      - 8 -


<PAGE>   27

HEALTH POWER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------

         Earnings per share. Basic earnings per share is computed based on the
         weighted average number of shares of common stock outstanding during
         the reporting period. Diluted earnings per share is computed based on
         the weighted average number of shares outstanding during the period
         adjusted for common stock equivalents that are dilutive during the
         period.

         Reclassifications. Certain 1998 and 1997 amounts have been reclassified
         to conform with the 1999 presentation.

3.       ACQUISITIONS

         On December 31, 1998, the Company's subsidiary CompManagement acquired
         M&N Risk Management, Inc. and M&N Enterprise, Inc. (collectively "M&N")
         in a transaction accounted for under the purchase method of accounting.
         CompManagement purchased 100% of the issued and outstanding shares of
         capital stock of M&N for a purchase price of $6,000,000 with the
         provision for adjustment based on the closing net equity of M&N.
         Funding for the acquisition was provided by a $3,000,000 demand note
         with a financial institution and $2,526,736 in a promissory note
         payable to the seller of M&N. At the time of acquisition, M&N had
         $5,451,165 in total assets and $5,924,429 in total liabilities, which
         have been included in the accompanying consolidated financial
         statements. At December 31, 1998, the Company recognized a reduction in
         the promissory note due the seller of M&N of $473,264 and a reduction
         in shareholder's equity for the net liabilities of M&N. The Company
         also recorded goodwill of $5,526,736 as a result of the application of
         purchase accounting.

         The purchase price of M&N was allocated as follows:

               Accounts receivable                             $ 3,635,212
               Deferred tax and other assets                     2,031,375
               Goodwill                                          5,624,392
               Accounts payable and accrued liabilties          (2,600,281)
               Deferred revenue                                 (3,163,962)
                                                               -----------

                   Total purchase price                        $ 5,526,736
                                                               ===========

         The agreement to acquire M&N included a guarantee of the
         collectablility of certain accounts receivable. During 1999,
         approximately $1,018,383 of accounts receivable were deemed
         uncollectible by the Company. Accordingly, the Company has recognized a
         reduction in accounts receivable purchased and a corresponding
         reduction in the note due to the seller.

         On July 16, 1999, CompManagement Health Systems completed the
         acquisition of the MCO assets of Anthem Managed Comp (AMC), a workers'
         compensation managed care organization operating as a division of a
         wholly-owned subsidiary of Anthem Insurance Companies, Inc. The
         acquired assets are operated as a division of CompManagement Health
         Systems under the name "Integrated Comp." The aggregate purchase price
         for the asset acquisition was $4,649,423. The Company paid
         approximately $1,610,000 of cash at closing and the remaining balance
         of $3,038,846 will be paid over a five-year period.

                                      - 9 -


<PAGE>   28



HEALTH POWER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------

         The acquisition has been accounted for under the purchase method. The
         purchase price has been allocated as follows:

               Property and equipment                           $  500,576
               Goodwill                                          4,279,152
               Accounts payable                                   (130,305)
                                                                ----------

                                                                $4,649,423
                                                                ==========

         The following summarizes the pro forma results of continuing operations
         for the years ended December 31, 1999 and 1998 as if M&N and AMC had
         been acquired at the beginning of each period presented (unaudited):

<TABLE>
<CAPTION>
                                                                          YEARS ENDED DECEMBER 31,
                                                                       ------------------------------
                                                                           1999              1998
                                                                       -----------        -----------

<S>                                                                   <C>                <C>
               Contract revenue                                        $46,530,280        $46,912,254

               Income from continuing operations                       $ 2,990,001        $   305,393

                   Income from continuing operations,
                     per share (basic and diluted)                     $       .78     $          .08
</TABLE>

         The pro forma information, as presented above, is not necessarily
         indicative of the results which would have been obtained had the
         transactions occurred at January 1, 1998, nor is it indicative of
         future results.


                                     - 10 -


<PAGE>   29



HEALTH POWER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------

4.       ACCOUNTS RECEIVABLE

         Accounts receivable consist of the following at December 31:

<TABLE>
<CAPTION>
                                                                  1999               1998
                                                               ----------         ----------
<S>                                                           <C>                <C>
               Contract receivables                            $4,352,273         $5,603,036
               Other                                              315,756            429,995
                                                               ----------         ----------

                                                                4,668,029          6,033,031

                    Less allowance for doubtful accounts         (573,664)          (361,957)
                                                               ----------         ----------

                                                               $4,094,365         $5,671,074
                                                               ==========         ==========
</TABLE>


         The Company maintains an allowance for doubtful accounts when the
         receivable is estimated to be uncollectible.

5.       NOTES PAYABLE

         Notes payable at December 31, 1999 and 1998 were as follows:


<TABLE>
<CAPTION>
                                                                                   1999               1998
                                                                               -----------         -----------
<S>                                                                           <C>                 <C>
               Note payable to a bank, with interest payable monthly
                   at the prime rate (8.75% and 7.75% at
                   December 31, 1999 and 1998, respectively), due
                   on demand                                                   $ 1,500,000         $ 3,000,000

               Note payable to the parent company of M&N with
                   interest at 7% due in annual installments
                   through December 31, 2001                                            --           2,526,736

               Note payable to AMC with interest imputed at 8%,
                   due in annual installments of principle and interest
                   through May 31, 2004                                          3,038,846                  --
                                                                               -----------         -----------
                                                                                 4,538,846           5,526,736
                     Less current portion                                       (2,665,403)         (3,526,736)
                                                                               -----------         -----------

                     Notes payable--noncurrent                                 $ 1,873,443         $ 2,000,000
                                                                               ===========         ===========
</TABLE>


         The fair value of the note payable to a bank approximates the carrying
         amount at December 31, 1999 and 1998 since its interest rate is based
         on recent market rates. At December 31, 1998, the fair value
         approximated the carrying amount of the note payable to the parent
         Company of M&N as the note originated on that date. The fair value of
         the note payable to AMC at December 31, 1999, based on the present
         value of future cash flows discounted at estimated borrowing rates for
         similar debt instruments, was $3,002,000.


                                     - 11 -


<PAGE>   30



HEALTH POWER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------

         Maturities of notes payable at December 31, 1999 are as follows:

<TABLE>
<CAPTION>
<S>                                                                <C>
               2000                                                $2,665,403
               2001                                                   500,165
               2002                                                   463,116
               2003                                                   428,811
               2004                                                   397,047
               Thereafter                                              84,304
                                                                   ----------
                                                                   $4,538,846
                                                                   ==========
</TABLE>

6.       COMMITMENTS

         CompManagement is party to employment agreements with certain
         employees. The agreements call for certain levels of commission expense
         to be paid by CompManagement to these individuals for selected contract
         revenue earned over the terms of their agreements. In 1997,
         CompManagement and CompManagement Health Systems amended the above
         employment agreements to include certain commissions to be paid to
         these employees. These agreements expired on December 31, 1999. In
         March, 2000 new employment agreements with certain employees were
         approved by the Board of Directors. These agreements extend the
         commission arrangements through December 31, 2002. Total commission
         expense paid in 1999, 1998 and 1997 in connection with these agreements
         was approximately $497,000, $668,000 and $2,050,000, respectively.

7.       INCOME TAXES

         The Company and its subsidiaries file a consolidated federal income tax
         return.

         Income tax benefit (expense) for the years ended December 31, 1999,
         1998 and 1997 consists of the following:


<TABLE>
<CAPTION>
                                                  1999                1998                1997
                                              -----------         -----------         -----------
<S>                                          <C>                 <C>                 <C>
               Current                         $ (773,954)        $  (317,695)        $  (549,692)
               Deferred                         1,777,969          (2,282,952)          2,190,602
                                               ----------         -----------         -----------

                                               $1,004,015         $(2,600,647)        $ 1,640,910
                                               ==========         ===========         ===========
</TABLE>


         Income tax benefit (expense) is included in the financial statements as
         follows:

<TABLE>
<CAPTION>
                                                  1999                1998                1997
                                              -----------         -----------         -----------
<S>                                          <C>                 <C>                 <C>
               Continuing operations           $1,539,329         $(1,570,204)        $(2,324,163)
               Discontinued operations           (535,314)         (1,030,443)          3,965,073
                                               ----------         -----------         -----------

                                               $1,004,015         $(2,600,647)        $ 1,640,910
                                               ==========         ===========         ===========
</TABLE>


                                     - 12 -


<PAGE>   31



HEALTH POWER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------

         The significant components of the deferred tax benefit (expense) for
         the years ended December 31, 1999, 1998 and 1997 were as follows:


<TABLE>
<CAPTION>
                                                                  1999                 1998               1997
                                                               -----------         -----------         -----------
<S>                                                           <C>                 <C>                 <C>
               Deferred tax expense from
                   change in temporary differences             $(1,034,973)        $   529,990          $ (266,447)
               Reversal (establishment) of
                   valuation allowance                           2,812,942          (2,812,942)          2,457,049
                                                               -----------         -----------          ----------

                                                               $ 1,777,969         $(2,282,952)         $2,190,602
                                                               ===========         ===========          ==========
</TABLE>

         A reconciliation of the Company's income tax benefit (expense) for
         continuing operations from the statutory tax expense is as follows:

<TABLE>
<CAPTION>
                                                                        1999                 1998               1997
                                                                     -----------         -----------         -----------
<S>                                                                 <C>                 <C>                 <C>
               Federal income tax expense
                   at the statutory rate                             $(1,030,298)        $(1,295,258)        $(1,979,787)
               State and local income taxes, net
                   of federal tax expense                               (215,028)           (234,482)           (359,040)
               Business meals and other temporary differences            (28,287)            (40,464)            (45,673)
               Reversal of valuation allowance                         2,812,942                  --              61,337
                                                                     -----------         -----------         -----------

                     Effective tax expense                           $ 1,539,329         $(1,570,204)        $(2,323,163)
                                                                     ===========         ===========         ===========
</TABLE>



