<PAGE>   1

                      SECURITIES AND EXCHANGE COMMISSION

                        WASHINGTON, D.C. 20549



                                 FORM 10 - K


            [  X ] ANNUAL REPORT PURSUANT  TO SECTION 13 OR 15 (d)

                    OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the fiscal year ended December 31, 1999
                                      OR


            [   ] TRANSITION REPORT PURSUANT SECTION 13 OR 15 (d)

                    OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the transition period from         to


                         Commission File No.  0-23998



                      FIRST CHOICE HEALTH NETWORK, INC.
            (Exact name of Registrant as specified in its charter)

      Washington                                             91-1272766
(State or Other Jurisdiction of                          (I.R.S. Employer
 Incorporation or Organization)                          Identification No.)

                               601 Union Street
                                  Suite 1100
                        Seattle, Washington 98101-1838
                            (Address of principal
                              executive offices)

                Issuer's Telephone Number, Including Area Code

                                (206) 292-8255
               (Issuer's telephone number, including area code)







                                 	     1
<PAGE>   2

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


         Securities to be registered under Section 12 (g) of the Act:
             Class A Common Stock, par value $1.00 par value per share


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

Yes   ___X__             No   ______

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-B 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.  [    ]


There is no trading market for the Registrants voting stock (Class A Common
Stock, $1.00 par value and Class B Common Stock, $1.00 par value) and,
accordingly, the market value of the voting stock held by non-affiliates of
the Registrant based on bid and asked prices cannot be determined.


The aggregate number of Registrant's shares outstanding on December 31, 1999
was 585 shares of Class A Common Stock, and 40,600 shares of Class B Common
Stock, $1.00 par value, respectively.



Transitional Small Business Disclosure Format ( check one ):


                        Yes   ______        No   __X__

Documents incorporated by reference:

None



                                         2
<PAGE>   3

PART   I

    ITEM 1          BUSINESS                                                4

    ITEM 2          PROPERTIES	                              					         10

    ITEM 3          LEGAL PROCEEDINGS                                      10

    ITEM 4          SUBMISSION OF MATTERS
                    TO A VOTE OF SECURITY HOLDERS                          10
PART  II

    ITEM 5          MARKET FOR COMMON EQUITY AND
                    RELATED STOCKHOLDER MATTERS                            10

    ITEM 6          SELECTED FINANCIAL DATA                                11

    ITEM 7          MANAGEMENT'S DISCUSSION AND ANALYSIS
                    OF FINANCIAL CONDITION AND RESULTS OF
                    OPERATIONS                                             11

    ITEM 7A         QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT
                    MARKET RISK                                            15


    ITEM 8          FINANCIAL STATEMENTS AND
                    SUPPLEMENTARY DATA                                     15

    ITEM 9          CHANGES IN AND DISAGREEMENTS WITH
                    ACCOUNTANTS ON ACCOUNTING AND
                    FINANCIAL DISCLOSURE					                              35
PART  III

   ITEM 10          DIRECTORS AND EXECUTIVE OFFICERS OF
                    FIRST CHOICE HEALTH NETWORK, INC.                      36


   ITEM 11          EXECUTIVE COMPENSATION                                 42

   ITEM 12          SECURITY OWNERSHIP OF CERTAIN
                    BENEFICIAL OWNERS AND MANAGEMENT                       43

   ITEM 13          CERTAIN RELATIONSHIPS AND RELATED
                    TRANSACTIONS                                           45

  PART  IV

   ITEM 14          EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
                    AND REPORTS ON FORM 8-K                                46

                    SIGNATURES                                             49

                                        3

<PAGE>   4

                                        PART  I

ITEM 1.   DESCRIPTION OF BUSINESS AND PRODUCTS

GENERAL

First Choice Health Network, Inc., ("The Network_) is a provider-owned,
managed health care company which has established a network of physicians,
hospitals and other health care providers (a "Preferred Provider Organization"
or "PPO") located almost exclusively in the State of Washington for the
provision of health care services; a small portion of the PPO is located in
each of Alaska, Idaho and Montana.  Subscribers (or members) in Oregon can
also access a network of health care providers (marketed as a separate PPO).
The Network contracts with the health care providers in its PPO for the
provision of health care services on a discounted fee basis and contracts with
self-insured employers, indemnity insurers, health maintenance organizations
and union trusts (collectively, "Health Plans") and third party administrators
("TPAs"), to provide their subscribers (or members) access to the PPO, for
which it receives a fee from the Health Plan or the TPA, as applicable,
typically on a per subscriber (or member) per month basis; an additional per
subscriber (or member) monthly fee is received in the event the Health Plan or
TPA elects to receive utilization management services.  In addition, the
hospitals participating in the PPO pay First Choice an administrative fee
under their respective participating health care facility service contracts.

At December 31, 1999, First Choice had arrangements with third party
administrators and health plans representing approximately 1,022,000 members
and their dependents (collectively "Covered Persons").   Practically all of
the Company's revenues were derived from services performed in the state of
Washington during the year ended December 31, 1999.

The Network's success depends to a significant degree on its ability to
control health care costs for the Health Plans utilizing its PPO.  In addition
to its discounted fee arrangements with the health care providers
participating in its PPO, The Network controls health care costs with respect
to a portion of the subscribers to its PPO through a primary care physician
"gatekeeper" system of health care delivery and utilization management
programs (third-party review of the utilization of health care services), the
latter of which is available to the Health Plan for an additional per
subscriber (or member) monthly fee.

An integral part of The Network's PPO is its comprehensive quality assurance
program, which is designed to maintain and improve proper medical care and
includes, among other things, verification of physicians' credentials and
hospital accreditation, medical care evaluations, outcome studies which
evaluate hospital admissions and referral patterns and the processing of
Covered Persons' grievances. In excess of 73% of the PPO physicians are board
certified or board eligible in one or more specialties.

First Choice Health Network, a corporation organized under the laws of the
state of Washington in 1984, is owned by 467 physicians, all of whom own Class
A Common Stock; seven hospitals who own Class B Common Stock, and four
hospital participants.

During 1995, The Network formed a wholly-owned subsidiary, First Choice Health
Plan, Inc.(_The Plan_), to operate as a health care service contractor
(_HCSC_) that permits the Company to assume risk for healthcare services in
its operations.

An HCSC is  an organization that  arranges for the  provision and delivery  of
health care services to a voluntarily enrolled population, either directly  or
indirectly as a  subcontractor through  a Health  Plan, for  a fixed  periodic
premium through  a  network  of  providers  who  generally  receive  either  a
capitation fee  (a fixed periodic fee per covered member) or a negotiated  fee
for the  health  care  services rendered.    HCSCs,  like  health  maintenance
organizations   ("HMOs"), may  utilize a  "gatekeeper" system  of health  care
delivery  whereby  each  member  is  serviced  by  a  primary  care  physician
(generally, a  family practitioner,  pediatrician or  internist) who  provides
medical care  related to  the general  health  of the  HMO member  and  refers
members to specialists and other health care providers, as appropriate.  HCSCs
differ from PPOs in that  they are permitted to  assume the financial risk  of

						   4

<PAGE>   5
the cost of  health  care  services  exceeding  the  premiums  received  from
members,subscribers or Health Plans.  HCSCs are required to register with the
state of Washington Department of Insurance which  requires, among other
items, filing copies of organizational documents, financial disclosure, forms
of agreements to be issued  to members,  a schedule of  proposed rates  of
reimbursement  to providers, solicitation materials  and a description  of
grievance  procedures and a quality assurance program.

Risked Based Capital (RBC) requirements were adopted by the state of
Washington and the NAIC effective for 1998 and 1999, which established that
certain required amounts of capital be maintained.  As of December 31, 1998
and 1999, the Company's RBC exceeded the required amount in connection with
its statutory filing.

Effective July 1, 1997, The Plan merged with Health First Partners, Inc. and
Health Washington L.L.C. which added approximately 18,000 fully insured
members.

Effective December 1, 1998 First Choice Health Network, Inc. acquired
Providence Plan Partners Preferred-Washington preferred provider organization,
or PPO Business.  The acquired business consists of approximately 1,000
physicians, which serves about 125,000 subscribers with an annual revenue
stream of approximately $4.0 million.  Under the terms of the purchase First
Choice Health Network, Inc. purchased substantially all of the assets for
Providence Plan Partners PPO Business for a minimum price of $2.8 million to
be paid with interest of six percent over 18 months.  There is a potential
contingent payment of up to $668,000 to be determined based on the revenues
received by First Choice Health Network from the PPO Business during the
twelve months after the closing date.  This transaction was accounted for
using the purchase method.  As of the date of this filing, the contingent
payment of $668,000 has been paid.

The Plan  has filed  an application  with the  Federal Health  Care  Financing
Administration (_HCFA_) for a license to offer a Medicare risk product  called
SeniorsFirst.  The medicare application was  approved in the third quarter  of
1998 with the first sales of the product occurred  on January 1, 1999.  As  of
December 31,  1999,  there  were 15,934  members  and  collected  premiums  of
$5,990,985.

Redeemable Equity Participation

On December 20, 1999, First Choice Health Network, Inc. executed an  agreement
with University  of Washington  Academic Medical  Center  (UWMC) to  become  a
participant in the administration, operations and any incentives bestowed upon
any shareholders in  First Choice Health  Network effective  January 1,  2000.
First Choice  offers and  operates a  preferred  provider organization  and  a
managed care delivery system for cost-effective, quality health care benefits,
and for  comprehensive  health  care  claims  processing  and  administration.
University of  Washington  Academic  Medical Center  has  agreed  to  pay  the
affiliation fee  of  $2,520,000,  payable $1,260,000  upon  execution  of  the
Agreement and the remaining $1,260,000 will be paid in three equal payments of
$420,000 due annually for three years plus interest at five percent (5%).

UWMC does not  become a  shareholder or  member of  the Network.   UWMC  shall
participate in any incentive or reward  program established by the Network  as
if UWMC owned 5,800 shares of class B common stock.  Dividends, distributions,
and liquidation of  the Network  are also determined  as if  UWMC owned  5,800
shares of class B stock.

If  the  Network  performs  certain  actions  that  substantially  change  the
organization, the  Network  discontinues  the health  care  facility  services
contract with UWMC, or  if total managed care  enrollment falls below  500,000
member months, then UWMC can withdraw  from the agreement, but no refunds  are
given.  If the  Network merges, is sold,  or if the  Network takes a  material
action that proves detrimental  to UWMC, then UWMC  may redeem their  interest
for the equivalent  of the fair  value of 5,800  class B common  shares of  FC
stock, less any amounts still owed by UWMC.

PRODUCTS

First Choice Health Network's PPO


                                       5


<PAGE>   6

The Network's PPO is comprised of physicians, hospitals and other health care
providers in the states of Washington, Alaska, Idaho and Montana who are
required to sign preferred physician contracts, health care facility service
contracts and provider contracts, respectively, under which the health care
provider agrees to accept, as payment in full, the discounted fee schedule
negotiated by The Network for each covered service; such agreements are
terminable on 90 days' notice.  Subscribers (or members) also have access to a
network of providers (marketed as a separate PPO) in the state of Oregon.

     Physicians

In the primary care physician "gatekeeper" system of health care delivery, a
Covered Person receives care from a participating primary care physician who,
in turn, refers the Covered Person to specialists and hospitals, as required.
Primary care physicians, consisting of family practitioners, pediatricians,
general practitioners and internists, are important to the Company's health
care cost containment as they control utilization of hospitals, specialists
and other health care providers.

The Network seeks to include within its PPO high-quality, cost-effective
physicians who have admitting privileges at a participating PPO hospital.  In
addition, physicians are recruited in geographic areas in which the Company's
PPO does not have a physician presence if a prospective Health Plan has a
large number of Covered Persons in such area.  Upon receipt of an application
by a physician to participate in the PPO, The Network conducts its own
credentialing process (separate and distinct from those performed by
participating hospitals with respect to physicians with admitting privileges),
evaluating relevant information such as malpractice insurance, claims activity
and the physician's standing with licensing regulatory authorities.

     Hospitals

The Network has contracts with hospitals in most counties in the State of
Washington and in each county in which it conducts business in other states.
The PPO offers Covered Persons a full range of hospital services, including
tertiary care.

The Network seeks to attract hospitals rendering high-quality, cost-effective
care.  Prior to contracting with a hospital, the Company reviews the
hospital's accreditation, federal and state certifications, and internal and
external claims data and reports, including data available from regulatory
agencies.


     Other Health Care Providers

The Network has contracts with many health care providers (other than
physicians and hospitals) which, among other services, provide mental health
care, diagnostic services, chiropractic services, physical therapy, out-
patient surgery, laboratory services and home health care.

The Network has also developed a pharmacy network in the state of Washington
which provides data with respect to utilization of prescribed drugs by
physicians participating in the PPO, which the Company intends to incorporate
into its utilization management program.

     Utilization Management Services

In addition to providing Health Plans with access to its PPO, The Network
offers a utilization management program for an additional per subscriber (or
member) monthly fee to the Health Plan.  The goal of the utilization
management program is to ensure that high quality health care is consistently
delivered to Covered Persons in an efficient and cost-effective manner.  The
program includes individual case reviews of hospital admissions, outpatient
surgery, primary care physician referrals to specialists, management of
catastrophic, psychiatric and substance abuse cases, profiling practice
patterns of individual physicians and evaluation of hospital utilization
patterns.