                                     - 13 -


<PAGE>   32



HEALTH POWER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------

         The components of the net deferred tax asset (liability) as of
         December 31, 1999 and 1998 were as follows:

<TABLE>
<CAPTION>
                                                                    1999               1998
                                                                -----------         -----------
<S>                                                            <C>                 <C>
               Deferred tax assets:
                   Bad debt expense                              $  231,181         $    83,802
                   Deferred contract revenue                         12,331              24,660
                   Goodwill                                          15,275                  --
                   Health care costs payable                        142,060             326,128
                   Membership acquisition                                --           1,471,667
                   Tax Credit carryforward                          239,857             239,857
                   Net operating loss carryforward                1,601,090             247,808
                   Provision for discontinued operations             64,438             548,588
                   Prepaid expenses                                     643                  --
                   Other                                             11,824              22,484
                                                                 ----------         -----------

                                                                  2,318,699           2,964,994
                                                                 ----------         -----------

               Deferred tax liabilities:
                   Property and equipment                           300,144             252,942
                   Prepaid expenses                                 133,639              38,796
                   Other                                              1,063               2,126
                                                                 ----------         -----------

                                                                    434,846             293,864
                                                                 ----------         -----------

               Net deferred tax asset before valuation
                     allowance                                    1,883,853           2,671,130
               Valuation allowance                                       --          (2,812,942)
                                                                 ----------         -----------

                     Net deferred tax asset (liability)          $1,883,853         $  (141,812)
                                                                 ==========         ===========
               Current deferred tax asset                        $2,107,984         $    80,669
               Noncurrent deferred tax liability                   (224,131)           (222,481)
                                                                 ----------         -----------
                                                                 $1,883,853         $  (141,812)
                                                                 ==========         ===========
</TABLE>

         At December 31, 1999, the Company had the following tax credit and net
operating loss carryforwards available:


                      EXPIRATION                  TAX
                        DATES                   CREDITS
                    -------------              --------
                    No expiration             $  239,857


                                                  NET
                                               OPERATING
                                                LOSSES
                                              ----------

                     2008                     $  561,000
                     2009                     $4,532,000



                                     - 14 -


<PAGE>   33



HEALTH POWER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------

8.       CAPITAL LEASE OBLIGATIONS

         The Company leases computer equipment under an agreement which is
         classified as a capital lease. Equipment subject to capital leases with
         a cost of $360,485 and accumulated depreciation of $48,335 at December
         31, 1999 is included in property and equipment. At December 31, 1999,
         future minimum lease payments under the capital lease obligations for
         the periods ending December 31 are as follows:

<TABLE>
<CAPTION>
<S>                                                                                <C>
               2000                                                                 $108,146
               2001                                                                  108,146
               2002                                                                  108,146
               2003                                                                   58,578
                                                                                    --------
                   Total minimum lease payments                                      383,016
                   Amounts representing interest                                     (70,866)
                                                                                    --------
               Present value of minimum lease payments                              $312,150
                                                                                    ========
</TABLE>

9.       OPERATING LEASES

         The Company leases a 70,000 square foot office building in Dublin, Ohio
         that is used as its principal office facilities. The lease for the
         building is for a term of 15 years, which began in 1997, provides for
         annual rent payments and requires the Company to pay all operating
         expenses for the building. The lease also provides for three renewal
         options of five years each, an option to purchase the building between
         the fourth and fifth years of the lease term at a price determined
         under a formula based on the rentable and unimproved square footage of
         the building, and a right of first offer to purchase the building
         before the Landlord enters into a contract to sell the building to a
         third-party. The lease restricts CompManagement, Inc. from paying a
         dividend, or otherwise distributing funds or assets outside the
         ordinary course of business to Health Power, Inc. or another affiliate
         unless CompManagement, Inc. meets certain tangible net worth
         requirements. The Company also leases office space in Akron,
         Cincinnati, Cleveland, and Toledo, Ohio; Seattle, Washington;
         Charleston, West Virginia; Lexington, Kentucky; and Indianapolis,
         Indiana. These spaces are used as regional offices and service centers
         for its operations.

         At December 31, 1999, future minimum rental payments under the
         operating leases are as follows:

<TABLE>
<CAPTION>
<S>                                                                              <C>
               2000                                                               $ 2,854,182
               2001                                                                 2,389,525
               2002                                                                 2,234,045
               2003                                                                 1,845,798
               2004                                                                 1,649,097
               Thereafter                                                          10,063,546
                                                                                  ------------
                                                                                  $21,036,193
                                                                                  ===========
</TABLE>


         Rental expense was approximately $2,564,137, $1,579,786 and $876,813,
         for 1999, 1998 and 1997, respectively.


                                     - 15 -


<PAGE>   34
HEALTH POWER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------

10.      STOCK OPTIONS AND AWARDS

         Stock-based compensation plans. The Company sponsors various
         stock-based incentive compensation plans (the Plans) for directors and
         eligible employees.

         Under the Plans, the Company is authorized to issue shares of common
         stock pursuant to "awards" granted in various forms, including
         incentive stock options (intended to qualify under Section 422 of the
         Internal Revenue Code of 1986, as amended), nonqualified stock options,
         and other similar stock-based awards for up to 400,000 common shares of
         the Company. The Company granted stock options in 1999, 1998 and 1997
         under the Plans in the form of incentive stock options and nonqualified
         stock options. The Company is authorized to issue 55,000 shares of
         common stock under the 1996 directors' stock award plan. In February
         1998, the Company registered 180,000 shares of common stock under an
         executive stock option plan.

         Employee and director stock options. The Company granted market price
         stock options in 1999, 1998 and 1997 to employees and directors. The
         stock options granted in 1999, 1998 and 1997 have terms of 10 years.
         The options granted to directors were vested immediately on the grant
         date. The options granted to employees vest at the rate of 25% per year
         on each of the first four anniversaries of the date of grant. Options
         granted to various executives vest 100% at the end of six years
         (subject to acceleration to a two-year period depending on the
         performance of the Company or at the discretion of the Compensation
         Committee). Options are granted at the fair market value of common
         stock at the date of grant. Accordingly, the Company has not recognized
         any compensation cost for these stock options granted in 1999, 1998 and
         1997.

         A summary of the status of the Company's director and employee stock
         options, and the changes during the years is presented below:

<TABLE>
<CAPTION>
                                                  1999                          1998                         1997
                                       --------------------------     ------------------------     -------------------------
                                                         WEIGHTED                     WEIGHTED                      WEIGHTED
                                       # SHARES OF       AVERAGE      # SHARES OF     AVERAGE      # SHARES OF      AVERAGE
                                        UNDERLYING       EXERCISE      UNDERLYING     EXERCISE      UNDERLYING      EXERCISE
                                         OPTIONS          PRICES        OPTIONS        PRICES        OPTIONS         PRICES
                                         -------           -----        -------        ------         -------        ------
<S>                                     <C>               <C>          <C>            <C>            <C>            <C>
Outstanding at beginning of year         249,789           $8.16        244,781        $ 9.36         204,615        $11.49

    Granted                               29,182            2.84         59,078          4.42          78,788          3.92

    Exercised                                 --              --             --            --              --            --
    Forfeited                             10,951            6.95         53,070         11.41          26,077          9.02
    Expired                                5,034            4.72          1,000         10.57          12,545         11.89

Outstanding at the end of year           262,986            7.69        249,789          8.16         244,781          9.36

Exercisable at end of year               133,797            9.94        122,092         10.77          95,124         11.52

Weighted-average fair value of
    options granted during year                            $1.65                       $ 2.33                        $ 1.83

</TABLE>


                                     - 16 -


<PAGE>   35



HEALTH POWER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------

         The fair value of each stock option granted is estimated on the date of
         grant using the Black-Scholes option-pricing model with the following
         weighted-average assumptions for grants in 1999, 1998 and 1997,
         respectively: no dividend yield for all years; risk-free interest rates
         are different for each grant and range from 5.06% to 6.73%; the
         expected lives of options are estimated to be five years; and a
         volatility of 59.81% for 1999 grants, 50.20% for 1998 grants, and
         41.97% for 1997 grants.

         The following table summarizes information about director and employee
         stock options outstanding at December 31, 1999

<TABLE>
<CAPTION>
                                                        OPTIONS
                                                      OUTSTANDING                         OPTIONS EXERCISABLE
                                                       WEIGHTED                       --------------------------
                                                        AVERAGE        WEIGHTED                         WEIGHTED
                                       NUMBER          REMAINING       AVERAGE          NUMBER          AVERAGE
                    RANGE OF         OUTSTANDING      CONTRACTUAL      EXERCISE       EXERCISABLE       EXERCISE
                EXERCISE PRICES      AT 12/31/99         LIFE           PRICE         AT 12/31/99        PRICE
                ---------------      -----------      -----------      --------       -----------       --------
<S>                                <C>               <C>              <C>            <C>               <C>
               $2.44 to 4.00           126,583           7.67          $ 3.65            32,202          $ 3.74

               $7.00 to 9.00            63,668           7.37            5.92            28,860            7.91

               $11.00 to 15.31          72,735           4.88           13.49            72,735           13.49
                                       -------           ----          ------           -------          ------

               $2.44 to $15.31         262,986           6.82          $ 7.69           133,797          $ 9.94
                                       =======           ====          ======           =======          ======
</TABLE>


         ProForma net income and net income per common share. Had the
         compensation cost for the Company's stock-based compensation plans been
         determined in accordance with SFAS No. 123, the Company's net income
         and net income per common share for 1999, 1998 and 1997 would
         approximate the pro forma amounts below:

<TABLE>
<CAPTION>
                                               AS                             AS                           AS
                                            REPORTED       PROFORMA        REPORTED       PROFORMA       REPORTED        PROFORMA
                                            12/31/99       12/31/99        12/31/98       12/31/98       12/31/97        12/31/97
                                           ----------     ----------      ----------     ----------     ----------      ----------
<S>                                       <C>            <C>            <C>            <C>             <C>             <C>
               Net income (loss)           $3,885,569     $3,816,592     $(4,051,989)   $(4,084,216)    $3,013,788      $2,904,414

               Net income (loss) per
                   common share, diluted         1.01           0.99           (1.06)         (1.07)          0.79            0.76
</TABLE>


         The effects of applying SFAS No. 123 in this pro forma disclosure are
         not indicative of future amounts. SFAS No. 123 does not apply to awards
         prior to 1995.