                                        6

<PAGE>   7

At December 31, 1999, The Network had contractual arrangements through which
Health Plans in both the public and private sectors representing approximately
1,022,000 Covered Persons, utilized the Company's PPO.  The Network receives a
fee for providing access to its PPO, typically on a per subscriber (or member)
per month basis, from the Health Plan, either directly or indirectly through a
TPA.  The per subscriber (or member) monthly fee is generally fixed for a
twelve-month period under contracts with each Health Plan or TPA, and is based
upon the extent of the network utilized (hospitals and/or physicians), whether
utilization management services are requested and the number of Covered
Persons.

First Choice Health Plan Products

The Plan offers health care coverage to individual groups, Association Plans
as well as a Medicare Risk and Medicare Supplement product:

     Association Plan

These plans include a plan offered through Costco Wholesale, a plan offered
through the Employers Health Purchasing Cooperative, a plan offered through
the Bellevue Chamber of Commerce, and a plan offered through the Association
of Washington Businesses which are tailor made to a targeted population of
employees.

     Medicare Risk

The Plan offers a medicare risk product called SeniorsFirst for persons
eligible to receive Medicare (parts A and B) at no or minimal cost to the
member.  SeniorsFirst is a medicare managed care plan combines health
insurance and health services in one organization, a Medicare + Choice HMO.
SeniorsFirst offer the same benefits that original medicare offers and
additional benefits, which may change from year to year.  Under this program,
the Health Care Financing Administration of the United States Department of
Health and Human Services (HCFA) pays a fixed premium for coverage of each
member based on a formula of the projected medical expense of each Medicare
member.

     Medicare Supplement

Under the HCSC license, The Plan contracted with Olympic Health Management
Systems, Inc., to develop and implement a Medicare Supplement product.  The

<PAGE>
rate schedules for the first phase of this proposed offering were filed and

approved by the state Office of Insurance Commissioner in the spring of 1996.
Upon acceptance of the proposed rates, the Company and Olympic Health
Management representatives marketed this product to the general public.  Rate
schedules for a second phase, a non-agent plan, of this Medicare supplement as
of this time have not been submitted to the OIC.

The Plan offers three basic types of health care plans to prospective employer
groups:  Managed Plans, Triple Option Plans and Point of Service Plans.

     Managed Plans

All health care, except emergency services,  under this plan is provided or
arranged by a primary care physician (PCP) which is chosen by the member
during enrollment.  The PCP will refer the member to specialists, as well as
arrange hospital and other services with a Community Network of providers.

     Point of Service Plan

This plan offers the same coverage as the Managed Plan but provides another
level of benefit coverage. The member is required to choose a PCP during
enrollment.  The member may choose to have his/her services coordinated
through the PCP in order to have the highest level of benefit coverage
available.  The member also has the choice to self-refer to an Extended PPO
Network Provider which is paid at a lower level.


                                         7

<PAGE>   8

     Triple Option Health Plan

This plan offers three different levels of benefit coverage:  the Community
Network benefit level, the Extended PPO Network benefit level and an out-of-
network benefit level.  The member is required to choose a PCP during
enrollment.  The member may choose to have his/her services coordinated
through the PCP in order to receive the highest level of benefit coverage
available.  However, the member may choose to self-refer to an Extended PPO
Network Provider or a non-participating provider which is covered at a lower
reimbursement.


MARKETING AND SALES

The Network markets its PPO and utilization management services through an
internal marketing staff to TPAs and, in conjunction with the TPAs and
independent brokers and agents, to the Health Plans.  The Network generally
does not market directly to subscribers or their dependents, although it does
engage in limited direct mailings relating to product development.

The Plan distributes its products through it direct sales force and
telemarketing representatives and through independent insurance agents and
brokers.

Direct Sales Force and Telemarketing

The Plan maintains a direct sales staff of account executives.  The account
executives sell the managed care and point of service to employer groups.  In
addition, they are the principal administrative contact for employers and
their benefit managers by conducting on-site employee meetings and various
other requests.

The Plan employs a staff of telemarketing representatives who sell the Costco
Health Insurance product directly to small groups.

Independent Insurance Agents and Brokers

Independent insurance agents and brokers have been responsible for a
significant portion of The Plan's enrollment growth of the managed care
products.  They are compensated pursuant to commission arrangements that vary
depending on the particular company products and services sold.

MAJOR CUSTOMER

The Company's largest customer, the Boeing Company, accounted for
approximately 34% of the Company's premium revenue in fiscal 1999 and
approximately 43% in fiscal 1998.  Boeing accounted for approximately
$24,500,000 and $19,800,000 of the Company's consolidated revenues for 1999 an
1998, respectively.  The Company believes that it relationship with Boeing is
excellent.

COMPETITION

The managed health care industry is highly competitive, primarily on the basis
of price, the size, quality and geographic location of the network of
physicians, hospitals and other health care providers, benefits provided and
quality of service.  The Network competes with other managed health care
companies, such as health maintenance organizations and indemnity health
insurance companies, and approximately twelve other PPOs in the state of
Washington and believes, that through its licensure as a HCSC, it can maintain
its PPO base and expand into additional areas of the marketplace.



                                        8

<PAGE>   9

GOVERNMENTAL REGULATION

State Health Care Legislation

The 1999 legislative session did not pass any health care related legislation.
There were, however a number of Rule Making Orders issued by the Office of the
Insurance Commissioner related to Health Care.  These Rule Making Orders are
summarized below:

R 98-17 (Filed 11/29/99) Standards for Expedited Review of Health Care Service
Denials by Health Carriers
The effective date is December 30, 1999.  The effected WAC Chapters are 284-
43-610, 284-43-620, 284-44-043, 284-46-507, 284-50-377, 284-96-015

The purpose is to set standards for expedited review of health care service
denials by health carriers when an enrollee's life and health would be
jeopardized by the timelines and procedures for more routine enrollee
grievances.  These standards shorten the time frames in which Health Carriers
may respond to member appeals. There is a business impact on First Choice as
this requirement results in increased costs associated with staffing
increases, and significant costs associated with contracting with outside
review organizations in order to meet standards set forth in this regulation.

R 98-21 (Filed 10/11/99) Health Care Provider Contracts
The effective date is November 11, 1999.  The effected WAC Chapter is 284-43.
The following is a  summary of what  is contained in  this Rule Making  Order:
Provisions requiring carriers to provide 60 days advance notice of changes  in
procedures must be given  only for those changes  that affect compensation  or
health care service delivery.  60 day notice is not required where changes  in
law prevent the carriers from giving 60 day notice.  No change to the contract
can be  made retroactive  without express  consent of  the provider.    Prompt
payment standards were modified  to reflect standards  required by the  Health
Care Financing Administration for Medicare.  Carriers must clearly report  the
reasons for a claim denial and must  have a process for answering health  care
provider questions about claims.   Audit standards were substantially  removed
in favor  of a  new cooperative  process to  establish uniform  standards  for
claims procedures later.  Instead, basic  standards related to carrier  access
to records  is  addressed.  Dispute  resolution  provisions  were  simplified.
Different disputes may be settled through different methods appropriate to the
type of  dispute.   Carriers  may  require the  provider  to use  the  dispute
resolution process before resorting to judicial means.  Carriers must  resolve
standard disputes within a reasonable time  frame and billing disputes  within
60 days.  The audit standards have been replaced with a few general  standards
relating to carrier access to records.  Carriers are permitted to use contract
forms upon  filing with  the Office  if  the contract  changes do  not  affect
regulatory  requirements.     The   above  changes   require  procedural   and
documentation revisions.  This has a  business impact on First Choice in  that
there are costs associated  with increased staffing  and overtime required  to
meet the  time frames,  potential interest  costs, and  costs associated  with
system modifications to calculate  the interest.   There are also  operational
costs such  as legal  review  costs associated  with  the development  of  new
contracting language as  well as costs  associated with  issuing new  contract
materials to providers.

R 98-7 (Filed 9/8/99) Advertisement of Mental Health Benefits
The effective date is October 9, 1999.  The effected WAC Chapters are 284-43-
130, 284-43-810. Improve uniformity in the terminology used in the advertising
of mental health benefits and increase the understanding of consumers who
read, hear, or view the advertisement.  There is no business impact on First
Choice.

R 99-4 (Filed 8/25/99) Washington State Health Insurance Pool
The effective date is September 25, 1999. The effected WAC Chapter is 284-91-
060.
Many state residents are unable to purchase health insurance in some counties
of the state.  These rules require the Washington State Health Insurance Pool
to provide coverage in Washington counties where no individual health plans
are commercially available from health carriers. There is a business impact on
First Choice as per member per month assessments on a Plan by Plan basis have
substantially increased.

                                         9

<PAGE>  10

R 98-20 (Filed 7/28/99) Every Category of Health Care Provider
The effective date is August 28, 1999.  The effected WAC Chapters are 284-43-
205.
The rules  are  intended to  implement  RCW 48.43.045  by  identifying  health
carrier practices  that would  violate the  statute.  The rules  supersede  an
earlier declaratory order (G 96-13) filed on May 21, 1996. There is a business
impact on First Choice as this  rule has a premium rating increase  associated
with it to accommodate in part  the expected higher utilization costs.   There
are also  operational  costs associated  with  system modifications  and  cost
increases associated with additional network contracting.

R 99-3 (Filed 7/28/99) Filing of Annual Reports
The effective date is August 28, 1999.  The effected WAC Chapter is 284-07-
050.  Reduce the amount of copies of the annual reports that must be filed
with the Commissioner.  There is no business impact on First Choice.

R 97-8 (Filed 12/18/97) Standards for Coverage of Chemical Dependency
The effective date is August 22, 1999.   The effected WAC Chapter is 284-53.
The rule was identified in the Commissioner's Regulatory Improvement process
as one that was out of date and should be reviewed and updated.  References in
the existing rule are outdated and benefit minimums established in 1987 have
become ceilings and are no longer considered adequate to pay for increasingly
effective but expensive treatment.  The lifetime dollar maximum has been
deleted and the 24 month dollar maximum has been raised to $10,000. There is a
business impact on First Choice as this benefit change has resulted in an
increase in premium rates to lessen the impact of the higher benefit maximum,
and also increased costs associated with system changes required to
accommodate the benefit modifications.

Employees

At December 31, 1999, the Company had 193 employees, 190 of which were full-
time.  None of the Company's employees are unionized or subject to collective
bargaining agreements with the Company, and the Company believes its
relationships with its employees to be good.

ITEM 2.   DESCRIPTION OF PROPERTY

First Choice leases and occupies two offices in separate buildings in downtown
Seattle.  The administrative, finance and marketing departments occupy an
office consisting of approximately 20,675 square feet of space in an office
building at 601 Union Street, Suite 1100, Seattle, Washington expiring March
2003.

Pursuant to the purchase of Providence Plan Partner Preferred_Washington
Preferred Provider Organization described on page 5, The Company renewed the
lease at the office building at 1100 Olive way, Suite 1480, Seattle,
Washington expiring July 2003.  This location consists of 11,209 square feet.

Item  3.  LEGAL PROCEEDINGS

          None

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

          No matters were submitted in the fourth quarter of 1999.

                                        PART II

ITEM  5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS


                                        10

<PAGE>  11

There is no public trading market for any of the Company's equity
securities.

As of December 31, 1999, there were 467 holders of the Company's Class A
Common Stock, seven holders of the Company's Class B Common Stock, and four
Hospital Participants.

Holders of each class of Common Stock are entitled to share ratably on a
share-for-share basis with respect to any dividends on such class of Common
Stock, when, as and if declared by the Board of Directors out of funds
legally available.  Therefore, such dividends may not be paid while an
obligation to repurchase shares remains outstanding.  Pursuant to the
Company's contracts with the Hospital Participants, if First Choice pays any

dividends or other distributions with respect to the Class B Common Stock,
First Choice must make an equivalent distribution to the Hospital
Participants.  The Company does not currently anticipate paying cash dividends
on its capital stock.

ITEM  6.  SELECTED FINANCIAL  DATA


<TABLE>
<CAPTION>


                                   1999          1998        1997          1996       1995
                                 --------     ----------    --------     --------   --------
<S>                          C>           <C>         <C>           <C>           <C>
  Operating revenue	  	         $92,097,975  $56,878,270  $25,581,122	$6,199,506	$5,383,522
  Net income        		          $ 1,660,238    $ 703,551    $ 380,868   $1,037,714   1,020,050
  Net income per common share         28.33        12.00         6.49        20.57       21.66
  Total assets                   30,667,873   20,712,398   19,262,806   10,473,153   7,403,850
  Total liabilities              16,394,980    8,868,805    8,349,601      902,543     787,114
  Redeemable equity participation 1,260,000

</TABLE>


                                        10
<PAGE>  11

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

OVERVIEW

The Network's ability to retain existing clients and attract new clients is
largely dependent on its ability to control health care costs by creating and
maintaining a network of high quality, efficient, fully credentials providers
who agree to accept competitive reimbursement rates and on its ability to
control excess utilization through its utilization management program.  During
1999, the  Company continued to expand  its  PPO network.  In 1999, The
Network continued its system of physician reimbursement which had commenced in
July 1993, referred to as the Resource Based Relative Value System, whereby
fees to physicians are weighted more toward cognitive services (i.e., overall
patient care) as opposed to procedural services (e.g., surgery and diagnostic
tests).  This system is consistent with the Company's belief in the importance
of managing the full scope of patient care to provide the most appropriate
level of service for each patient and its focus on the primary care
"gatekeeper" model for its PPO, whereby a Covered Person must obtain a
referral from a primary care physician prior to obtaining health care services
from specialists and other health care providers.

Since its inception, the Company has negotiated reimbursement to its principal
hospitals under a Diagnostic Related Group (DRG) system under which payments
are based on the diagnosis of the patient's condition, generally
notwithstanding the length of hospitalization.  In 1997, The Network
negotiated with additional hospitals to change the basis upon which DRGs are
determined from an "All Medicare Grouper" to an "All Patient Grouper" and
concurrently introduced Washington State-specific hospital weights to more
closely match reimbursement payments to actual resource consumption.

In anticipation of the proposed Washington State health care reform and to
enhance its competitive position in the health care industry, The Plan
obtained, on January 13, 1995, a Certificate of Registration to operate as a
health care
                                        11
<PAGE>  12

service contractor ("HCSC_), in the state of Washington, which permits The
Plan to assume financial risk in its operations.

The Plan's revenues consist primarily of commercial premiums resulting from
the offering of health insurance products.  However, this is supplemented by
the Plan's rental of the PPO network beginning January 1, 1998.  See the
_First Choice Health Plan Products_ under _Description of Business_ for
further explanation of products currently being offered by The Plan.

Medical expenses are largely comprised of capitation arrangements with the
physician organizations (PO) in which the risk for health insurance coverage
has been passed to the PO.  The Plan passes much of the premium to the POs and
keeps a certain percentage for administrative fees which covers services that
the Plan provides on behalf of the PO.  In addition, as a result of the merger
with Health First Partners, The Plan assumes the full risk for  a small amount
of membership.    For the membership that The Plan is at risk for, the medical
expenses are comprised of payments to physicians, hospitals and other health
care providers which includes an estimated amount for incurred but not
reported claims (_IBNR_).
The Plan has a license with the Federal Health Care Financing Administration
(_HCFA_) to offer a Medicare risk product.  The medicare application was
approved in the third quarter of 1998 with the first sales of the product
occurring on January 1, 1999.  Upon sale of this product, the Plan will be
paid a fixed per member per month capitation amount by the HCFA based on a
formula of the projected medical expense of each Medicare member.  Medicare
risk contracts provide revenues which are higher per member than those for
non-Medicare members which provide an opportunity for increased profits and
cash flow. However, these contracts also carry certain risks such as higher
comparative medical costs, government regulatory and reporting requirements
and the possibility of reduced government reimbursement in the future.

The Plan transferred an additional $1 million on February 19, 1998 and
$400,000 on March 31, 1998 to it restricted depository account in order to
satisfy statutory requirements for additional restricted deposits related to
the Medicare business.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEARS ENDED DECEMBER 31, 1998 AND
1997

Operating revenue for the year ended December 31, 1999 increased 61.92% to
approximately $92.1 million in 1999 from approximately $57.0 million in 1998
and $26.5 million in 1997.  The majority of the increase was due to the
increase in Plan health insurance membership resulting from increased growth
in 1999 .  The Plan's membership increased from 166,297 member months in 1997,
395,659 member months in 1998 to 602,856 member months in 1999.  The Company's
network access fees increased 39.80% from $4.1 million in 1997, $5.6 million
in 1998 to $7.8 million in 1999.  The increase was a result of growth in the
Company's rental of the PPO network as well as the purchase of the Sound
Health network and related membership in December 1999.  Hospital
administrative fees also increased 32.44% from $2.5 million in 1997, $4.8
million in 1998 to $5.9 million in 1999.  The growth in this line item was
primarily due to a large contract beginning in January 1998 which was part of
the merger with Health First Partners.  Network access fees and hospital
administrative fees will continue to show growth over the previous year with
the expansion of the PPO network arising from the acquisition of the
Providence Plan Partner-Washington Preferred Provider Organization.

Total operating expenses increased 60.09% to approximately $90.6 million in
1999 versus approximately $56.6 million in 1998 and $26.4 million in 1997.
Medical expenses drove the majority of the increase as a direct result of the
increase in Plan health insurance membership.  Selling, general and
administrative costs increased to

                                        12
<PAGE>  13
approximately $9.7 million in 1999 from approximately $7.5 million in 1998 and
$4.6 million in 1997 as a result of increased marketing expenditures related
to the new health insurance products as well as the premium and business taxes
associated with The Plan's business.    Payroll and related expenses increased
50.35% from approximately $4.3 million in 1997, $6.6 million in 1998 compared
to approximately $10.0 million in 1999.  The Company increased the number of
employees as a result of the increased Plan membership and also absorbed 25
employees from the acquisition of the Providence Plan Partner-Washington
Preferred Provider Organization.

Inflation

Health care costs in the United States have increased more rapidly than the
national consumer price index in recent years, and that trend is expected to
continue.  The Company operating results have not significantly been affected
by inflation, and the Company does not anticipate that inflation will have a
significant impact on its operating results in the near term. However,
inflation in healthcare costs could affect operations if the Company were
unable to submit new rates to the OIC in a timely manner in order to obtain
approval of increased rates necessary to mitigate its risk from this factor.
The Company obtained licensure as an HCSC in January 1995 and assumes risk for
medical costs.  The Company transfers risk to health care providers through
capitation arrangements and risk-sharing provisions and is generally not
directly impacted by significant escalation of health care costs.

Market Risk

HMOs and health insurance companies operate in a highly competitive
environment. The Company has numerous competitors, including for-profit and
not-for-profit HMOs, preferred provider organizations ("PPOs"), and indemnity
insurance carriers, some of which have substantially larger enrollments and
greater financial resources than the Company.  The Network's ability to retain
existing clients and attract new clients is largely dependent on its ability
to control health care costs by creating and maintaining a network of high
quality, efficient, fully credentials providers who agree to accept
competitive reimbursement rates and on its ability to control excess
utilization through its utilization management program.

LIQUIDITY AND CAPITAL RESOURCES

Since inception in 1986, the Company has financed its operations from equity
investments from over 870 physicians, from the seven hospitals constituting
the Company's Class B shareholders, non-equity capital contributions from
four additional hospitals pursuant to their respective participation
agreements, and funds from operations.

In July 1996, First Choice issued 5,800 shares of its Class B common Stock
to Swedish Medical Center in exchange for $931,484.  This equity investment
increased the number of Class B shareholders to six.

In December, 1996, First Choice issued 5,800 shares of its Class B Common
Stock to Overlake Hospital Medical Center in exchange for $1,000,000 in cash
and two additional payments of $250,000 each due in December of 1997 and 1998.
The final payment of $250,000 was received by the Company in December 1998.
This equity investment increased the number of Class B shareholders to seven.

At December 31, 1999, the Company had cash and cash equivalents of
approximately $13.1 million as compared to approximately $5.7 million
at December 31, 1998.

In January 1995, the Company transferred cash and investments of $1.5 million
to its subsidiary,  First Choice  Health Plan, Inc., in connection with its
licensure as an HCSC.   In the first and second quarters of 1997, the Company
transferred $5 million of additional cash and investments to it subsidiary.
Of the total cash held by The Plan, $1.4 million was transferred to restricted
deposits to increase the statutory deposits in the first quarter of 1998 to
satisfy regulatory requirements.

                                        13

<PAGE>  14

In May 1996 the Company's subsidiary, First Choice Health Plan, Inc.,
introduced into the marketplace a Medicare Supplement program in conjunction
with two of its owner hospitals, Northwest Hospital and Valley Medical Center.
At December 31, 1999 there were 473 policies in force and collected premiums
of $347,455.  The Company has contracted with Olympic Health Management
Systems to act as the plan administrator.  Its primary responsibilities are
maintenance of an adequate sales force legally licensed in Washington state,
and to perform premium billing and collection, claims processing and payment,
and financial reporting to all applicable parties including the appropriate
reports necessary for compliance with the Office of Insurance Commissioner of
the State of Washington.

On July 1, 1997, First Choice Health Network, Inc. (The Network), First Choice
Health Plan, Inc. (The Plan), Health First Partners, Inc. (Health First) and
Health Washington, L.L.C. (Health WA) entered into a merger and asset purchase
agreement.  The agreement between the four companies consisted of three
transactions as described in the paragraphs below.

First, The Plan purchased substantially all of the assets of Health WA in
exchange for 34,523 shares of The Plan's Common Stock.  These shares were
issued to the former shareholders of Health WA.  The assets of Health WA
consisted primarily of Health WA's rights to various provider contracts, a
large group contract, as well as other intangible property including
trademarks.  Estimated growth in membership was 12,500 as a result of this
merger.  These shares represent approximately 12.6% ownership in FC Health
Plan.

Secondly, Health First merged with and into The Plan with Health First
ceasing operations and The Plan as the surviving corporation.  FC Health
Plan issued 33,572 shares of stock to the former shareholders of Health First
for the net assets of Health First as well as the rights to various provider
and group contracts.  The net assets purchased included those assets and
liabilities that existed as of July 1, 1997 which had a book value of
approximately $1.0 million.  Estimated growth in membership was 5,500 as
a result of this merger. These shares represent approximately 12.3% ownership
stake in The Plan.

Third, The Network, formerly the sole shareholder of The Plan, became
obligated to contribute cash to The Plan in exchange for 55,436 shares of FC
Health Plan stock.  This is facilitated by a Contribution Agreement that
states that The Network shall contribute a certain percentage of revenues over
the next ten years in exchange for those shares.   The Network's ownership in
the subsidiary, The Plan, was approximately 75.1%.

In January 1998, the owners of the Plan signed an agreement which gave the
Company an 80% ownership in the common stock of the Plan.  The purpose of the
increase in common stock ownership was to allow for consolidation of Plan
income or losses  in the Company's filing of consolidated tax return which
includes the Plan.   This transaction by Health Washington exchanging 8,613
shares of common stock for the same number of preferred shares.  Two other
owners made a similar exchange of 4,187 shares each. In order to facilitate
this transaction, the Plan amended their Articles of Incorporation to
authorize 1,000,000 shares of preferred stock.  This stock has a par value of
$29.10 and is nonvoting and noncumulative, but has a dividend preference rate
of 8.75% of the par value per share.

Effective February 1, 1998, the Network and Plan entered into a tax sharing
agreement which provides for the sharing of Federal income tax liabilities and
benefits in the filing of consolidated tax returns.

In July, 1998, the Plan amended the Articles of Incorporation to increase the
authorization of preferred shares to 1,000,000.  The Network then increased
its investment in the Plan by purchasing 3,000,000 dollars in the Plan's
preferred stock.

Effective December  1, 1998,  the Company  executed  a purchase  agreement  to
acquire Providence  Plan  Partners  Preferred-Washington PPO  Business.    The
acquired business consists of approximately 125,000 subscribers with an annual
revenue

                                        14
<PAGE>  15
stream of approximately $4.0 million.   The  purchase was  $2.8 million to  be
paid with interest at a rate of six  percent over 18 months, and a  contingent
payment of $668,000  based on revenue  received by the  Company in the  twelve
months after the closing date.  The revenue was received and the $668,000 paid
before February 15, 2000.

On December 20, 1999, First Choice Health Network, Inc. executed an  agreement
with University of Washington Academic Medical Center to become a  participant
in the  administration,  operations  and  any  incentives  bestowed  upon  any
shareholders in  First  Choice  Health  Network  effective  January  1,  2000.
University of Washington Academic Medical Center shall pay the affiliation fee
of $2,520,000, payable  $1,260,000 upon execution  of this  Agreement and  the
remaining $1,260,000 will  be paid  in three  equal payments  of $420,000  due
annually for three years plus interest at five percent (5%).

UWMC does not  become a  shareholder or  member of  the Network.   UWMC  shall
participate in any incentive or reward  program established by the Network  as
if UWMC owned 5,800 shares of class B common stock.  Dividends, distributions,
and liquidation of  the Network  are also determined  as if  UWMC owned  5,800
shares of class B stock.

If  the  Network  performs  certain  actions  that  substantially  change  the
organization, the  Network  discontinues  the health  care  facility  services
contract with UWMC, or  if total managed care  enrollment falls below  500,000
member months, then UWMC can withdraw  from the agreement, but no refunds  are
given.  If the  Network merges, is sold,  or if the  Network takes a  material
action that proves detrimental  to UWMC, then UWMC  may redeem their  interest
for the equivalent  of the fair  value of 5,800  class B common  shares of  FC
stock, less any amounts still owed by UWMC.

The Company anticipates that the revenues generated by operations cash and
cash equivalents as of December 31, 1999 will be sufficient to meet its cash
requirements throughout 2000.