                                     - 17 -


<PAGE>   36



HEALTH POWER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------

11.      EMPLOYEE BENEFITS PLANS

         The Company maintains 401(k) plans for its employees meeting certain
         age requirements and completing six months to one year of employment.
         Qualifying employees may contribute a percentage of their compensation
         to the plans. The Company matches a portion of the employee
         contributions based on the terms of the plan agreement. The Company's
         matching contributions to the 401(k) plans were approximately $237,854,
         $79,803 and $50,332 for 1999, 1998 and 1997, respectively, for
         employees of the continuing operations and approximately $6,793, $3,438
         and $5,976 for 1999, 1998 and 1997, respectively for employees of the
         discontinued operations.

12.      SEGMENT REPORTING

         The Company has two reportable segments for its continuing operations:
         consulting services and managed care services, which were determined
         based upon its method of internal reporting. Each segment of the
         Company is managed separately. The consulting services segment offers
         workers' and unemployment compensation consulting services. The managed
         care services segment administers workers' compensation claims for the
         OBWC and began operations March 1, 1997. The Company also has an other
         segment which derives its revenues from management fees and interest
         income. Segment assets of the other segment includes assets of the
         discontinued operations of HPHMO.

         The accounting policies of the segments are the same as those described
         in Note 2 " Summary of Significant Accounting Policies". Segment data
         includes intercompany revenues, as well as a charge for allocating
         corporate expenses to each of its segments. Such amounts have been
         included in the elimination column to reconcile to consolidated totals.


                                     - 18 -


<PAGE>   37



HEALTH POWER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                     1999
                                             ------------------------------------------------------------------------------------
                                             MANAGED CARE       CONSULTING
                                               SERVICES          SERVICES           OTHER          ELIMINATIONS         TOTAL
                                             ------------      ------------      ------------      ------------      -----------
<S>                                         <C>               <C>               <C>               <C>               <C>
Revenues to unaffiliated customers           $ 18,516,431      $ 19,745,932      $         --      $         --      $ 38,262,363
Intercompany revenues                                  --                --         1,332,013        (1,332,013)               --
Salaries and benefits                          11,070,947        10,583,518           907,535          (807,535)       21,754,465
Depreciation and amortization expense             453,009           878,205            26,289                --         1,357,507
Interest (expense) income and other, net          (97,720)         (128,965)          123,755          (120,597)         (223,523)
Income before taxes                               362,201         2,900,320          (266,376)               --         2,996,145
Income tax benefit (expense)                     (155,309)        1,696,467            (1,829)               --         1,539,329
Net income (loss)                                 206,892         4,596,787          (382,796)               --         4,535,474
Identifiable assets                            14,330,904        25,028,891        15,931,233       (23,712,756)       31,578,272

                                             ------------------------------------------------------------------------------------
                                                                                      1998
                                             ------------------------------------------------------------------------------------
Revenues to unaffiliated customers           $ 12,962,611      $ 11,898,843      $         --      $         --      $ 24,861,454
Intercompany revenues                                  --                --         2,425,500        (2,425,500)               --
Salaries and benefits                           7,437,574         6,057,233         1,385,806        (1,235,806)       13,644,807
Depreciation expense                              185,249           220,475            25,307                --           431,031
Interest income and other, net                    123,837           298,237         8,488,344        (8,466,128)          444,290
Income before taxes                             1,458,103         2,590,998         8,451,271        (8,466,432)        4,033,940
Income tax (expense) benefit                     (626,308)       (1,031,431)           87,535                --        (1,570,204)
Net income                                        831,795         1,599,566         8,498,807        (8,466,432)        2,463,736
Identifiable assets                             3,682,746        21,708,398        13,020,667        (7,742,476)       30,669,335

                                             ------------------------------------------------------------------------------------
                                                                                      1997
                                             ------------------------------------------------------------------------------------
Revenues to unaffiliated customers           $ 11,269,270      $ 10,913,374      $         --      $         --      $ 22,182,644
Intercompany revenues                                  --                --         2,970,070        (2,979,070)               --
Salaries and benefits                           5,495,032         5,411,519         1,516,192        (1,600,192)       10,852,551
Depreciation expense                               74,176           139,552            15,224                --           228,952
Interest income and other, net                         --           216,609         2,975,993        (2,660,683)          531,919
Income before taxes                             3,077,625         3,051,410         2,687,681        (2,660,683)        6,156,033
Income tax (expense) benefit                   (1,197,864)       (1,208,225)           81,926                --        (2,324,163)
Net income                                      1,879,761         1,843,185         2,769,607        (2,660,683)        3,831,870
Identifiable assets                             4,615,448         5,406,046        27,073,702       (14,746,388)       22,348,808
</TABLE>



                                     - 19 -


<PAGE>   38


HEALTH POWER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------


13.      SUPPLEMENTAL DISCLOSURES FOR EARNINGS PER SHARE

<TABLE>
<CAPTION>

                                                                                 1999               1998                1997
                                                                             -----------         -----------         -----------
<S>                                                                          <C>                 <C>                 <C>
               Basic:
                   Earnings:
                     Income from continuing operations                        $4,535,474         $ 2,463,736          $3,831,870
                     Less:  Loss from discontinued operations                   (649,905)         (6,515,725)           (818,082)
                                                                              ----------         -----------          ----------

                          Net income (loss)                                   $3,885,569         $(4,051,989)         $3,013,788
                                                                              ----------         -----------          ----------

                   Shares:
                     Weighted average common shares outstanding                3,845,666           3,828,564           3,818,465
                                                                              ----------         -----------          ----------

                     Income from continuing operations per common
                       share, basic                                           $     1.18         $       .64          $     1.00
                     Loss from discontinued operations, per common
                       share, basic                                                 (.17)              (1.70)               (.21)
                                                                              ----------         -----------          ----------

                          Net income (loss) per common share, basic           $     1.01         $     (1.06)         $      .79
                                                                              ----------         -----------          ----------

               Diluted:
                   Earnings:
                     Income from continuing operations                        $4,535,474         $ 2,463,736          $3,831,870
                     Less:  Loss from discontinued operations                   (649,905)         (6,515,725)           (818,082)
                                                                              ----------         -----------          ----------

                          Net income (loss)                                   $3,885,569         $(4,051,989)         $3,013,788
                                                                              ----------         -----------          ----------

                   Shares:
                     Weighted average common shares outstanding                3,845,666           3,828,564           3,818,465
                     Add: dilutive effect of outstanding options                      --               6,294              14,185
                                                                              ----------         -----------          ----------
                     Weighted average common shares outstanding,
                       diluted                                                 3,845,666           3,834,858           3,832,650
                                                                              ----------         -----------          ----------

                   Income from continuing operations per common
                     share, diluted                                           $     1.18         $       .64          $     1.00
                   Loss from discontinued operations, per common
                     share, diluted                                                 (.17)              (1.70)               (.21)
                                                                              ----------         -----------          ----------

                          Net income (loss) per common share, diluted         $     1.01         $     (1.06)         $      .79
                                                                              ==========         ===========          ==========
</TABLE>


                                     - 20 -

<PAGE>   39


HEALTH POWER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------

 14.     DISCONTINUED OPERATIONS

         On December 29, 1998, the Company's Board of Directors formally
         approved a plan to discontinue operations of HPHMO. Accordingly, the
         operating results of the HMO operations, including provisions for
         estimated lease costs, employee severance and benefits, write-downs of
         property, plant and equipment during the phase-out period and a loss on
         disposal have been segregated from continuing operations and reported
         as a separate line item on the statement of operations. Income from
         operations of the discontinued HMO operations for the year 1998
         included results through December 31, 1998.

         On May 1, 1999, the certificate of authority of HPHMO was revoked by
         the Ohio Department of Insurance ("ODI") for failure to meet statutory
         financial requirements. Since that time, and in accordance with the ODI
         revocation order, HPHMO has been winding-up its business under the
         supervision of ODI, but without judicial involvement.

         The HMO accepted all valid claims related to provider services rendered
         prior to April 30, 1999. In addition, the HMO has disposed of
         substantially all tangible assets related to its operations and,
         pursuant to the wind-down plan, the proceeds from these sales have been
         segregated to be used in satisfaction of all claims filed through
         October 31, 1999. The HMO will not have sufficient assets to pay the
         claims of all of its creditors.

         The Company provided a reserve for loss on disposal of the HMO of
         $1,613,000 at December 31, 1998. The settlement of claims and approval
         of providers of the final payout of claims has extended over a period
         of time longer than originally estimated when establishing the reserve.
         Accordingly, the Company has provided an additional $115,000 to the
         reserve to cover estimated disposal costs through April 30, 2000, the
         expected date of final execution of the wind-down plan.

         The Company has reclassified its prior financial statements to present
         the operating results of HPHMO as discontinued operations. The assets
         and liabilities of such operations at December 31, 1999 and 1998,
         respectively, have been reflected as separate line items on the balance
         sheet based substantially on the original classification of such assets
         and liabilities.

         Management services. The Company has a management service agreement
         between Health Power Management Company (HPMC), a subsidiary of the
         Company, and its affiliate HPHMO, to provide administrative services.
         Services provided include finance and accounting functions, data
         processing, office of the president, marketing and membership services,
         corporate planning, and legal and regulatory services. The affiliates
         of HPMC pay a management fee on a monthly basis. Beginning in 1997,
         HPHMO was reimbursed approximately $14,000 per month through April 1999
         and $14,000 and $7,000 per month in 1998 and 1997, respectively, by its
         affiliates CompManagement, Inc. and CompManagement Health Systems, for
         the portion of management services that related to their organization's
         activities.