Throughout 1999 and early 2000, the Plan contracted with Cascade Medical Group
(Cascade) for capitated health care services.  The Plan did not have insurance
risk for the covered individuals to the extent that Cascade could continue  to
pay the Plan  for claims  paid on their  behalf.   In March  of 2000,  Cascade
management dissolved the organization.   The dissolution  of Cascade does  not
affect the financial  position or results  of operations in  1999 because  the
Plan had a payable to Cascade as of December 31, 1999.  However, management
believes a loss of between $500,000 and $700,000 will  be incurred in  2000
for claims  paid in 2000  for which the Plan does not expect to be reimbursed.
Management is evaluating the financial impact of this event.   The ultimate
financial impact of this  event will be determined, and the expense recorded,
during 2000.

Year 2000 Update

The Company has assessed its computer systems and facilities regarding the
Year 2000 problem.  The Year 2000 problem is defined as storing the year as
two digits rather than storing the year with four digits to include the
century.  Date sensitive calculations or reports may treat the year 00 as
1900 rather than 2000 resulting in erroneous results or calculations.  As of
January 1, 2000, the Company has evaluated its systems and applications to
determine whether or not those systems were impacted by Year 2000.  Based
upon its testing and review, the core business systems operated effectively
and there was no impact of Year 2000.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable as of December 31, 1999.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA


						   15


<PAGE>  16

               FIRST CHOICE HEALTH NETWORK, INC. AND SUBSIDIARY
                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . .   16

Consolidated Balance Sheets as of December 31, 1999 and 1998  . . . . . .  17

Consolidated Statements of Income
  for the years ended December 31, 1999, 1998, and 1997  . . . . . . . .   19

Consolidated Statements of Shareholders' Equity
  for the years ended December 31, 1999, 1998, and 1997  . . . . . . . .   20

Consolidated Statements of Cash Flows
  for the years ended December 31, 1999, 1998, and 1997  . . . . . . . .   21

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . 23


                         INDEPENDENT AUDITORS' REPORT


Shareholders and Board of Directors
First Choice Health Network, Inc.


We have audited the accompanying consolidated  balance sheets of First  Choice
Health Network, Inc. and subsidiary (the Company) as of December 31, 1999  and
1998, and the related consolidated statements of income, shareholders' equity,
and cash flows for each of  the three years in  the period ended December  31,
1999.  These consolidated financial statements  are the responsibility of  the
Company's management.  Our  responsibility is to express  an opinion on  these
consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America.  Those standards require that we
plan and perform the audits 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.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the
Company as of December 31, 1999 and 1998, and the results of its operations
and its 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 of America.



Deloitte & Touche LLP
Seattle, Washington
March 24, 2000



                                        16
<PAGE>  17


    <PAGE>     17


                  FIRST CHOICE HEALTH NETWORK, INC. AND SUBSIDIARY
                             CONSOLIDATED BALANCE SHEETS
                             DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>

ASSETS                                                         1999           1998

<S>                                                       <C>            <C>         <C>
CURRENT ASSETS:
  Cash and cash equivalents                                $13,082,130    $ 5,759,751
  Service fees receivable, net of allowance for doubtful
     accounts of $252,361 and $146,000 for 1999 and 1998     3,929,493      2,234,969
  Service fees and premiums
     receivable from related parties                         1,213,593      1,504,537
  Premiums receivable, net of allowance for doubtful
     accounts of $65,427 and $215,014 for 1999 and 1998      2,562,710      1,997,926
  Due from unrelated provider organizations                  1,891,651      1,586,381
  Due from related provider organizations                      684,606        972,785
  Prepaid expenses                                             572,935        390,748
  Deferred tax assets (Note 4)                                 548,735        152,318
  Other current assets                                         170,581         81,178
                                                           -----------    -----------
  Total current assets                                      24,656,434     14,680,593

FURNITURE, EQUIPMENT, AND COMPUTER SOFTWARE:
  Furniture and equipment                                    3,353,485      2,601,718
  Computer software                                            324,385        306,522
                                                           -----------    -----------
                                                             3,677,870      2,908,240
  Less accumulated depreciation and amortization             2,011,730      1,488,358
                                                           -----------    -----------
     Furniture, equipment and computer software, net         1,666,140      1,419,882

DEFERRED TAX ASSETS (Note 4)						                             314,384

OTHER ASSETS:
  Restricted indemnity cash                                  1,747,626      1,705,956
  Goodwill, net of accumulated amortization of $137,614
     and $113,616                                              137,646        307,310
  Other intangible assets, net of accumulated amortization
     of $1,212,757 and $91,743                               2,145,643      2,598,657
                                                           -----------    -----------
     Total other assets                                      4,030,915      4,611,923
                                                           -----------    -----------
TOTAL                                                      $30,667,873     $20,712,398
                                                           ===========    ============

</TABLE>

See accompanying notes to consolidated financial statements.

                                        17

<PAGE>  18

                  FIRST CHOICE HEALTH NETWORK, INC. AND SUBSIDIARY
                             CONSOLIDATED BALANCE SHEETS
                             DECEMBER 31, 1999 AND 1998


<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY                           1999           1998


CURRENT LIABILITIES:
<S>                                                       <C>              <C>    <C>
  Accounts payable                                        $    520,046    $   377,850
  Accrued expenses                                           2,275,005      1,609,202
  Reserve for unpaid claims adjustment expenses   	        	 3,210,613      2,102,364
  Due to unrelated provider organizations                    5,104,101      1,229,331
  Due to related provider organizations                        421,711        247,355
  Federal income tax payable                                                   28,417
  Unearned premiums                                          3,104,521        137,280
  Deferred income taxes                                        146,979        136,715
  Current portion of note payable                            1,612,004      1,887,996
                                                           -----------     ----------
     Total current liabilities                              16,394,980      7,756,510

NOTE PAYABLE (Note 10)                                                        999,671

DEFERRED INCOME TAXES (Note 4)                                                112,624

MINORITY INTEREST                                              864,249      1,320,085

REDEEMABLE EQUITY PARTICIPATION                              1,260,000

COMMITMENTS (Note 5 and 13)

SHAREHOLDERS' EQUITY:

  Common Stock:
     Class A, par value $1 - Authorized, 30,000 shares;
       issued and outstanding, 585 and 619 shares                 585            619
     Class B, par value $1 - Authorized, 70,000 shares;
       issued and outstanding, 40,600 and 40,600 shares         40,600         40,600
     Additional paid-in capital                              4,350,034      4,385,102
     Shareholder receivable
     Paid-in capital from affiliates                         1,472,108      1,472,108
     Retained earnings                                       6,285,317      4,625,079
                                                           -----------   ------------
          Total shareholders' equity                        12,148,644     10,523,508
                                                           -----------   ------------
TOTAL                                                      $30,667,873    $20,712,398
                                                           ===========   ============

</TABLE>

See accompanying notes to consolidated financial statements.

                                        18

<PAGE>  19

                  FIRST CHOICE HEALTH NETWORK, INC. AND SUBSIDIARY
                          CONSOLIDATED STATEMENTS OF INCOME
                    YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997


<TABLE>
<CAPTION>

                                             1999              1998           1997
OPERATING REVENUE:
  <S>                                        <C>          <C>             <C>        <C>
  Premium revenue                           $64,496,942    $42,634,121    $15,711,616
  Premium revenue, related parties            7,204,129      3,720,738      4,050,286
  Medicare revenue                            6,338,440
  Network access fees                         7,838,999      5,607,173      4,172,888
  Hospital administrative fees                4,289,828      2,956,822      1,283,982

  Hospital administrative fees, related party 1,609,000      1,841,789      1,243,123
  Other                                         320,637        117,627        119,227
                                             ---------------------------   ----------
     Total operating revenue                 92,097,975     56,878,270     26,581,122

OPERATING EXPENSES:
  Medical expenses                           41,812,940   25,149,892       10,472,784
  Medical expenses, related parties          27,875,293   17,125,490        7,074,205
  Payroll and related expenses               10,012,045    6,659,224        4,305,685
  Selling, general, and administrative costs  9,741,831    7,517,177        4,533,543
  Amortization expense                        1,191,012    	 160,333           34,151
                                             -------------------------     ----------
     Total operating expenses                90,633,121   56,612,116       26,420,368
                                             ---------------------------   ----------
     Operating income                         1,464,854      266,154          160,754

OTHER INCOME (EXPENSE):
  Interest           			                      361,200        504,415          511,257
  Other                                        46,000       (155,928)          97,366
                                             ---------------------------   ----------
         Total other income, net              407,200        348,487        608,623
                                             ---------------------------   ----------
     Income before federal income taxes
       and minority interest                1,872,054        614,641        769,377

FEDERAL INCOME TAXES                          279,143        429,348        504,006
                                             ---------------------------   ----------
                                            1,592,911        185,293        265,371
MINORITY INTEREST                              67,327        518,258        115,497
                                             --------------------------    ----------
NET INCOME                                 $1,660,238     $  703,551     $  380,868
                                             =========     =========       ==========

NET INCOME PER COMMON SHARE                  $  28.33     $    12.00     $     6.49
                                             =========      ==========     ==========

WEIGHTED AVERAGE SHARES OUTSTANDING            58,601         58,619         58,650
                                             =========      ==========     ==========

</TABLE>

See accompanying notes to consolidated financial statements.


                                        19
<PAGE>  20

                  FIRST CHOICE HEALTH NETWORK, INC. AND SUBSIDIARY
                   CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                    YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997


<TABLE>
<CAPTION>

                                                              Common Stock
                                                             ------------
                                                       Class A           Class B        Additional                      Balance
                                                      -------            -------          paid-in     Shareholder       carried
                                                  Shares    Amount   Shares    Amount     capital      receivable       forward
                                                  ------    ------   ------    ------     -------      ----------       -------
<S>                                                <C>       <C>     <C>      <C>       <C>             C>            <C>

Balances at January 1, 1997                         656      $656    40,600   $40,600    5,046,417      (500,000)    $4,587,673

  Cash received from shareholder receivable										                                                    250,000		      250,000

  Repurchase of Class A common stock
     and membership rights from physicians          (8)       (8)                           (1,728)                     (1,736)

      Reduction in equity from issuance of subsidiary's stock                             (628,599) 			    (628,599)

       Net income

       Change in unrealized loss on securities available
     for sale, net of deferred taxes

  Net income
                                                  -----     -----   -------   -------   ----------      ---------      ----------

Balances at December 31, 1997                       648      $648    40,600   $40,600    4,416,090      (250,000)     4,207,338

  Cash received from shareholder receivable                                                              250,000        250,000

  Repurchase of Class A common stock
     and membership rights from physicians         (29)      (29)                          (30,988)                    (31,017)

  Net income
                                                  -----     -----   -------   -------   ----------      ---------      ----------

BALANCE, December 31, 1998                          619      $619    40,600   $40,600   $4,385,102                   $4,426,321


  Repurchase of Class A common stock and           (34)      (34)
     Membership rights from physicians                                                     (35,068)                     (35,102)


  Net income
                                                  -----     -----   -------   -------   ----------      ---------      ----------

BALANCE, December 31, 1999                          585      $585    40,600   $40,600   $4,350,034                    $4,391,219

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


                                                                                              Net unrealized
                                                                                                  loss on
                                                                                                investment
                                                                                                securities
                                                  Balance         Paid-in                      available for        Total
                                                  brought      capital from     Retained       sale, net of      shareholders'
                                                  forward        affiliates     earnings      deferred taxes        equity
                                                  -------        ----------     --------      --------------        ------
<S>                                                <C>       <C>     		<C>       <C>                     <C>
								   <C>

Balances at January 1, 1997                     $4,587,673       $1,472,108    $3,540,660         $(29,831)        $9,570,610

  Cash received from shareholder receivable    	   250,000									          250,000

 Repurchase of Class A common stock
     and membership rights from physicians          (1,736)                                                           (1,736)

Reduction in equity from issuance of
	subsidiary's stock				                           (628,599)										                              (628,599)

  Net income                                          -                           380,868                             380,868

  Change in unrealized loss on securities
     available for sale, net of deferred taxes        -                                              29,831            29,831
                                                ----------      -----------     ----------        ---------        ----------


BALANCES at December 31, 1997                    4,207,338        1,472,108      3,921,528                          9,600,974

Cash received from shareholder receivable          250,000                                                            250,000

  Repurchase of Class A common stock
     and membership rights from physicians         (31,017)                                                          (31,017)

  Net income                                                                       703,551                            703,551

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

BALANCE, December 31, 1998                      $4,426,321       $1,472,108     $4,625,079        $    -          $10,523,508

Cash received from shareholder receivable

  Repurchase of Class A common stock and          (35,102)                                                           (35,102)
     membership rights from physicians

  Net income                                                                     1,660,238                          1,660,238
                                                ----------      -----------     ----------        ---------        ----------

BALANCE, December 31, 1999                      $4,391,219       $1,472,108     $6,285,317        $               $12,148,644
                                                ==========      ===========     ==========        =========        ==========


</TABLE>

See accompanying notes to consolidated financial statements.