                                     - 21 -


<PAGE>   40


HEALTH POWER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------

         Operating results from discontinued operations for the years ended
         December 31 were as follows:

<TABLE>
<CAPTION>

                                                                       1999                1998                1997
                                                                    ---------         ------------         ------------
<S>                                                                <C>               <C>                  <C>
               Medicaid revenues                                    $      --         $ 36,731,250         $ 42,819,206
               Commercial revenues                                         --            2,648,965           10,811,320
               Healthcare costs and expenses                               --          (44,248,972)         (59,102,511)
               Interest income and other, net                              --              996,968              688,830
               Loss on disposal of discontinued operations           (114,591)          (1,613,493)                  --
                                                                    ---------         ------------         ------------

                    Net loss before taxes                            (114,591)          (5,485,282)          (4,783,155)

               Federal, state and local income tax (expense)
                  benefit                                            (535,314)          (1,030,445)           3,965,073
                                                                    ---------         ------------         ------------

                    Net loss                                        $(649,905)        $ (6,515,727)        $   (818,082)
                                                                    =========         ============         ============
</TABLE>


                                     - 22 -


<PAGE>   41


HEALTH POWER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------

         The assets and liabilities of the discontinued HMO operations as of
         December 31 were as follows:

<TABLE>
<CAPTION>
                                                                                    1999               1998
                                                                                 ----------        -----------
<S>                                                                             <C>               <C>
               Current assets of discontinued operations:
                   Cash and cash equivalents                                     $4,058,980        $ 2,511,515
                   Accounts receivable                                              212,785          1,909,928
                   Prepaid expenses and other                                         2,000              5,155
                   Income taxes refundable                                               --          1,140,041
                                                                                 ----------        -----------

                     Total current assets of discontinued operations             $4,273,765        $ 5,566,639
                                                                                 ==========        ===========

               Noncurrent assets of discontinued operations:
                   Land                                                                  --            152,640
                   Buildings and leasehold improvements                                  --          1,252,652
                   Furniture, equipment and software                                                 1,910,308
                   Less accumulated depreciation                                         --         (2,407,874)
                   Deposits and other assets                                             --            495,618
                                                                                 ----------        -----------

                     Total noncurrent assets of discontinued
                       operations                                                $                 $ 1,403,344
                                                                                 ----------        -----------

               Current liabilities:
                   Health care costs payable                                     $6,258,194        $ 4,679,105
                   Deferred revenues                                                     --          2,683,638
                   Accounts payable                                                 287,263            693,619
                   Accrued expenses and other current liabilities                        --             47,122
                   Accrued expenses for disposal                                    189,523          1,060,151
                                                                                 ----------        -----------

                     Total current liabilities of discontinued operations        $6,734,980        $ 9,163,635
                                                                                 ==========        ===========
</TABLE>



                                     - 23 -


<PAGE>   42


HEALTH POWER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------

15.      RELATED PARTIES OF DISCONTINUED OPERATIONS

         HPHMO engaged in transactions with medical centers and companies
         controlled by certain shareholders and directors of the Company and its
         subsidiaries, which are herein, referred to as affiliates or affiliated
         providers as follows:

         Health care providers. During 1999, 1998 and 1997, primary care and
         physician-related costs of $58,346, $564,123 and $1,485,107,
         respectively, resulted from transactions between HPHMO and affiliated
         providers. Such transactions resulted in receivables from related
         primary care providers of $39,076 and $12,830 as of December 31, 1999
         and 1998, respectively.

         Commercial revenue. Certain affiliated providers had contracted with
         HPHMO to provide health care services to their employees and
         dependents. HPHMO recognized commercial premiums from these affiliated
         providers in the amounts of $20,582, $53,674, and $65,793 in 1999, 1998
         and 1997, respectively.

16.      COMMITMENTS OF DISCONTINUED OPERATIONS

         HPHMO maintains stop-loss insurance coverage for 85% of inpatient
         hospital costs in excess of $50,000 per Medicaid member, per contract
         year and varying percentages (generally 80%) of inpatient hospital
         costs in excess of $81,000 per commercial member, per contract year.
         These stop-loss insurance contracts do not relieve HPHMO of its
         obligations to members, and failure of reinsurers to honor their
         obligations could result in losses to HPHMO.

         During 1998, the Company's HMO subsidiary commenced a legal action
         seeking compensation for damages alleged under a prior administrative
         agreement with a claims processing organization. A counterclaim was
         filed against HPHMO sought compensatory and punitive damages alleged
         under this same agreement. HPHMO and the claims processing
         organization signed a settlement agreement effective February 25, 2000
         which provided for the dismissal of all claims in litigation.


                                      -24-


<PAGE>   43


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

         None.


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

DIRECTORS AND EXECUTIVE OFFICERS

         The following sets forth certain information regarding the directors
and executive officers of Health Power, Inc.:

<TABLE>
<CAPTION>
Name                                        Age      Positions with Health Power, Inc. or Its Subsidiaries
----                                        ---      -----------------------------------------------------

<S>                                         <C>      <C>
Dr. Bernard F. Master                       58       Chairman of the Board, Chief Executive Officer, and
                                                     President of Health Power, Inc.; director of Health
                                                     Power, Inc.

Robert J. Bossart                           48       Chief Executive Officer of CompManagement and
                                                     CompManagement Health Systems;
                                                     director of Health Power, Inc.

Jonathan R. Wagner                          42       President of CompManagement; director of Health
                                                     Power, Inc.

Dr. Elliott P. Feldman                      61       Secretary of Health Power, Inc.; director of Health
                                                     Power, Inc.

Robert S. Garek                             61       Director of Health Power, Inc.

Dr. Crystal A. Kuykendall                   50       Director of Health Power, Inc.

Frank R. Nutis                              78       Director of Health Power, Inc.

Dr. Burt E. Schear                          77       Director of Health Power, Inc.

Richard T. Kurth                            41      Executive Vice President of CompManagement

Randy E. Jones                              40       President of CompManagement Health Systems

Paul A. Miller                              43       Vice President, General Counsel, Chief Financial Officer
                                                     and Treasurer of CompManagement

Daniel R. Sullivan                          41       Senior Vice President of CompManagement
</TABLE>

         Dr. Master has been the Chairman of the Board, a director, and the
Chief Executive Officer of Health Power, Inc. since its formation in March 1985,
and the President of Health Power, Inc. since January 1998.


                                       25
<PAGE>   44

         Mr. Bossart has been the Chief Executive Officer of CompManagement
since September 1996, and an executive officer of CompManagement since its
formation in 1984. He has also been the Chief Executive Officer of
CompManagement Health Systems since it commenced operations in September 1996.
Mr. Bossart has been a director of Health Power, Inc. since 1995.

         Mr. Wagner has been the President of CompManagement since September
1996, and an executive officer of CompManagement since its formation in 1984.
Mr. Wagner has been a director of Health Power, Inc. since June 1999.

         Dr. Feldman has been the Secretary and a director of Health Power, Inc.
since its formation in March 1985. Dr. Feldman has been a practicing physician
in Columbus, Ohio, since 1965.

         Mr. Garek has been a director of Health Power, Inc. since 1986. Mr.
Garek has been a principal in R.S. Garek & Associates, a Columbus, Ohio real
estate development firm, since its formation in 1997. From 1965 to 1997, he was
a partner in Feibel-Garek Realtors, a Columbus, Ohio real estate development
firm.

         Dr. Kuykendall has been a director of Health Power, Inc. since 1995.
Dr. Kuykendall has been the president of Kreative & Innovative Resources for
Kids, Inc., a company that provides products and serves to advance the technical
development of youths, since 1990.

         Mr. Nutis has been a director of Health Power, Inc. since 1986. Mr.
Nutis has been the president of Nutis Press, Inc., a printing and lithograph
company, since 1949.

         Dr. Schear has been a director of Health Power, Inc. since 1991. Dr.
Schear is a retired physician.

         Mr. Kurth has been the Executive Vice President of CompManagement since
September 1996, and a Vice President of CompManagement since 1988. Mr. Kurth
joined CompManagement in 1984.

         Mr. Jones has been the President of CompManagement Health Systems since
August 1999, and prior to that a Vice President since he joined the company in
July 1996. Prior to that time, Mr. Jones was employed by R.E. Harrington, an
Ohio-based third party administrator of workers' compensation claims, for more
than five years, last serving as a regional vice president.

         Mr. Miller has been the General Counsel, Chief Financial Officer, and
Treasurer of CompManagement since August 1999, and a Vice President since
joining the company in June 1998. Prior to that time, Mr. Miller was chief
financial officer and general counsel for Cross Medical Products (formerly
Danninger Medical Technology) from 1994 to 1998 and chief financial officer and
general counsel for Litter Industries, Inc. from 1991 to 1994.

         Mr. Sullivan has been the Senior Vice President of CompManagement since
August 1997, and a Vice President of CompManagement since July 1994. Mr.
Sullivan joined CompManagement in February 1992.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers, directors, and beneficial owners of more than 10% of a
registered class of the Company's equity securities to file reports of ownership
and changes in ownership with the Securities and Exchange Commission. Officers,
directors, and beneficial owners of more than 10% of such equity securities are
required by the Securities

                                       26
<PAGE>   45

and Exchange Commission's regulations to furnish the Company with copies of all
Section 16(a) forms they file. Based solely on a review of the copies of such
forms furnished to the Company, the Company believes that during 1999 all
Section 16(a) filing requirements applicable to its officers, directors, and
more than 10% beneficial owners were complied with by such persons, except as
follows: Dr. Bernard F. Master filed a Form 4 one day late to report the
purchase of 1,000 shares of Common Stock; and Richard T. Kurth filed a Form 4
one day late to report the purchase of 1,000 shares of Common Stock.




                                       27
<PAGE>   46
w

ITEM 11. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

         Set forth below is summary information regarding the annual and
long-term compensation of the Company's chief executive officer and its four
most highly compensated executive officers, other the chief executive officer,
at the end of 1999:


<TABLE>
<CAPTION>
                                                                                     Long-Term
                                                                                    Compensation
                                            Annual Compensation                       Awards
                                -----------------------------------------------       ------
                                                                                      Shares          All
                                                                      Other         Underlying       Other
Name and                                                         Annual Compen-       Options       Compen-
Principal Position              Year    Salary(1)      Bonus        sation(2)       Granted(2)     sation(3)
------------------              ----    ---------      -----        ---------       ----------     ---------
<S>                             <C>      <C>          <C>            <C>               <C>           <C>
Dr. Bernard F. Master,          1999     $386,378     $103,250          -0-           13,531         $1,450
Chairman, President and Chief   1998     $303,692      $50,000          -0-           20,000         $2,137
Executive Officer of the        1997     $192,000        -0-            -0-            3,472         $  638
Company

Robert J. Bossart, Chief        1999     $178,030     $150,000        $96,904          3,531         $2,500
Executive Officer of            1998     $178,030        -0-         $379,381          3,506         $2,500
CompManagement and              1997     $178,031        -0-         $815,968          2,031         $2,250
CompManagement Health Systems

Jonathan R. Wagner, President   1999     $165,309     $150,000       $122,665          3,219         $2,500
of CompManagement               1998     $165,309        -0-         $464,012          3,367         $2,500
                                1997     $165,309        -0-         $828,688          1,875         $2,589

Richard T. Kurth, Executive     1999     $133,380     $150,000       $186,962          2,401         $2,500
Vice President of               1998     $133,380        -0-         $447,468          2,455         $2,500
CompManagement                  1997     $133,380        -0-         $860,620          1,406         $2,688

Daniel R. Sullivan,             1999     $101,201      $50,000        $90,475           -0-          $2,500
Senior Vice President of        1998     $ 77,500        -0-          $54,226          1,000         $2,500
CompManagement                  1997     $ 58,166        -0-          $93,829          1,000         $2,500


</TABLE>

-----------------------------------

(1)      Includes amounts contributed by the named executive officer to 401(k)
         retirement plans.

(2)      Other annual compensation represents sales commissions paid to Messrs.
         Bossart, Wagner, and Kurth under their respective employment agreements
         and to Mr. Sullivan under his employment arrangements. Sales
         commissions paid are based upon a percentage of revenues of
         CompManagement and CompManagement Health Systems which are attributable
         to new business generated by such person.

(3)      Represents matching contributions to 401(k) retirement plans.



                                       28
<PAGE>   47

OPTION GRANTS IN LAST FISCAL YEAR

         The following table sets forth all grants of stock options during 1999
to the executive officers named in the Summary Compensation Table:

<TABLE>
<CAPTION>
                           Individual Grant
                           -------------------------------------------------
                                                                                         Potential Realizable Value
                                                                                         at Assumed Annual Rates of
                                            % of Total                                   Stock Appreciation
                           Number of        Options                                      for Option Term(2)
                           Shares           Granted to       Exercise                    -------------------------
                           Underlying       Employees in     Price Per     Expiration
Name                       Options Granted  Fiscal Year      Share(1)      Date          5%              10%
----                       ---------------  -----------      --------      ----          --              ---

<S>                         <C>             <C>              <C>           <C>           <C>            <C>
Dr. Bernard F. Master       10,000          44.1%            $3.00         03/17/09      $18,867        $47,812
Dr. Bernard F. Master        3,531          15.6%            $2.75         05/01/09      $ 6,161        $15,476
Robert J. Bossart            3,531          15.6%            $3.00         03/17/09      $ 6,662        $16,883
Jonathan R. Wagner           3,219          14.2%            $3.00         03/17/09      $ 6,073        $15,391
Richard T. Kurth             2,401          10.6%            $3.00         03/17/09      $ 4,530        $11,480
Daniel R. Sullivan             -0-           0.0%             N/A           N/A           N/A             N/A
</TABLE>

-----------------------------

(1)      The exercise price per share is equal to the fair market value of the
         Shares on the date of grant.

(2)      The dollar amounts under the 5% and 10% columns are the result of
         calculations required by the rules of the Securities and Exchange
         Commission. Although permitted by these rules, the Company did not use
         an alternate formula for a grant date valuation because the Company is
         not aware of a formula that would determine with reasonable accuracy a
         present value based on future unknown factors.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUE TABLE

         The following tables sets forth stock option exercises during 1999 by
the executive officers named in the Summary Compensation Table and the value of
in-the-money stock options held by those individuals as of December 31, 1999:

<TABLE>
<CAPTION>
                                                                                                 Value of Unexercised
                                                                        Number of Shares       In-The-Money Options at
                            Shares Acquired                          Underlying Unexercised            12/31/99
                                  on                                  Options at 12/31/99           Exercisable /
Name                           Exercise        Value Realized(1)   Exercisable/ Unexercisable      Unexercisable(2)
----                           --------        -----------------   --------------------------      ----------------

<S>                                <C>                 <C>                <C>                         <C>
Dr. Bernard F. Master             -0-                 -0-                 74,806/3,531                $-0-/$-0-
Robert J. Bossart                 -0-                 -0-                 14,673/7,037                $-0-/$-0-
Jonathan R. Wagner                -0-                 -0-                 14,161/6,584                $-0-/$-0-
Richard T. Kurth                  -0-                 -0-                 8,620/4,856                 $-0-/$-0-
Daniel R. Sullivan                -0-                 -0-                 1,550/1,250                 $-0-/$-0-
</TABLE>

------------------------------

(1)      Aggregate market value of shares of Common Stock covered by the option
         less the aggregate price paid by the executive officer.

                                       29
<PAGE>   48

(2)      The value of in-the-money options was determined by subtracting the
         exercise price from the closing price of the Common Stock of Health
         Power, Inc. as of December 31, 1999.


EMPLOYMENT AGREEMENTS AND CHANGE-IN-CONTROL ARRANGEMENTS

         Dr. Bernard F. Master, the Company's Chairman, President, and Chief
Executive Officer, has an employment agreement with the Company that expires on
December 31, 2002. Dr. Master's employment agreement provides for an annual base
salary of $295,000 and an annual performance-based cash incentive bonus up to
35% of his base salary. If Dr. Master's employment is terminated by the Company,
terminated by Dr. Master after a change-in-control, or terminated at the end of
its term, then he will receive severance payments in an amount equal to the sum
of (a) two times his base salary plus (b) an amount equal to his last annual
cash bonus. Severance payments are payable over a two-year period after
termination. Severance benefits also include the continuation of fringe benefits
until the earlier of two years after the date of termination or the date any
such benefit is provided by another employer. Under his employment agreement,
Dr. Master also receives formula vesting options under the Health Power, Inc.
1994 Executive Performance Stock Option Plan.

         Robert J. Bossart, the Chief Executive Officer of CompManagement and
CompManagement Health Systems, has an employment agreement with the Company that
expires on December 31, 2002. Mr. Bossart's employment agreement provides for an
annual base salary of $280,000, sales commissions based upon new business
generated by him, and an annual performance-based cash incentive bonus up to 35%
of his base salary. The bonus is earned and paid in accordance with the Health
Power, Inc. Performance-Based Incentive Compensation Plan. Mr. Bossart has also
agreed to abide by certain noncompetition and confidentiality provisions. If Mr.
Bossart's employment is terminated for any reason other than just cause, or is
terminated at the end of its term, then he will receive severance payments in an
amount equal to the sum of (a) two times his base salary plus (b) an amount
equal to the commissions earned by him during the one-year period immediately
prior to such termination. Severance payments are payable over a two-year period
after termination. Severance benefits also include the continuation of fringe
benefits until the earlier of two years after the date of termination or the
date any such benefit is provided by another employer. However, the foregoing
severance benefits are superceded and replaced by any severance benefits payable
under his change-in-control severance agreement, discussed below. The employment
agreement also provides for Mr. Bossart to receive a grant of stock options to
purchase up to 70,000 shares of Common Stock under a new Health Power, Inc.
management stock option plan. However, this grant is subject to the conditions
that the new management stock option plan be approved by the directors and
stockholders of Health Power, Inc., neither of which has occurred as of the date
of this filing. If approval of the new management stock option plan is received,
then the stock options will be at an exercise price equal to the closing market
price of the Common Stock on the last business day immediately preceding the
date of the 2000 annual meeting of stockholders of Health Power, Inc. These
options will vest annually in increments of 14,000 shares.

         Jonathan R. Wagner, the President of CompManagement, has an employment
agreement with the Company that expires on December 31, 2002. Mr. Wagner's
employment agreement provides for an annual base salary of $260,000, sales
commissions based upon new business generated by him, and an annual
performance-based cash incentive bonus up to 35% of his base salary. The bonus
is earned and paid in accordance with the Health Power, Inc. Performance-Based
Incentive Compensation Plan. Mr. Wagner has also agreed to abide by certain
noncompetition and confidentiality provisions. If Mr. Wagner's employment is
terminated for any reason other than just cause, or is terminated at the end of
its term, then he will receive severance payments in an amount equal to the sum
of (a) two times his base salary plus (b) an amount equal to the commissions
earned by him during the one-year period immediately prior to such termination.
Severance payments are payable over a two-year period after


                                       30
<PAGE>   49

termination. Severance benefits also include the continuation of fringe benefits
until the earlier of two years after the date of termination or the date any
such benefit is provided by another employer. However, the foregoing severance
benefits are superceded and replaced by any severance benefits payable under his
change-in-control severance agreement, discussed below. The employment agreement
also provides for Mr. Wagner to receive a grant of stock options to purchase up
to 70,000 shares of Common Stock under a new Health Power, Inc. management stock
option plan. However, this grant is subject to the conditions that the new
management stock option plan be approved by the directors and stockholders of
Health Power, Inc., neither of which has occurred as of the date of this filing.
If approval of the new management stock option plan is received, then the stock
options will be at an exercise price equal to the closing market price of the
Common Stock on the last business day immediately preceding the date of the 2000
annual meeting of stockholders of Health Power, Inc. These options will vest
annually in increments of 14,000 shares.