						    20

<PAGE>  21

                  FIRST CHOICE HEALTH NETWORK, INC. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                    YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

<TABLE>
<CAPTION>
                                                    		   1999          1998        1997
OPERATING ACTIVITIES:
  <S>                                               <C>          <C>             <C>     <C>
  Net income                                      		$ 1,660,238  $  703,551   $  380,868
  Adjustments to reconcile net income to net cash
       provided (used) by operating activities:
     Gain on sale of Dental Network	                    (44,500)
     Depreciation                            	          523,372     384,620       283,945
     Amortization                           		        1,191,012     160,333        34,151
     Deferred income taxes, net      	       		        (813,161)   (268,589)      (78,604)
     Provision for doubtful accounts                    207,356     307,000        57,796
     Minority interest                        	         (67,327)   (518,258)     (115,497)
     Cash provided (used) by changes in operating
          assets and liabilities:
       Service fees receivable                     		(1,631,435)  (1,520,090)     (848,307)
       Premiums receivable                         		  (544,285)    (405,968)   (1,672,363)
       Prepaid expenses                    	 	         (182,187)     (98,636)      (59,791)
       Other current assets                  	          (89,403)     316,923      (373,622)
	 Intangibles and other 	                              (390,009)     353,497        58,942
       Accounts payable                           		    142,196     171,648        48,279
       Accrued expenses                     	           665,805    (193,372)      761,129
       Reserve for unpaid claims and claims
          adjustment expenses                     		  1,108,249     708,257         (737)
       Due to (from) unrelated provider organizations   462,536    (533,992)    1,386,205
       Due to (from) related provider organizations   3,569,500  (3,057,956)    1,279,573
       Federal income tax payable                       (28,417)      28,417
       Unearned premiums                      		      2,967,241    (198,349)      321,261
                                                        ---------     --------    ---------
     Net cash provided (used) by operating activities   8,706,778  (3,660,964)    1,463,228

INVESTING ACTIVITIES:
     Purchase of investment securities available for sale                        (7,457,715)
     Sales and maturities of investment securities
       available for sale                                                        15,301,865
     Acquisition of Health First Partners, net of
       cash acquired									                                                     		(97,936)
     Sale of Dental Network					                           90,000
     Purchase of furniture, equipment, and
       computer software                            		   (769,630)   (810,032)     (508,715)
     Increase in restricted indemnity cash                (41,671) (1,344,582)
                                             									   --------- -----------     ----------
     Net cash provided (used) by investing activities    (721,301) (2,154,614)     7,237,499
                                                         --------- -----------     ----------
BALANCE, carried forward                           		   7,985,477 (5,815,578)     8,700,727
                                            									   ========= ===========     ==========
</TABLE>

See accompanying notes to consolidated financial statements.

                                        21

<PAGE>  22

                  FIRST CHOICE HEALTH NETWORK, INC. AND SUBSIDIARY
                  CONSOLDIATED STATEMENTS OF CASH FLOWS (CONTINUED)
                    YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997


<TABLE>
<CAPTION>
          	                                            	 1999              1998           1997

<S>                                                  <C>             <C>              <C>
BALANCE, brought forward                             $7,985,477      $(5,815,578)     $8,700,727

FINANCING ACTIVITIES:
     Repurchase of Class A common stock and membership
       rights from physicians                           (35,102)        (31,017)        (1,736)
     Receipt of shareholder receivable                                  250,000        250,000
     Redeemable equity participation	                 1,260,000
     Payment of note payable                         (1,887,996)
                                                      ----------       ---------     ----------
     Net cash provided by financing activities         (663,098)        218,983        248,264
                                                      ----------     -----------     ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   7,322,379     (5,596,595)     8,948,991

CASH AND CASH EQUIVALENTS:
     Beginning of period                       	       5,759,751     11,356,346      2,407,355
                                                       ---------     ----------      ----------
     End of year                               	     $13,082,130     $5,759,751    $11,356,346
                                                    		==========    ===========     ==========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Cash paid during the year for federal income taxes $1,350,000     $  250,000     $  955,000
   Cash paid during the year for interest     		     	    94,174

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
ACTIVITIES:
   Net assets for common stock (Note 8)                                               525,303
   Business acquired for note payable			                 612,333		     837,920

</TABLE>

See accompanying notes to consolidated financial statements.

                                        22
<PAGE>  23

               FIRST CHOICE HEALTH NETWORK, INC. AND SUBSIDIARY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997


NOTE 1:  DESCRIPTION OF BUSINESS AND SUMMARY
         OF SIGNIFICANT ACCOUNTING POLICIES

  Description of business:  First Choice Health Network, Inc. (the Company)
  was incorporated under the laws of the state of Washington on September 28,
  1984.  The Company was formed to organize a network of independent
  participating physicians and hospitals to provide a comprehensive, managed
  health care delivery system for group plans established by employers and
  benefit groups.  The Company's business is conducted primarily in
  Washington, Oregon, and Alaska.

  The Company's majority owned subsidiary, First Choice Health Plan, Inc.,(the
  Plan) is a health care services contractor which was formed on January 31,
  1995, to offer fully insured health care services to an enrolled population
  in Washington state.

  Principles of consolidation: The consolidated financial statements include
  the accounts of the Company and the Plan.  All significant intercompany
  accounts have been eliminated in consolidation.

  New accounting  pronouncements: On June 16,  1998, the Financial  Accounting
  Standards Board  (FASB) issued Statement  of Financial Accounting  Standards
  (SFAS) No. 133, Accounting for Derivative Financial Instruments and  Hedging
  Activities, which is effective for quarters of fiscal years beginning  after
  June 15, 2000.  SFAS No. 133 establishes accounting and reporting  standards
  for derivative  instruments and hedging activities.   Under this  statement,
  certain derivatives are recognized at fair value and changes in fair  market
  value are recognized as gains  or losses.  Management is currently  studying
  this  pronouncement  to determine  its  effect,  if any,  on  the  Company's
  financial statements.

  Cash equivalents:  The Company considers all  investments purchased with an
  original maturity of three months or less to be cash equivalents.  At
  December 31, 1999 and 1998, cash and cash equivalents consist of cash
  management funds of $13,082,130 and $5,759,751, respectively.

  Service fees receivable:  Service fees receivable consist primarily of
  estimates for hospital administrative fees receivable related to claims
  incurred on or before the balance sheet date but not reported.  The Company
  evaluates the reasonableness of hospital administrative fees receivable
  based on claims reported in subsequent periods.  These estimates are
  subject to the effects of trends in claims.  Although considerable
  variability is inherent in such estimates, management believes that the
  hospital administrative fees receivable is reasonable.  The estimates are
  continually reviewed and adjusted as necessary in the period new
  information becomes known.

  Allowance for doubtful accounts:  The Company performs periodic credit
  evaluations of its customers and maintains an allowance for potential
  credit losses related to receivables.

  Premiums receivable:  Premiums receivable represents monthly group health
  insurance premiums billed and outstanding.


                                       23


<PAGE>  24

               FIRST CHOICE HEALTH NETWORK, INC. AND SUBSIDIARY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


  Furniture, equipment, and computer software:  Furniture, equipment, and
  computer software are recorded at cost.  Depreciation and amortization are
  computed using the straight-line method over the lesser of the estimated
  useful lives of the assets or lease term ranging from three to five years.

  Restricted indemnity cash:  Restricted indemnity cash consists of amounts
  required to be restricted for potential claims from enrollees as required
  by the Office of Insurance Commissioner of the State of Washington.

  Other intangible assets:  Intangible assets assumed in the Providence Plan
  Partners  PPO network acquisition were trademarks, contracts, and a
  noncompetition agreement.  Intangible assets are amortized using the
  straight-line method over three years.

  Goodwill:  Goodwill is determined as the difference between the purchase
  price and fair value of identifiable net assets purchased.  Goodwill is
  amortized using the straight-line method over three to five years.  Events
  or changes in circumstances have not occurred that indicate the value of
  goodwill has been impaired as of December 31, 1999 and 1998.

  Reserve for unpaid claims and claims adjustment expenses:  This liability
  represents reported and unreported claims which have been incurred but have
  not been paid at the date of the financial statements.  The reserve for
  unreported claims is determined actuarially using prior experience and the
  nature of current health insurance contracts and volume.  Included in the
  liability is an estimate of the expenses necessary to settle claims.  Due
  to the uncertainties inherent in the estimation process, actual costs may
  differ from the estimated amounts in the near term, and these differences
  may be significant.

  Due to (from) related (unrelated) provider organizations:  This liability
  or asset is the amount due to (from) health care providers in conjunction
  with capitation arrangements, which is computed by subtracting the claims
  payments made on behalf of the provider from the capitated amounts
  contractually allocated to them.  The ultimate payout or receipt of these
  amounts is subject to a settlement process subsequent to the contract year
  end.  The Company believes the amounts recorded appropriately reflect the
  ultimate settlement amounts.

  Unearned premiums:  Unearned premiums consist of insurance premiums
  received prior to fiscal year end for health insurance coverage subsequent
  to year end.

  Operating revenue:  Operating revenue consist primarily of premium revenue,
  medicare revenue, network access fees, and hospital administrative fees.
  Premium revenue represents amounts charged for health care services and is
  recognized as revenue in the period for which enrollees are entitled to
  medical care.  Medicare revenue is paid at a fixed per member per month
  capitation amount by the HCFA based on the projected medical cost for each
  Medicare member and are recognized as revenue over the coverage period.
  Network access fees are recognized as earned during the period of coverage
  and are recorded at contractual rates.  Hospital administrative fees are
  recognized as earned in the period hospital claims are incurred by a
  subscriber and are recorded at a contractual percentage of the claims.
  For the year ended December 31, 1999 and 1998, 34% and 43%, respectively,
  of the premium revenue related to one subscriber group.


                                        24



<PAGE>  25
               FIRST CHOICE HEALTH NETWORK, INC. AND SUBSIDIARY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


  Income taxes:  Deferred tax assets and liabilities are recognized for the
  future tax consequences attributable to differences between the financial
  statement carrying amounts of assets and liabilities and their respective
  tax bases.  Deferred tax assets and liabilities are measured using enacted
  tax rates expected to apply to taxable income in the years in which those
  temporary differences are expected to reverse.  The effect on the deferred
  tax assets and liabilities of a change in tax rates is recognized in income
  in the period that includes the enactment date.  A valuation allowance is
  established to the extent that it is more likely than not that deferred tax
  assets will not be realized.

  Valuation of long-lived assets:  Using its best estimates, based on
  reasonable and supportable assumptions and projections, the Company reviews
  its long-lived assets for impairment whenever events or changes in
  circumstances have indicated that the carrying amounts of its assets might
  not be recoverable.  At December 31, 1999 and 1998, no write downs were
  required.

  Earnings per share:  Net income per common share (class A and B) is
  computed by dividing income available to common shareholders by the
  weighted average number of common shares outstanding during the period,
  including 41,201, 41,219 and 41,248 common shares and 17,400, 17,400, and
  17,402 shares applicable to affiliate common share equivalents (Note 2) in
  1999, 1998 and 1997, respectively.  Shares issued and reacquired during
  each period were weighted for the portion of the period that they were
  outstanding.  There are no dilutive securities.

  Use of estimates:  Preparation of consolidated financial statements in
  conformity with generally accepted accounting principles 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 date of the financial statements and the reported
  amounts of revenues and expenses during the reporting period.  Actual
  results could differ from those estimates.

  Reclassifications:  Certain prior year amounts have been reclassified to
  conform to the current year presentation.

NOTE 2:  SHAREHOLDERS' EQUITY

  Ownership of stock:  Class A voting common stock may be held solely by
  physicians licensed in the state of Washington who contract with the
  Company to provide health care services and who hold active, associate, or
  provisional medical staff privileges at one or more of the hospitals that
  contract with the Company to provide health care services.

  Class B voting common stock may be held by hospitals in the state of
  Washington that contract with the Company to provide health care services.
  Voting rights:  Holders of each outstanding share of Class A or Class B
  common stock are entitled to one vote on each matter submitted to a vote at
  meetings of shareholders, and each class of common stock votes as a
  separate class.

  Transfer of stock:  Shareholders may only transfer their stock in the
  Company to the Company for repurchase.  The repurchase price is established
  by the Board of Directors each fiscal year as set forth in the bylaws.
  Class A shares were repurchased at $1,031.95, $1,014.91 and $1,108.15 per
  share during 1999, 1998 and 1997, respectively.



                                        25

<PAGE>  26

               FIRST CHOICE HEALTH NETWORK, INC. AND SUBSIDIARY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


  Dividends:  The Board of Directors may declare and pay dividends on one or
  more classes of common stock at such times and in such amounts as it
  designates, but in no event may dividends be paid while there is an
  outstanding obligation to repurchase shares.  Dividends are allocated among
  shareholders of each class of stock according to the number of shares
  outstanding to each Class A or B shareholder.  Any dividends paid to the
  Class B shareholders must be shared with the nonshareholders that have
  rights equivalent to that of the other shareholders.

  Liquidation rights:  Upon liquidation or dissolution, the Board of
  Directors, at its discretion, will allocate the value of assets among the
  classes of its outstanding stock in proportion to the capital contributions
  of shareholders of each class.  For these purposes, the contributions by
  the nonshareholder district hospitals that have rights equivalent to that
  of the Class B shareholders and the membership fees paid by Class A
  shareholders are considered capital contributions.  The allocation to Class
  A shareholders will be shared among all Class A shareholders in accordance
  with the number of shares outstanding to each Class A shareholder.  The
  allocation of the Class B shareholders must be shared with the
  nonshareholder hospitals that have rights equivalent to that of Class B
  shareholders.