         Richard T. Kurth, the Executive Vice President of CompManagement, has
an employment agreement with the Company that expires on December 31, 2002. Mr.
Kurth's employment agreement provides for an annual base salary of $225,000,
sales commissions based upon new business generated by him, and an annual
performance-based cash incentive bonus up to 35% of his base salary. The bonus
is earned and paid in accordance with the Health Power, Inc. Performance-Based
Incentive Compensation Plan. Mr. Kurth has also agreed to abide by certain
noncompetition and confidentiality provisions. If Mr. Kurth's employment is
terminated for any reason other than just cause, or is terminated at the end of
its term, then he will receive severance payments in an amount equal to the sum
of (a) two times his base salary plus (b) an amount equal to the commissions
earned by him during the one-year period immediately prior to such termination.
Severance payments are payable over a two-year period after termination.
Severance benefits also include the continuation of fringe benefits until the
earlier of two years after the date of termination or the date any such benefit
is provided by another employer. However, the foregoing severance benefits are
superceded and replaced by any severance benefits payable under his
change-in-control severance agreement, discussed below. The employment agreement
also provides for Mr. Kurth to receive a grant of stock options to purchase up
to 70,000 shares of Common Stock under a new Health Power, Inc. management stock
option plan. However, this grant is subject to the conditions that the new
management stock option plan be approved by the directors and stockholders of
Health Power, Inc., neither of which has occurred as of the date of this filing.
If approval of the new management stock option plan is received, then the stock
options will be at an exercise price equal to the closing market price of the
Common Stock on the last business day immediately preceding the date of the 2000
annual meeting of stockholders of Health Power, Inc. These options will vest
annually in increments of 14,000 shares.

         Robert J. Bossart, Jonathan R. Wagner, Richard T. Kurth, Daniel R.
Sullivan, and certain other executive officers of the Company have each entered
into a "change-in-control" severance agreement with the Company. Each of these
severance agreements is identical. These severance agreements provide each of
them with certain severance benefits if their employment is terminated within a
six-month period prior to, or a two-year period following, a change-in-control
of the Company. Under these severance agreements, the executive officer is
entitled to the continuation of his monthly "compensation" and fringe benefits
for 24 months following the date of his termination of employment. Compensation
is equal to the monthly average of such executive officer's base salary, cash
bonus and commissions received during the 36-month period prior to his
termination of employment. Termination events that will trigger the severance
benefits are (a) termination by the Company or its successor other than for
cause, (b) the executive officer's voluntary termination of employment within
six months after a change-in-control, or (c) the executive officer's voluntary
termination of employment for "good reason" during the two-year period following
the change-in-control. Good reason includes a material change or diminution in
the executive officer's position, authority, duties or responsibilities; a
reduction in salary; a material reduction in fringe benefits; an involuntary
relocation; or a material change in the kind of business engaged in by


                                       31
<PAGE>   50

CompManagement. The executive officer is prohibited from competing with the
Company during the period the severance benefits are provided to such officer.
The failure to abide by this noncompetition agreement will cause a forfeiture of
all severance benefits. For Messrs. Bossart, Wagner, and Kurth, any severance
benefits received under these severance agreements supercede and replace any
severance benefits otherwise payable under their respective employment
agreements.

COMPENSATION OF DIRECTORS

         Directors who are employees receive no separate compensation for their
services as a director. Outside directors of the Company (persons who are not
employees of the Company or any of its subsidiaries) receive an annual cash
retainer fee of $3,000, $500 for each Board or committee meeting attended, and
the reimbursement of travel expenses. In accordance with the Company's 1996
Directors Stock Award and Purchase Plan, outside directors also receive an
annual award of a number of Shares equal in value to $3,000 (determined as of
the end of the year for which the award is to be made). In addition, under this
plan, outside directors receive 50% of their cash annual retainer fee and 50% of
their quarterly meeting fees in the form of shares of Common Stock of Health
Power, Inc., and they have the option to receive all or a greater percentage of
such fees in the form of such shares. Outside directors can also elect to
receive all or a specified percentage of their other fees (such as fees for
attending special Board meetings or committee meetings) in the form of shares of
Common Stock of Health Power, Inc. The number of shares awarded is determined by
dividing the dollar amount of the fees to be received in the form Shares by the
last reported sale price of shares of Common Stock of Health Power, Inc. in the
over-the-counter market as of the last trading day prior to the date on which
the applicable Board meeting is held. In addition, outside directors receive
stock options under the Company's 1993 Directors' Stock Option Plan. Under this
plan, promptly following each annual meeting of stockholders of the Company,
each eligible director is granted an option to purchase 1,000 shares of Common
Stock at the fair market value of such shares on the last trading day prior to
the annual meeting preceding the date of grant. Options are immediately
exercisable in whole or in part and must be exercised within ten years of the
grant date.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         Robert S. Garek, Crystal A. Kuykendall, Ph.D., J.D., and Frank R. Nutis
serve as members of the Compensation Committee. No executive officer of the
Company served during 1999 as a member of a compensation committee or as a
director of any entity of which any of the Company's directors served as an
executive officer.





                                       32
<PAGE>   51


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain information with respect to the
beneficial ownership of shares of Common Stock of Health Power, Inc. by: (a)
each person known to Health Power, Inc. to be the beneficial owner of more than
5% of the outstanding Common Stock; (b) each director and each executive officer
named in the Summary Compensation Table (see Item 11); and (c) all directors and
executive officers as a group. Except as otherwise indicated in the notes to
this table, beneficial ownership was determined as of March 3, 2000. On that
date, there were 3,853,719 shares of Common Stock outstanding. Except as
otherwise indicated in the notes to this table, the persons named in this table
and their spouses have sole voting and investment power with respect to all
shares of Common Stock of Health Power, Inc. owned by them.
<TABLE>
<CAPTION>

NAME                                  AMOUNT AND NATURE
                                  OF BENEFICIAL OWNERSHIP (1)   PERCENT OF OWNERSHIP
                                  ---------------------------   --------------------
<S>                                    <C>                      <C>
Dr. Bernard F. Master                     1,277,142(2)               32.5%
340 Tucker Drive
Worthington, Ohio 43085

Heartland Advisors, Inc.                    776,300(3)               19.9%
789 North Market Street
Milwaukee, Wisconsin 53202

Robert J. Bossart                           310,422                   8.0%
6377 Emerald Parkway
Dublin, Ohio 43016

Jonathan R. Wagner                          309,865                   8.0%
6377 Emerald Parkway
Dublin, Ohio 43016

Dr. Elliott P. Feldman                       97,891                   2.5%


Robert S. Garek                              17,580(4)                  *


Dr. Crystal A. Kuykendall                     9,544                     *


Frank R. Nutis                               35,719(5)                  *


Dr. Burt E. Schear                           81,015                   2.1%


Richard T. Kurth                             73,517                   1.9%


Daniel R. Sullivan                            4,934                     *


All directors and executive officers      2,222,013                  55.0%
as a group (12 persons)
----------------------------
</TABLE>
*        Less than 1%.

(1)      For each of the persons named above, this table includes the following
         number of shares of Common Stock of Health Power, Inc. which may be
         acquired upon the exercise of options that


                                       33
<PAGE>   52

         are currently exercisable or exercisable within 60 days of March 3,
         2000: Dr. Master--74,806 shares; Mr. Bossart--16,304 shares; Mr.
         Wagner--15,747 shares; Dr. Feldman--18,614 shares; Mr. Garek--14,880
         shares; Dr. Kuykendall--4,000 shares; Mr. Nutis--16,325 shares; Dr.
         Shear--10,663 shares; and Mr. Sullivan--2,050. The number of shares of
         Common Stock of Health Power, Inc. which may be acquired by all
         directors and executive officers as a group includes options for
         184,365 shares which are currently exercisable or exercisable within 60
         days of March 3, 2000.

(2)      Includes 2,400 Shares owned by trusts of which Dr. Master or his spouse
         are trustees.

(3)      Beneficial ownership was determined as of December 31, 1999, and is
         based upon a Schedule 13G/A filed by Heartland Advisors, Inc. with the
         Securities and Exchange Commission. Heartland Advisors, Inc. is an
         investment adviser registered under Section 203 of the Investment
         Advisors Act of 1940.

(4)      Does not include any shares owned by Mr. Garek's spouse. Mr. Garek
         specifically disclaims any beneficial ownership of such shares.

(5)      Includes 5,000 Shares owned by a trust of which Mr. Nutis is the
         trustee.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         None.


PART IV

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

         (a)(1)   FINANCIAL STATEMENTS

                  The following financial statements of Health Power, Inc. are
                  included in Item 8:

                  Consolidated Balance Sheets as of December 31, 1999 and 1998

                  Consolidated Statements of Operations for the Years Ended
                  December 31, 1999, 1998, and 1997

                  Consolidated Statements of Stockholders' Equity for the Years
                  Ended December 31, 1999, 1998, and 1997

                  Consolidated Statements of Cash Flows for the Years Ended
                  December 31, 1999, 1998, and 1997

                  Notes to Consolidated Financial Statements

                  Report of Independent Accountants




                                       34
<PAGE>   53


         (a)(2)   FINANCIAL STATEMENT SCHEDULES

                  All financial statement schedules have been omitted because
                  they are not applicable or the required information is
                  included in Health Power, Inc.'s consolidated financial
                  statements or notes thereto.