  Paid-in capital from affiliates:  District hospitals are not shareholders
  of the Company, but have contractual agreements with the Company that
  provide for certain rights and obligations equivalent, but not identical,
  to those of Class B shareholders, including liquidation and dividend
  rights.  The capital contributions of the nonshareholders are recorded as
  paid-in capital from affiliates.  These contractual agreements are
  considered to be common share equivalents for purposes of calculating net
  income per common share.

  Common stock:  In January 1998, the owners of the Plan entered into an
  agreement, which increased the Company's ownership in the common stock of
  the Plan from 75.1% to 80%.  The purpose of the increase in common stock
  ownership was to allow for the consolidation of tax returns between the
  Company and the Plan.  This transaction included exchanging common stock
  held by the minority owners of the Plan, who are also stockholders in the
  company, for the same number of preferred shares.  This preferred stock is
  nonvoting and noncumulative and has a dividend rate of 8.75%.

NOTE 3:  REDEEMABLE EQUITY PARTICIPATION

  On  December  20,  1999, First  Choice
  Health  Network,  Inc.  executed  an agreement with University of
  Washington Academic Medical Center (UWMC) to become  a participant in
  the administration,  operations  and any incentives  bestowed upon any
  shareholders in the Company effective January  1, 2000. UWMC will pay a
  fee  of $2,520,000, payable $1,260,000 upon  execution of  this Agreement
  and the remaining  $1,260,000 in three equal payments of  $420,000 due
  annually for three years plus interest at five percent (5%).

  UWMC does  not become a shareholder  or member of the Company.  UWMC  shall
  participate in  any incentive or reward  program established by the Company
  as  if  UWMC owned  5,800  shares  of class  B  common  stock.    Dividends,
  distributions, and  liquidation of  the Company are also  determined as  if
  UWMC owned 5,800 shares of class B stock.

  If the Company performs certain  actions that  substantially  change the
  organization, the Company discontinues  the health  care facility  services
  contract with UWMC, or if total managed care enrollment falls below  500,000
  member months,  then UWMC can  withdraw from the  agreement, but no  refunds
  are given.   If  the Company  merges, is  sold, or  if the  Company takes  a
  material action that proves detrimental to UWMC, then UWMC may redeem  their
  interest  for the  equivalent of  the fair  value of  5,800 class  B  common
  shares of FC stock, less any amounts still owed by UWMC.  Since redemption,
  under certain terms, is outside the control of the Company, the amounts
  received are recorded as a redeemable equity participation.



                                        26

<PAGE>  27


               FIRST CHOICE HEALTH NETWORK, INC. AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4:  FEDERAL INCOME TAXES

Federal income taxes consist of the following components:

                     Years Ended December 31,
                     ------------------------
                   1999         1998       1997
                 ------        ------    ------
  Current      $1,092,304    $697,937   $582,610
  Deferred      (813,161)   (268,589)   (78,604)
               ----------   ---------   --------
                 $279,143    $429,348   $504,006
               ==========   =========   ========



Federal income taxes differ from the amount computed by applying the expected
U.S. corporate income tax rate to income before federal income taxes for the
years ended December 31 as follows:


<TABLE>
<CAPTION>
                                                 1999             	1998                 1997
                                                ------    		  	------       	   -----
                                           Amount     Percent     Amount    Percent     Amount    Percent
						                                    	-------	   -------    	------    -------     ------ 	  -------
  <S>                                     <C>         <C>       <C>           <C>       <C>  		<C>
 Computed expected rate                   $636,498    34.0%     $208,978      34.0%     $261,558  34.0%
 Tax effect of permanent differences:
     Valuation allowance on Plan NOLs                              66,640      10.8      179,481   23.4%
     Change in valuation allowance     		 (73,608)  	(3.9)%
     Provision reconciliation to return
	             filed					                	(283,747)  (15.2)%
     Political contributions                                      139,328      22.7%       34,026    5.6%
     Other                              		 14,402      2.3%       28,911        3.8%
                                           ---------   -----     --------    ------       ------   -----
                                           $279,143    14.9%     $429,348     69.8%     $504,006   66.8%
                                           ========    =====     ========     =====      =======   =====

</TABLE>



                                        27
<PAGE>  28

               FIRST CHOICE HEALTH NETWORK, INC. AND SUBSIDIARY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The deferred tax  assets and  liabilities resulting  from the  tax effects  of
temporary differences at December 31 are presented below:

                                                   1999         1998
                                                   ----         ----
  Deferred tax assets:
     Net operating losses                      $2,200,080   $1,598,029
     Reduction of shareholders' equity            213,724      213,724
     Allowance for doubtful accounts              108,048      122,745
     Unearned Premium                             211,107
     Amortization                                 209,848
     Vacation                                      87,506
     Other                                         32,886       53,664
                                                 ---------   ----------

     Gross deferred tax assets                  3,063,199    1,988,162
     Valuation allowance                       (2,200,080)  (1,835,844)
                                                ---------    ----------
       Net deferred tax assets                    863,119      152,318

  Deferred tax liabilities:
     Cash to accrual adjustment                   112,624      225,248
     Furniture, equipment and computer software    34,355       24,091
                                                 ---------    --------
       Total deferred tax liabilities             146,979      249,339
                                                 ---------    --------
     Deferred income tax asset (liability), net  $716,140     ($97,021)
                                                 =========    ========

     Current portion of deferred tax assets       548,735      152,318
      Long-term portion of deferred tax assets    314,384
                                                 --------     --------
      Deferred income tax assets                 $863,119     $152,318
                                                 ========     ========

    Current portion of deferred tax liabilities  $146,979     $136,715
    Long-term portion of deferred tax liabilities              112,624
                                                 ---------    --------
    Deferred  income tax liability               $146,979   $  249,339
                                                 ========     ========






                                        28
<PAGE>  29


               FIRST CHOICE HEALTH NETWORK, INC. AND SUBSIDIARY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The valuation allowance was established in 1997 for the tax benefit of the
1997 NOLs of the Company since the Company filed a separate federal income
tax return for the final six months of 1997 and the first three weeks of 1998
and the realization of the tax benefit is unlikely.  The allowance also
provides for NOLs acquired in the Health First Partners, Inc. acquisition as
described in Note 8.  The following schedule represents the amounts of the
Plan's NOLs and their expiration date:

               2007         150,754
               2008          53,781
               2009          20,754
               2010       1,584,667
               2011       2,075,894
               2012       2,353,449
               2013         231,526
                         ----------
                         $6,470,825
                         ==========

NOTE 5:  COMMITMENTS

  Leases:  The Company leases its office facilities and some office equipment
  under operating leases expiring through 2003.  The leases provide for
  monthly minimum rent payments, and some include renewal options for an
  additional five years.

  Rental expense charged to operations under the operating leases for the
  years ended December 31, 1999, 1998 and 1997, was $749,108, $510,316 and
  $254,247, respectively.

  Future minimum lease payments under the operating leases for the years
  ended December 31 are as follows:


            2000            817,500
            2001            815,204
            2002            830,026
            2003            431,540
                          ----------
                         $2,894,270
                          ==========


NOTE 6:  REPORTABLE OPERATING SEGMENTS

  Factors management used to identify the enterprise's reportable segments:
  The Company has two reportable segments which correspond to the
  organization of the Company and its majority-owned subsidiary, the
  Plan.  Each segment requires distinct tracking capabilities in the areas of
  revenues, claims processing, marketing strategies and reporting to
  regulatory organizations.



                                        29

<PAGE>  30

               FIRST CHOICE HEALTH NETWORK, INC. AND SUBSIDIARY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


  Description of the types of products and services from which each
  reportable segment derives its revenue:  The Company has two primary
  products which have been aggregated into one reportable segment:  network
  access fees and hospital administration fees.  Network access fees arise
  from the rental of the Company's large PPO network while hospital
  administration fees arise from charges to the network hospitals based on
  claims incurred by members.  The other reportable segment, the Plan, offers
  a variety of fully insured health insurance plans to employer groups.

  Measurement of segment profit or loss and segment assets:  The accounting
  policies of the segments are the same as those described in the summary of
  significant accounting policies.  The Company evaluates performance based
  on profit and loss from operations before income taxes not including
  nonrecurring gains and losses.  The Company accounts for intersegment
  revenues by assigning a management fee to the Plan that is an estimate of
  resources expended on the Plan's behalf.

  Information about profit or loss and assets of reportable segments:

NOTE 5 #1

<TABLE>
<CAPTION>

                                          First Choice    First Choice
                                         Health Network    Health Plan        Total
                                         --------------    -----------        -----
     <S>                                   <C>             <C>            <C>
     1999:
       Revenues from external customers  $ 11,850,166      $80,247,809    $92,097,975
       Revenue from intercompany              337,226                         337,226
       Interest revenue (expense)            (44,726)          405,926        361,200
	      Depreciation/amortization expense    1,497,695          216,689      1,714,384
       Income tax expense (benefit)           640,470         (361,327)       279,143
       Expenditures on furniture, equipment
          and computer software               769,630                         769,630
       Segment profit (loss)                1,748,182        (155,271)      1,592,911

       Assets                             $23,515,062      $20,555,995    $44,071,057
       Liabilities                         $6,213,590      $10,413,052    $16,626,642

     1998:
       Revenues from external customers   $ 8,711,788      $48,166,482    $56,878,270
       Revenue from intercompany              345,184                         345,184
       Interest revenue                        65,587          438,828        504,415
       Depreciation/amortization expense      391,902          153,051        544,953
       Income tax expense (benefit)         1,639,030      (1,209,682)        429,348
       Expenditures on furniture, equipment
          and computer software               181,330          628,702        810,032
       Segment profit (loss)                2,837,133      (2,651,840)        185,293

       Assets                             $20,522,701      $12,374,475    $32,897,176
       Liabilities                         $5,328,643       $4,267,933     $9,596,576

     1997:
       Revenues from external customers     6,545,852       20,035,270     26,581,122
       Revenue from intercompany               86,918                          86,918
       Interest revenue                       131,520          379,737        511,257
       Depreciation/amortization expense      265,570           51,926        317,496
       Income tax expense (benefit)           537,730         (33,724)        504,006
       Expenditures on furniture, equipment
          and computer software               508,715            -            508,715
       Segment profit (loss)                2,601,835      (2,336,464)        265,371

       Assets                             $13,761,732      $12,817,130    $26,578,862
       Liabilities                         $1,466,574       $7,531,774     $8,998,348


</TABLE>


                                        30

<PAGE>  31


               FIRST CHOICE HEALTH NETWORK, INC. AND SUBSIDIARY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5 #2

<TABLE>
<CAPTION>
                                        	   	   1999           1998           1997
                                        	  	   ----        	-----          ----
     <S>                             <C>                   <C>            <C>
     Revenues:
       Total revenues for reportable segments
          and consolidated revenues   		$92,097,975    $56,878,270   $ 26,581,122
                                       	===========    ===========    ===========

     Profit or loss:
       Total profit or loss for reportable
	        	segments   			                	$1,592,911    $185,293     $ 265,371
       Adjustment for minority interest in
          consolidated statements       	    67,327     518,258       115,497
                                         		----------    --------     --------
            Consolidated net income    		$1,660,238    $703,551      $380,868
                                       		==========    ========     =========

     Assets:
       Total assets for reportable segments   $44,071,057   $32,897,176   $26,578,862
       Elimination of intercompany investment (13,171,522)  (11,457,007)  (6,667,309)
       Elimination of intercompany balances      (231,662)     (727,771)    (648,747)
                                              -----------    -----------  ----------
            Consolidated total assets         $30,667,873    $20,712,398  $19,262,806
                                               ==========    ===========  ===========
     Liabilities:

       Total liabilities for reportable
          		segments 				                    $16,626,642     $9,596,576   $8,998,348
       Elimination of intercompany balances     (231,662)      (727,771)    (648,747)
                                              -----------      ---------   -----------
            Consolidated total liabilities   $16,394,980      $8,868,805  $8,349,601
                                     	        ===========      ==========  ==========

</TABLE>


                                        31


<PAGE>  32

               FIRST CHOICE HEALTH NETWORK, INC. AND SUBSIDIARY
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Substantially all of the revenues from external customers are derived from
within the state of Washington.

Revenues from one customer of the Plan represent approximately $24,500,000
and $19,800,000 of the Company's consolidated revenues for 1999 and 1998,
respectively.

NOTE 7:  FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of cash and cash equivalents, service fees and premiums
receivable, accounts payable, notes payable, and due to provider
organizations approximates fair value because of the short maturity of
these instruments.

NOTE 8:  RETIREMENT PLAN

The Company has a qualified 401(k) Employee Savings and Profit Sharing Plan
covering all full-time employees.  Under the plan, employees can defer up to
12% of eligible compensation.  The Company matches 50% of the employee
contribution, up to 6% of the employee's eligible salary.  Employees become
fully vested in employee and employer contributions when the contributions are
made.  The Company also has the option to make an additional profit sharing
contribution to the plan.  Employer contributions to the plan for the years
ended December 31, 1999 and 1998 amounted to $141,117 and $90,768
respectively.