         (a)(3)   LISTING OF EXHIBITS

<TABLE>
<CAPTION>

                                                                    If Incorporated by Reference,
Exhibit                                                             Document with which Exhibit was Previously
 No.            Description of Exhibit                              Filed with SEC
---             ----------------------                              ------------------------------------------

<S>             <C>                                                 <C>
2(a)            Stock Purchase Agreement dated December 31, 1998,   Current Report on Form 8-K dated January 15,
                among CompManagement, Inc., Century Business        1999 (see Exhibit 2 therein).
                Services, Inc., CBSI Management Co., M&N Risk
                Management, Inc. and M&N Enterprises, Inc.

2(b)            Asset Purchase Agreement dated May 12, 1999,        Current Report on Form 8-K dated July 30, 1999
                between CompManagement Health Systems, Inc. and     (see Exhibit 2 therein).
                Community Insurance Company, as amended by the
                First Amendment to Asset Purchase Agreement dated
                June 30, 1999, as further amended by the Second
                Amendment to Asset Purchase Agreement dated July
                16, 1999.

3(a)            Amended and Restated Certificate of Incorporation   Registration Statement on Form S-1, File No.
                of Health Power, Inc.                               33-74124 (see Exhibit 3(a) therein).

3(b)            Amended and Restated By-Laws of Health Power, Inc.  Registration Statement on Form S-1, File No.
                                                                    33-74124 (see Exhibit 3(b) therein).

4               Form of stock certificate.                          Amendment No. 2 to Registration Statement on
                                                                    Form S-1, File No. 33-74124 (see Exhibit 4(b)
                                                                    therein).

10(a)           Agreement between Ohio Bureau of Workers'           Annual Report on Form 10-K for the fiscal year
                Compensation and CompManagement Health Systems,     ended December 31, 1998, File No. 0-23220 (see
                Inc., dated November 10, 1998.                      Exhibit 10(a) therein).

10(b)           Form of Indemnification Agreement between Health    Registration Statement on Form S-1, File No.
                Power, Inc. and each of its officers and            33-74124 (see Exhibit 10(i) therein).
                directors.
</TABLE>

                                       35
<PAGE>   54
<TABLE>
                                                                    If Incorporated by Reference,
Exhibit                                                             Document with which Exhibit was Previously
 No.            Description of Exhibit                              Filed with SEC
---             ----------------------                              ------------------------------------------

<S>             <C>                                                 <C>
10(c)*          Employment Agreement between CompManagement, Inc.   Contained herein.
                and Dr. Bernard Master, dated as of May 1, 1999,
                as amended by First Amendment to Employment
                Agreement, dated as of January 1, 2000.

10(d)*          Employment Agreement among CompManagement, Inc.,    Contained herein.
                CompManagement Health Systems, Inc., and Robert
                J. Bossart, dated as of January 1, 2000.

10(e)*          Employment Agreement among CompManagement, Inc.,    Contained herein.
                CompManagement Health Systems, Inc., and Jonathan
                R. Wagner, dated as of January 1, 2000.

10(f)*          Employment Agreement between CompManagement,        Contained herein.
                Inc., CompManagement Health Systems, Inc., and
                Richard T. Kurth, dated as of January 1, 2000.

10(g)*          Executive Severance Benefits Agreement, among       Contained herein.
                Health Power, Inc., CompManagement, Inc.,
                CompManagement Health Systems, Inc. and Robert J.
                Bossart, dated as of August 26, 1999.

10(h)*          Executive Severance Benefits Agreement, among       Contained herein.
                Health Power, Inc., CompManagement, Inc.,
                CompManagement Health Systems, Inc. and Jonathan
                R. Wagner, dated as of August 26, 1999.

10(i)*          Executive Severance Benefits Agreement, among       Contained herein.
                Health Power, Inc., CompManagement, Inc.,
                CompManagement Health Systems, Inc. and Richard
                T. Kurth, dated as of August 26, 1999.

10(j)*          Executive Severance Benefits Agreement, among       Contained herein.
                Health Power, Inc., CompManagement, Inc.,
                CompManagement Health Systems, Inc. and Daniel R.
                Sullivan, dated as of August 26, 1999.
</TABLE>
                                       36
<PAGE>   55
<TABLE>
<CAPTION>
                                                                    If Incorporated by Reference,
Exhibit                                                             Document with which Exhibit was Previously
 No.            Description of Exhibit                              Filed with SEC
---             ----------------------                              ------------------------------------------

<S>             <C>                                                 <C>
10(k)*          Health Power, Inc. 1996 Directors Stock Award and   Registration Statement on Form S-8, File No.
                Purchase Plan.                                      333-20535 (see Exhibit 4(d) therein).

10(l)*          Amendment No. 1 to Health Power, Inc. 1996          Annual Report on Form 10-K for the fiscal year
                Directors Stock Award and Purchase Plan.            ended December 31, 1997, File No. 0-23220 (see
                                                                    Exhibit 10(x) therein).

10(m)*          Amendment No. 2 to Health Power, Inc. 1996          Contained herein.
                Directors Stock Award and Purchase Plan.

10(n)*          Health Power, Inc. 1985 Nonqualified Directors'     Registration Statement on Form S-1, File No.
                Stock Option Plan, as amended.                      33-74124 (see Exhibit 10(w) therein).

10(o)*          Health Power, Inc. 1993 Directors Stock Option      Registration Statement on Form S-1, File No.
                Plan.                                               33-74124 (see Exhibit 10(x) therein).

10(p)*          Amendment No. 1 to Health Power, Inc. 1993          Annual Report on Form 10-K for the fiscal year
                Directors Stock Option Plan.                        ended December 31, 1994, File No. 0-23220 (see
                                                                    Exhibit 10(t) therein).

10(q)*          Health Power, Inc. 1994 Stock Option Plan.          Registration Statement on Form S-1, File No.
                                                                    33-74124 (see Exhibit 10(y) therein).

10(r)*          Amendment No. 1 to Health Power, Inc. 1994 Stock    Annual Report on Form 10-K for the fiscal year
                Option Plan.                                        ended December 31, 1994, File No. 0-23220 (see
                                                                    Exhibit 10(v) therein).

10(s)*          Health Power, Inc. 1994 Executive Performance       Quarterly Report on Form 10-Q for the
                Stock Option Plan.                                  quarterly period ended June 30, 1994, File No.
                                                                    0-23220 (see Exhibit (a)(1) therein).

10(t)*          Amendment No. 1 to Health Power, Inc. 1994          Annual Report on Form 10-K for the fiscal year
                Executive Performance Stock Option Plan.            ended December 31, 1994, File No. 0-23220 (see
                                                                    Exhibit 10(x) therein).

10(u)*          Amendment No. 2 to Health Power, Inc. 1994          Annual Report on Form 10-K for the fiscal year
                Executive Performance Stock Option Plan.            ended December 31, 1995, File No. 0-23220 (see
                                                                    Exhibit 10(dd) therein).

10(v)           Commercial Note dated December 31, 1998, from       Current Report on Form 8-K dated January 15,
                CompManagement, Inc. and CompManagement Health      1999 (see Exhibit 99(a) therein).
                Systems, Inc. to National City Bank
</TABLE>
                                       37
<PAGE>   56
<TABLE>
<CAPTION>
                                                                    If Incorporated by Reference,
Exhibit                                                             Document with which Exhibit was Previously
 No.            Description of Exhibit                              Filed with SEC
---             ----------------------                              ------------------------------------------

<S>             <C>                                                 <C>
10(w)*          Health Power, Inc.  Performance-Based Incentive     Contained herein.
                Compensation Plan.

10(x)           Agreement between Ohio Bureau of Workers'           Contained herein.
                Compensation and Community Insurance Company
                d/b/a Anthem Blue Cross and Blue Shield, dated
                November 10, 1998, as assigned to CompManagement
                Health Systems, Inc. on July 16, 1999.

21              Subsidiaries of Health Power, Inc.                  Contained herein.

23              Consent of PricewaterhouseCoopers LLP               Contained herein.

24(a)           Powers of Attorney for Dr. Bernard F. Master, Dr.   Annual Report on Form 10-K for the fiscal year
                Elliott P. Feldman, Robert S. Garek, Frank R.       ended December 31, 1997, File No. 0-23220 (see
                Nutis, Dr. Burt E. Schear, Robert J. Bossart and    Exhibit 24 therein).
                Crystal A. Kuykendall

24(b)           Power of Attorney for Jonathan R. Wagner            Contained herein.

27              Financial Data Schedule                             Contained herein.

*        Executive compensation plans and arrangements required to be filed
         pursuant to Item 601(b)(10) of Regulation S-K.

         (b)      REPORTS ON FORM 8-K

                  None.

         (c)      EXHIBITS

                  The exhibits in response to this portion of Item 14 are
                  submitted following the signatures.

         (d)      FINANCIAL STATEMENT SCHEDULES

                  All financial statement schedules have been omitted because
                  they are not applicable or the required information is
                  included in Health Power, Inc.'s consolidated financial
                  statements or notes thereto.
</TABLE>




                                       38
<PAGE>   57
                                   SIGNATURES

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

                               HEALTH POWER, INC.


Date:  March 30, 2000          By /s/Dr. Bernard F. Master
                                  ------------------------
                                      Dr. Bernard F. Master, Chairman of the
                                      Board, Chief Executive Officer, and
                                      President

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

<TABLE>
<CAPTION>
            Signature                            Title                                 Date
            ---------                            -----                                 ----

<S>                                     <C>                                         <C>
/s/Dr. Bernard F. Master                Chairman of the Board,                      March 30, 2000
---------------------------             Chief Executive Officer,
Dr. Bernard F. Master                   President, and Director
                                        (principal executive officer)

/s/Paul A. Miller                       Chief Financial Officer of                  March 30, 2000
---------------------------             CompManagement, Inc. (principal
Paul A. Miller                          financial and accounting officer)


Dr. Elliott P. Feldman*                          Director                           March 30, 2000
---------------------------
Dr. Elliott P. Feldman

Robert J. Bossart*                               Director                           March 30, 2000
---------------------------
Robert J. Bossart

Robert S. Garek*                                 Director                           March 30, 2000
---------------------------
Robert S. Garek

Crystal A. Kuykendall*                           Director                           March 30, 2000
---------------------------
Crystal A. Kuykendall

Frank R. Nutis*                                  Director                           March 30, 2000
---------------------------
Frank R. Nutis

Dr. Burt E. Schear*                              Director                           March 30, 2000
---------------------------
Dr. Burt E. Schear

Jonathan R. Wagner*                              Director                           March 30, 2000
---------------------------
Jonathan R. Wagner
</TABLE>

*    The undersigned, Dr. Bernard F. Master, by signing his name hereto, does
     hereby execute this Annual Report on Form 10-K for the Registrant's fiscal
     year ended December 31, 1999, on behalf of each of the other above-named
     directors of the Registrant pursuant to Powers of Attorney executed by such
     directors and filed with the Securities and Exchange Commission as an
     exhibit to this report.

<TABLE>
<S>                                                                                 <C>
/s/ Dr. Bernard F. Master                                                           March 30, 2000
-----------------------------------------------
Dr. Bernard F. Master, Attorney in Fact
</TABLE>



                                       39
<PAGE>   58




                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
                                                                    If Incorporated by Reference,
Exhibit                                                             Document with which Exhibit was Previously
No.             Description of Exhibit                              Filed with SEC
---             ----------------------                              ------------------------------------------
<S>             <C>                                                 <C>
2(a)            Stock Purchase Agreement dated December 31, 1998,   Current Report on Form 8-K dated January 15,
                among CompManagement, Inc., Century Business        1999 (see Exhibit 2 therein).
                Services, Inc., CBSI Management Co., M&N Risk
                Management, Inc. and M&N Enterprises, Inc.

2(b)            Asset Purchase Agreement dated May 12, 1999,        Current Report on Form 8-K dated July 30, 1999
                between CompManagement Health Systems, Inc. and     (see Exhibit 2 therein).
                Community Insurance Company, as amended by the
                First Amendment to Asset Purchase Agreement dated
                June 30, 1999, as further amended by the Second
                Amendment to Asset Purchase Agreement dated July
                16, 1999.

3(a)            Amended and Restated Certificate of Incorporation   Registration Statement on Form S-1, File No.
                of Health Power, Inc.                               33-74124 (see Exhibit 3(a) therein).

3(b)            Amended and Restated By-Laws of Health Power, Inc.  Registration Statement on Form S-1, File No.
                                                                    33-74124 (see Exhibit 3(b) therein).

4               Form of stock certificate.                          Amendment No. 2 to Registration Statement on
                                                                    Form S-1, File No. 33-74124 (see Exhibit 4(b)
                                                                    therein).

10(a)           Agreement between Ohio Bureau of Workers'           Annual Report on Form 10-K for the fiscal year
                Compensation and CompManagement Health Systems,     ended December 31, 1998, File No. 0-23220 (see
                Inc., dated November 10, 1998.                      Exhibit 10(a) therein).

10(b)           Form of Indemnification Agreement between Health    Registration Statement on Form S-1, File No.
                Power, Inc. and each of its officers and            33-74124 (see Exhibit 10(i) therein).
                directors.

10(c)           Employment Agreement between CompManagement, Inc.   Contained herein.
                and Dr. Bernard Master, dated as of May 1, 1999,
                as amended by First Amendment to Employment
                Agreement, dated as of January 1, 2000.
</TABLE>


                                       40
<PAGE>   59
<TABLE>
<CAPTION>

                                                                    If Incorporated by Reference,
Exhibit                                                             Document with which Exhibit was Previously
No.             Description of Exhibit                              Filed with SEC
---             ----------------------                              ------------------------------------------
<S>             <C>                                                 <C>
10(d)           Employment Agreement among CompManagement, Inc.,    Contained herein.
                CompManagement Health Systems, Inc., and Robert
                J. Bossart, dated as of January 1, 2000.

10(e)           Employment Agreement among CompManagement, Inc.,    Contained herein.
                CompManagement Health Systems, Inc., and Jonathan
                R. Wagner, dated as of January 1, 2000.

10(f)           Employment Agreement between CompManagement,        Contained herein.
                Inc., CompManagement Health Systems, Inc., and
                Richard T. Kurth, dated as of January 1, 2000.

10(g)           Executive Severance Benefits Agreement, among       Contained herein.
                Health Power, Inc., CompManagement, Inc.,
                CompManagement Health Systems, Inc. and Robert J.
                Bossart, dated as of August 26, 1999.

10(h)           Executive Severance Benefits Agreement, among       Contained herein.
                Health Power, Inc., CompManagement, Inc.,
                CompManagement Health Systems, Inc. and Jonathan
                R. Wagner, dated as of August 26, 1999.

10(i)           Executive Severance Benefits Agreement, among       Contained herein.
                Health Power, Inc., CompManagement, Inc.,
                CompManagement Health Systems, Inc. and Richard
                T. Kurth, dated as of August 26, 1999.

10(j)           Executive Severance Benefits Agreement, among       Contained herein.
                Health Power, Inc., CompManagement, Inc.,
                CompManagement Health Systems, Inc. and Daniel R.
                Sullivan, dated as of August 26, 1999.

10(k)           Health Power, Inc. 1996 Directors Stock Award and   Registration Statement on Form S-8, File No.
                Purchase Plan.                                      333-20535 (see Exhibit 4(d) therein).

10(l)           Amendment No. 1 to Health Power, Inc. 1996          Annual Report on Form 10-K for the fiscal year
                Directors Stock Award and Purchase Plan.            ended December 31, 1997, File No. 0-23220 (see
                                                                    Exhibit 10(x) therein).
</TABLE>

                                       41
<PAGE>   60

<TABLE>
<CAPTION>
                                                                    If Incorporated by Reference,
Exhibit                                                             Document with which Exhibit was Previously
No.             Description of Exhibit                              Filed with SEC
---             ----------------------                              ------------------------------------------
<S>             <C>                                                 <C>
10(m)           Amendment No. 2 to Health Power, Inc. 1996          Contained herein.
                Directors Stock Award and Purchase Plan.

10(n)           Health Power, Inc. 1985 Nonqualified Directors'     Registration Statement on Form S-1, File No.
                Stock Option Plan, as amended.                      33-74124 (see Exhibit 10(w) therein).

10(o)           Health Power, Inc. 1993 Directors Stock Option      Registration Statement on Form S-1, File No.
                Plan.                                               33-74124 (see Exhibit 10(x) therein).

10(p)           Amendment No. 1 to Health Power, Inc. 1993          Annual Report on Form 10-K for the fiscal year
                Directors Stock Option Plan.                        ended December 31, 1994, File No. 0-23220 (see
                                                                    Exhibit 10(t) therein).

10(q)           Health Power, Inc. 1994 Stock Option Plan.          Registration Statement on Form S-1, File No.
                                                                    33-74124 (see Exhibit 10(y) therein).

10(r)           Amendment No. 1 to Health Power, Inc. 1994 Stock    Annual Report on Form 10-K for the fiscal year
                Option Plan.                                        ended December 31, 1994, File No. 0-23220 (see
                                                                    Exhibit 10(v) therein).

10(s)           Health Power, Inc. 1994 Executive Performance       Quarterly Report on Form 10-Q for the
                Stock Option Plan.                                  quarterly period ended June 30, 1994, File No.
                                                                    0-23220 (see Exhibit (a)(1) therein).

10(t)           Amendment No. 1 to Health Power, Inc. 1994          Annual Report on Form 10-K for the fiscal year
                Executive Performance Stock Option Plan.            ended December 31, 1994, File No. 0-23220 (see
                                                                    Exhibit 10(x) therein).

10(u)           Amendment No. 2 to Health Power, Inc. 1994          Annual Report on Form 10-K for the fiscal year
                Executive Performance Stock Option Plan.            ended December 31, 1995, File No. 0-23220 (see
                                                                    Exhibit 10(dd) therein).

10(v)           Commercial Note dated December 31, 1998, from       Current Report on Form 8-K dated January 15,
                CompManagement, Inc. and CompManagement Health      1999 (see Exhibit 99(a) therein).
                Systems, Inc. to National City Bank

10(w)           Health Power, Inc.  Performance-Based Incentive     Contained herein.
                Compensation Plan.
</TABLE>

                                       42
<PAGE>   61

<TABLE>
<CAPTION>
                                                                    If Incorporated by Reference,
Exhibit                                                             Document with which Exhibit was Previously
No.             Description of Exhibit                              Filed with SEC
---             ----------------------                              ------------------------------------------
<S>             <C>                                                 <C>
10(x)           Agreement between Ohio Bureau of Workers'           Contained herein.
                Compensation and Community Insurance Company
                d/b/a Anthem Blue Cross and Blue Shield, dated
                November 10, 1998, as assigned to CompManagement
                Health Systems, Inc. on July 16, 1999.

21              Subsidiaries of Health Power, Inc.                  Contained herein.

23              Consent of PricewaterhouseCoopers LLP               Contained herein.

24(a)           Powers of Attorney for Dr. Bernard F. Master, Dr.   Annual Report on Form 10-K for the fiscal year
                Elliott P. Feldman, Robert S. Garek, Frank R.       ended December 31, 1997, File No. 0-23220 (see
                Nutis, Dr. Burt E. Schear, Robert J. Bossart and    Exhibit 24 therein).
                Crystal A. Kuykendall

24(b)           Power of Attorney for Jonathan R. Wagner            Contained herein.

27              Financial Data Schedule                             Contained herein.
</TABLE>


                                       43