NOTE 9:   ACQUISITIONS

Health First Partners and Health Washington contract:  Effective July 1, 1997,
the Plan acquired 100% of the stock of Health First Partners, Inc., a health
care services contractor operating in the state of Washington, in which
shareholders of the Company have and interest, by issuing 33,572 shares of
stock.  The acquisition has been accounted for as a purchase with a cost of
the net assets acquired of approximately $936,000. The purchase price was
allocated based on the fair value of assets and liabilities at the date of
acquisition as follows: $660,740 working capital and $275,260 goodwill.  The
results of operations of Health First Partners, Inc. have been included in the
Company's consolidated financial statements from the date of acquisition.  At
the same time, the Plan acquired a large contract from Health Washington,
L.L.C., a limited liability company licensed under the laws of the state of
Washington, in which shareholders of the Network have an interest, by issuing
34,523 shares of common stock.  The primary asset acquired through this
acquisition was an employer group health insurance contract and supporting
health care network of providers for which fair value has been determined to
be minimal, accordingly, no amounts have been attributed to this contract in
the accompanying financial statements.  The acquisition has been accounted for
as a purchase. The results of operations attributable to the contract have
been included in the Company's consolidated financial statements from the date
of acquisition. As a result of the above transactions, there was a reduction
in the Company's equity as the carrying value of the stock issued exceeded
the fair value of the contract.

The Company retained 75.1% interest in the voting common stock of the Plan
as a result of these acquisitions.  In addition, the Company is required to
contribute to the capital of the Plan, a percentage of the Company's
administrative fee revenue for the ten years following July 1, 1997, if any.
No minimum amounts of contributions are required. The Company contributed
$1,714,515 for common stock and additional paid-in-capital on a percentage
of the Company's revenues for the year ended December 31, 1999. The investment
in the Plan is eliminated in consolidation.  Prior to December 31, 1998, the
Company contributed $1,159,667 in accordance with the contract based on
expected revenues for the period ended December 31, 1998.  The investment in
the Plan is eliminated in consolidation.  Subsequent to December 31, 1997,
$630,031 was contributed for common stock and additional paid-in capital on
a percentage of the Company's revenues for the year ended December 31, 1997.

In 1998, three shareholders of the Plan converted a portion of their common
stock to preferred stock that increased to 80% the percentage of share of
the Company in the Plan.

                                        32
<PAGE>  33

                 FIRST CHOICE HEALTH NETWORK, INC. AND SUBSIDIARY
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Providence Plan Partners PPO:  On December 1, 1998, the Company purchased all
of the assets of Providence Plan Partners PPO Business for a purchase price
of $3,500,000 in the form of a note payable to be paid with interest at a rate
of 6% over 18 months.  The assets acquired consist of provider contracts
($1,680,000), trade name ($140,000), a noncompetition agreement ($840,000),
computer equipment, and software licenses ($140,000).  There is a contingent
payment of $668,000 to be determined based on the revenues received by the
Company from the acquired business during the 12 months after the closing
date.  This acquisition was accounted for using the purchase method.  Results
operations are included in the financial statements of the Company from the
effective date of the acquisition December 1, 1998.

NOTE 10:  NOTES PAYABLE

The Company has an unsecured note payable at December 31, 1999 and 1998,
related to the acquisition of Providence Partners PPO business (note 8)
of $1,612,004 and $2,887,667, respectively.   The note is payable in 18
equal monthly installments plus interest of 6%, starting December 1998.


                                        33


<PAGE>  34

               FIRST CHOICE HEALTH NETWORK, INC. AND SUBSIDIARY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 11:  RESERVE FOR UNPAID CLAIMS AND CLAIMS ADJUSTMENT EXPENSES

Activity in the reserve  for unpaid claims and  claims adjustment expenses  is
summarized as follows for the years ended December 31:

                                                 1999          1998
                                                -------       ------
          Balance, beginning of year         $2,102,364     $ 1,394,107

          Incurred related to:
               Current year                  12,042,521       8,543,200
               Prior year                     (848,750)       (339,144)
                                             ----------     -----------
               Total incurred                11,193,771       8,204,056

            Paid related to:
               Current year                   8,831,908        6,440,836
               Prior year                     1,253,614        1,054,963
                                             ----------      -----------
               Total paid                    10,085,522       7,495,799
                                             ----------      -----------
          Balance, end of year               $3,210,613      $2,102,364
                                             ==========      ==========

As a result of changes in estimates of insured events in the prior year for
1999 and 1998, and recovery of duplicate claims payments of approximately
$700,000 in 1999, the provision for unpaid claims and claims adjustment
expenses for 1997 and 1998 decreased because of lower than anticipated losses.

The Company negotiated contracts with two contracted provider organizations
in 1998 that impacted incurred expenses in 1997.  Both renegotiated contracts
related to the transfer of medical risk to the Company from contracts where
each provider organization previously held risk.  Claims incurred in 1998
include $1,502,904 for the retention of this risk.  Claims paid in 1998
that related to 1997 were $905,107.


                                        34
<PAGE>  35


               FIRST CHOICE HEALTH NETWORK, INC. AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 12:  REGULATORY MATTERS

The Company is subject to regulation by the Office of Insurance Commissioner
(OIC)in the state of Washington including the requirement to follow statutory
accounting principles (SAP), which differ from accounting principles generally
accepted in the United States of America (GAAP).  The OIC also requires that
certain levels of capital be maintained. The State of Washington has adopted a
risk-based capital (RBC) calculation for determining statutory capital
requirements.  This methodology became effective for the year ended December
31, 1999.  At December 31, 1999, the Company was in compliance with the new
capital requirements.

The primary differences in reporting between the SAP and GAAP result from
goodwill, accounts receivables over 90 days past due, and prepaid expenses
being treated as _non-admitted_ assets under SAP.

The NAIC has developed statutory accounting practices (the codification) which
are expected to constitute the only source of prescribed statutory accounting
practices.  The NAIC anticipates the effective date for health-related
organizations to be January 1, 2001.  The codification will have no effect on
those financial statements which are in accordance with accounting principles
generally accepted in the United States of America.  Statutory-basis
shareholders' equity as filed in the OIC statement was $6,627,243 and
$7,121,270 as of December 31, 1999 and 1998, respectively.  Statutory-basis
net loss as filed in the OIC statements was $364,612 and $2,651,839 for the
year ended December 31, 1999 and 1998, respectively.

The Company is subject to regulations which limit dividend payments and
regulate other intercompany transactions.  At December 31, 1999 and 1998, the
Company had negative statutory basis earned surplus and therefore must seek
regulatory approval prior to payment.  No dividends were paid by the Company
during 1999 or 1998.

NOTE 13:  SUBSEQUENT EVENTS

Throughout 1999 and early 2000, the Plan contracted with Cascade Medical Group
(Cascade) for capitated health care services.  The Plan did not have insurance
risk for the covered individuals to the extent that Cascade could continue to
pay the Plan for claims paid on their behalf.  In March of 2000, Cascade
management dissolved the organization.  The dissolution of Cascade does not
affect the financial position or results of operations in 1999 because the
Plan had a payable to Cascade as of December 31, 1999.  However, management
believes a loss of between $500,000 and $700,000 will be incurred in 2000 for
claims paid in 2000 for which the Plan does not expect to be reimbursed.
Management is evaluating the financial impact of this event.  The ultimate
financial impact of this event will be determined, and the expense will be
recorded, during 2000.

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

          There were no disagreements with accountants on accounting and
financial disclosure.

                                        35
<PAGE>  36


                                        PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
          COMPLIANCE WITH SECTION 16 (a)OF THE EXCHANGE ACT.

The executive officers and directors of First Choice are as follows:


Name                         Age        Position

Gary R. Gannaway              53   President & Chief Executive Officer
David Peel                    39   Sr. Vice President _Chief Financial Officer
Ross D. Heyl                  46   Sr. Vice President & Chief Marketing Officer
Julie Keeffe                  42   Sr. Vice President-Medical Mgmt & Member
                         					     Services
Joe Leinonen, M.D.           	55   Chief Medical Officer
Paul M. Elliott          	    59   Director (III)
Andrew Fallat                 52   Director (II)
James J. Finley, M.D.         60   Director (III)
Kenneth D. Graham        	    53   Director (I)
Phillip J. Haas               51   Director (III)
William F. Johnston, M.D.     54   Director (II)
John F. Koster, M.D.          50   Director (III)
R. Dean Martz, M.D.      	    42   Director (III)
Barbara L. Mauk          	    54   Director (I)
Richard A. McGee, M.D.        54   Director (I)
Richard H. Peterson      	    57   Director (I)
Richard E. Rust, M.D.         73   Director (I)
Robert H. Smith,III           55   Director (II)
Richard Stubbs, M.D., M.B.A.	 54   Director (III)
Clyde D. Walker          	    44   Director (II)

   (I)    Term Expires in 2000
  (II)    Term Expires in 2001
 (III)    Term Expires in 2002

Gary R. Gannaway assumed the position of President and Chief Executive Officer
of First Choice in January 1996.  Mr. Gannaway has an extensive background in
the development and marketing of managed health care and creating innovative
partnerships between physicians and hospitals.  Mr. Gannaway has served as
Principal and President of Dauner, Gannaway and Associates, a managed care
consulting and management company, with offices in Phoenix, Arizona and
Wichita, Kansas, from 1987 to 1995. During the same period he has served as
President and CEO of Premier healthcare of Arizona, a statewide HMO; as
President of the Arizona Healthcare Alliance of Phoenix, which developed and
marketed seven area PHOs; and Vice President for western U.S. managed care
operations at Aetna Health Plans.

David Peel, Senior Vice President, Chief Financial Officer, and Treasurer
joined First Choice Health Network in July 1996. He served as the Vice
President of Product Development and Underwriting until assuming the position
of Chief Financial Officer in February 1997.  Mr. Peel served as Vice
President and Chief Financial Officer for Premier Healthcare of Arizona from
1995 to 1996 and as Associate Director, Provider Contracting for Samaritan
Health Plan in Phoenix, Arizona from 1987 to 1995.

                                        36

<PAGE>  37

Ross D. Heyl, Senior Vice President, Chief Marketing Officer, joined First
Choice in 1985.  From 1982 to 1985, Mr. Heyl was an account executive for
Rollins Burdick Hunter of Washington; and from 1980 to 1982, he was employed
by Penn Mutual Life Insurance Company in San Francisco and Seattle.  Mr. Heyl
is a licensed health insurance agent in the state of Washington.

Julie Keeffe, Senior Vice President, Medical Management and Member Services,
joined First Choice in May 1997. Julie has worked in health care since 1979.
Prior to coming to First Choice Health, she provided health care management
consulting services for Milliman and Robertson, Inc, where she implemented
successful strategies for the medical management systems of health plans and
delivery systems.  Earlier, Julie was Director of Utilization and Quality
Management for the Virginia Mason Health Plan for nine years.  Her background
includes indemnity, PPO, and HMO utilization management and analysis.  Her
clinical experience includes several years of inpatient, outpatient, and
emergency care nursing.  Julie's expertise is in designing medical management
that meets the needs of the provider as well as the payer.  Her areas of
interest include utilization and quality management, specialty referral.

Joe Leinonen, M.D., Chief Medical Officer, joined First Choice Health in April
1998 although he was also one of the original developers of First Choice
Health in 1984.  He brings 18 years of managed care experience as a physician
executive in a variety of positions with national, regional and local
responsibilities.  Dr. Leinonen was born and raised in Seattle, obtained his
undergraduate degree from Stanford University and his medical degree from the
University of Washington.  He received his hospital training at Virginia Mason
and served on the medical staff of Northwest Hospital for 17 years of which 2
years were served as Chief of Family Practice.  He has also served as General
Manager and Medical Director for Equicor's operations in Washington, Executive
Director and Medical Director for CIGNA's Managed Care Operations for the
Northwest Region and was the First President and CEO for Health Washington.

Paul M. Elliott, CPA

Mr. Elliott, recently retired, was formerly Senior Vice President of Finance
and Operations for the Alpac Corporation.  From August 1969 to August 1981, he
was Vice President-Controller for Airborne Freight Corporation in Seattle.  He
is a member of the Board of Visitors for Central Washington University, on the
Board of the Boys & Girls Clubs of South Snohomish County and a member of
Rotary Club International.

Andrew Fallat, FACHE

Mr. Fallat has served as the Chief Executive Officer of Evergreen Healthcare
since 1981.  Evergreen Healthcare is a provider of a broad range of services
in King and Snohomish Counties including a 149 bed acute care hospital, 17 bed
skilled nursing facility, a free standing surgical center, Puget Sound's
largest and most comprehensive hospital based hospice and home health program,
mobile paramedic services and a broad range of other community-based health
assistance programs.  He is board member on the Foundation for Health Care
Quality and is a Fellow in the American College of Healthcare Executives.  Mr.
Fallat holds a Masters degree in Healthcare Administration from George
Washington University and a B.S. in Zoology from Duke University.

James G. Finley, M.D.

Dr. Finley joined The Everett Clinic in 1973 as a gastroenterologist.  A
native of Tennessee, he received his B.S. degree from Rhodes College in
Memphis, Tennessee.  His medical degree was received from Vanderbilt in 1966
and internship and first year Internal Medicine residency were also completed
at Vanderbilt.  A second year of Internal Medicine and two years of
gastroenterology fellowship were completed at the University of Washington,
followed by two years in San Diego with the United States Navy Hospital as a
gastroenterologist.

Dr. Finley is a Diplomat of the American Board of Internal Medicine and the
American Board of Gastroenterology since 1972.  In addition to his practice of
Gastroenterolgy, he has served as Medical Director of The Everett Clinic since
1983.
                                        37

<PAGE>  38

Since January 1998, this position now occupies 100% of his professional time.
He serves in board positions with Medical Partners Northwest and Washington
Medical Group Alliance.

Kenneth D. Graham, FACHE

Mr. Graham has served as President and CEO at Overlake Hospital Medical Center
since 1994, and has overseen significant changes in the organization.  The
hospital has: developed a new facilities master plan; introduced operational
controls that have significantly improved hospital efficiency; established
contracts with more than 25 managed care companies and implemented new
programs like an adolescent psychiatric care program; a Multiple Sclerosis
Center; a Level III Emergency Center and a Women's Hospital.  He serves as
Chair of the Overlake Venture Center and also the Chair of Dr. Goodwell.com;
an Internet based virtual clinic service.

Mr. Graham also currently serves as the voluntary Executive Director of
RotaCare International; an organization dedicated to providing free clinics in
association with local Rotary clubs.  RotaCare serves homeless, migrant
workers, new immigrants and the uninsured or underinsured.

Mr. Graham is committed to community involvement in local, regional and
national organizations including the Bellevue Chamber of Commerce and the
Rotary Club of Bellevue.  He previously served as a member or advisor of more
than a dozen hospitals or health care organization boards.

He earned a B.S. degree in Public Health and a Masters degree in Public Health
Hospital Administration, both from UCLA.  He is a Fellow in the American
College of Health Care Executives and is the College's Regent for the State of
Washington.

Phillip J. Haas

Mr. Haas is Administrator-Managed Care of Valley Medical Center, a 304-bed
acute care public district hospital, with responsibility for negotiating,
implementing, and administering contracts and joint ventures linking payers
with the hospital, its clinic network, individual practice associations, and
medical staff.  Since joining Valley Medical Center in November 1993, he
managed the development of a clinic network including seven primary care
clinics, a family practice residency clinic, a behavioral health clinic, and
two occupational health clinics.

From 1988 through 1993, Mr. Haas was Executive Director of Virginia Mason
Health Plan, an HMO serving over 40,000 members.  From 1985 to 1988, he was
President of First Choice Health Network, a preferred provider organization.
His prior experiences include serving as Senior Vice President of the Illinois
Hospital Association, president of a hospital shared services organization,
and administrative director of a medical school-based prepaid group practice
plan.  He is a Fellow of the American College of Healthcare Executives and a
Director of First Choice Health Network, Inc.  He received a M.B.A. degree
from the University of Chicago and a B.A. degree from Northwestern University
in Evanston, Illinois.

William F. Johnston, M.D., F.A.C.E.P.

Dr. Johnston is the Medical Director of Emergency Services at Northwest
Hospital.  Besides the supervision of the physicians who deliver emergency
medical care at the hospital, his position provides an interface between
administration, nursing, the medical staff and other hospital departments to
help support the smooth delivery of emergency medical services at the
hospital.  He serves on the Executive Committee of the hospital as Chairman of
the Department of Emergency Medicine.  Bill also practices as an emergency
physician and helps teach Advanced Cardiac Life Support and Advanced Trauma
Life Support Courses.  He received his M.D., M.B.A. and M.S.E.E.
Bioengineering) degrees from the University of Washington.


                                        38

<PAGE>  39

John Koster, M.D.

John Koster, M.D. joined Sisters of Providence Health System in April 1997 as
vice president of Clinical and Physician Services.  In May of 1998 he was
promoted to senior vice president in the Office of the CEO and chief executive
of the Washington region.  The Sisters of Providence Health System is
comprised of 20 hospitals, 9 freestanding long-term care facilities, physician
practices, managed care plans and other health and social services in the
states of Alaska, Washington, Oregon and California.

Prior to joining Sisters of Providence, Dr. Koster was senior vice president
of Targeted Member Services at VHA, a nationwide network of leading community-
owned healthcare organizations and physicians.  He focused on business
development and educational needs of specific segments such as physician group
practices and HMOs.  He has served as an advisor to physicians and management
staff in healthcare organizations in every part of the country.

Dr. Koster also served as vice president of Presbyterian Healthcare Services
in Albuquerque, New Mexico, an integrated health care financing and delivery
system serving 14 communities in New Mexico and Colorado.  Dr. Koster was
senior vice president of Rocky Mountain Healthcare Corporation, which managed
BCBS plans of Colorado, New Mexico and Nevada.  Board certified in Internal
medicine, Dr. Koster was in private practice with a multispecialty group of
primary care physicians from 1980 until 1988.

Dr. Koster graduated from New Mexico Tech with a bachelor's degree in biology.
He earned his medical degree from the University of New Mexico.  His
postgraduate studies include Internship at Providence Hospital in Portland,
Oregon and a residency in Internal medicine at the University of New Mexico
Medical School.

R. Dean Martz, M.D.

Dr. Martz is a practicing neurosurgeon in Spokane since 1990.  He is an active
staff member of both Sacred Heart Medical and Deaconess Medical Centers in
Spokane.  He is a member of the American Medical Association, American
Association of Neurological Surgeons, and was certified by the American Board
of Neurological Surgeons in 1993.  He received his medical degree from Case
Western Reserve University in Cleveland, Ohio.  He trained neurological
surgery at the University of Michigan Hospitals in Ann Arbor.

Barbara L. Mauk

Ms. Mauk is the Director, Human Resources for Valley Medical Center, Renton,
Washington.  Previously, she was the Managing Partner of ClearPoint, an
employee benefits brokerage and consulting firm.  She has previously served as
the Chief Operating Officer of The Reppond Company; Vice President Human
Resources for KIRO Broadcasting, Inc.; and Personnel Director for Northwest
Hospital.  She is active with Bellevue Rotary, the American Compensation
Association, Society of Human Resource Management, and the Employee Benefits
Planning Association.

Richard A. McGee, M.D., F.A.C.P.

Dr. McGee has a full-time private medical oncology practice and is President
of Washington Cancer Centers, the largest medical oncology group in Washington
State.  He was previously the Medical Director of Stevens Healthcare, a Public
Hospital District, and is a consultant in Medical Staff Affairs to other area
hospitals.  He is a diplomat of the American Board of Internal Medicine as
well as the specialty Boards of both the American Board of Hematology and the
American Board of Medical Oncology.  He is President of the Washington State
Medical Oncology Society.  He is Chairman of the Quality Assurance Committee
of Stevens Health Network, a local PHO.  He is a Clinical Professor of
Medicine at the University of Washington and is a Fellow of the American
College of Physicians.  He is a member of the Clinical Practice Committee of
the American Society of Clinical Oncology and Assistant Editor for Clinical
Practice on their Web site.  In the past, he has served as Chief of the
Medical Staff

                                        39

<PAGE>  40

and Chairman of several hospital committees.  He was Vice-Chairman of the
Board of Directors of Snohomish County Physicians Corporation, a Blue Shield
company.  His undergraduate studies were at John Carroll University, his
graduate studies at Johns Hopkins University Medical School and his post
graduate work was done at the University of Washington Hospital and the
National Institutes of Health in Bethesda, Maryland.

Richard H. Peterson

Mr. Peterson is President and Chief Executive Officer of Swedish Health
Services, a non-profit organization comprised of a 163-bed community hospital
on the Ballard campus and a 697-bed tertiary care hospital on the First Hill
campus.  Mr. Peterson previously served as President and Chief Executive
Officer of Fairview Riverside Medical Center in Minneapolis, Minnesota.  In
all, his career in health system administration has spanned more than 25
years.  A native of Minnesota, Mr. Peterson holds a master's degree in
hospital and health care administration from the University of Minnesota and a
B.A. from Macalester College in St. Paul, Minnesota.

Richard E. Rust, M.D.

Dr. Rust is a retired family practitioner.  Dr. Rust has served on the First
Choice Health Network Board of Directors since 1985.  Additional activities
have included serving as Trustee of the Washington Academy of Family
Physicians; Trustee, King County Medical Society; Trustee and Vice Chairman of
King County Medical Blue Shield; and President of King County Academy of
Family Physicians.  He was Chief of Medical Staff of Northwest Hospital in
1965.

Robert H. Smith, III

Mr. Smith is Executive Vice President and Chief Financial Officer of Good
Samaritan Community Healthcare.  Mr. Smith holds an M.B.A. from San Diego
State University, is a certified public accountant (CPA) and a certified
healthcare executive (CHE).  Previously, Mr. Smith served as Chief Financial
Officer for Roseville Community Hospital near Sacramento, Merle West Medical
Center in Klamath Falls, Oregon and was a senior accountant with Ernst & Young
in San Diego.  He has served actively with the Healthcare Financial Management
Association in various posts, including chapter president, and has recently
served as treasurer of the Board of Directors of several non-profit
organizations.

Richard Stubbs, M.D., M.B.A

Dr. Stubbs is the Vice President, Medical Affairs and the senior physician
manager in the MultiCare Health System with direct responsibility for medical
staff relationships and the departments of Medical Staff Services, Family
Practice Residency Education, Quality Management, Medical Records,
Transcription, Pharmacy, Cancer Services, Perinatal and Neonatal Services.
Dr. Stubbs' position represents the key link between MultiCare Health Systems
and the physician community in the Pierce and South King County areas.  Dr.
Stubbs previously served as Medical Director, McKay-Dee Hospital Center in
Ogden, Utah, Medical Director for Blue Cross and Blue Shield of Virginia, in
Richmond, Virginia, and Medical Director, IPA and Group Plans, FHP in Southern
California.  Dr. Stubbs received his undergraduate and medical degrees from
the University of Arkansas and his M.B.A. from the University of Phoenix.  He
is Fellow of the American Board of Family Practice and a Fellow of the
American College of Physician Executives where he currently serves on the
Council of Fellows.  He teaches Medical Ethics for the Tulane University
Masters of Medical Management program.




                                        40



<PAGE>  41

Clyde D. Walker

Mr. Walker is Vice President, Human Resources of PRIMEX Aerospace and
Electronics Division and PRIMEX Aerospace Company in Redmond, WA.  Mr. Walker
has over ten years experience in the human resources field and over twenty
years of business administration and management experience.  Since 1977, Mr.
Walker has held positions of increasing levels of responsibility in areas
including subcontract administration, contract administration, pricing and
human resources.  He received an M.B.A. degree from City University in Seattle
and a B.A. degree in business administration from the University of Washington.

Mr. Walker recently served as Chairman of the Board of Directors of Big
Brothers/Big Sisters of King County and led both boards through the
combination of the two independent agencies.  He remains on the resultant
combined Board and also serves on the Board of Directors of First Choice
Health Network.

The Company's Board of Directors proposed an amendment of the Bylaws to modify
the membership of the Board, and on June 29, 1999, the shareholders approved
the changes unanimously.

Classification of Directors. - The management of this corporation shall be
vested in a Board of Directors.  Effective from June 29, 1999, the Board of
Directors shall consist of fifteen individuals: Six (6) directors (the "Class
A Directors") shall be physicians representing Class A shareholders.  Six (6)
directors (the "Class B Directors") shall represent Class B shareholders and
any public hospitals that have made capital contributions to the corporation
("participating hospitals").  Three (3) directors (the "Class C Directors")
shall represent employers other than health care providers and/or be consumers
of health care services.

The Board shall be divided into three categories as follows:

     Category   I: Two Class A Directors, two Class B Directors, and one Class
			      C Director.
     Category  II: Two Class A Directors, two Class B Directors, and one Class
				C Director.
     Category III: Two Class A Directors, two Class B Directors, and one Class
				C Director.

Directors may be removed, with or without cause, by an affirmative vote of the
holders of at least 75% of the outstanding shares of each class of Common
Stock, and the number, classification, qualifications and terms of directors
may not be altered except by such class voting.

A quorum of six (6) directors is generally required to transact business at a
meeting of the Board, except that a quorum of eight (8) directors is required
for determination of the admission and expulsion of shareholders and "members"
i.e., PPO physicians), the fees charged for and/or paid to health care
providers, and any issues reviewed by the Board regarding the limitation or
termination of health care provider contracts.



                                        41

<PAGE>    42

ITEM  11. EXECUTIVE COMPENSATION

The following table sets forth a summary of the compensation earned by the
Company's President and Chief Executive Officer and each other executive
officer who earned in excess of $100,000 in each of the last three fiscal
years:

Name and Principal               		Annual Compensation All Other
   Position                        Year    Salary    Bonus    Compensation
-----------------------            ----    ------    -----    ------------
Gary Gannaway (1)           	      99   $238,218  $100,000  	$7,484
President and CEO                 	98   $226,518  $126,000
                         		        97   $221,589  $126,000

Ross Heyl                        		99   $112,879  $15,930   	$5,208
Senior Vice President, Marketing   98   $95,108   $18,000
                                 		97   $93,467   $18,000

Julie Keeffe, R.N.                	99   $143,205  $11,820   	  $475
Senior Vice President, Medical    	98   $117,500  $5,300
Management & Member Services

Joe Leinonen, M.D.                	99   $195,539  $12,610   	$6,250
Chief Medical Officer              98   $139,500

David Peel                        	99   $143,637  $22,250   	$6,250
Senior Vice President, Finance     98   $122,497  $22,900
                         		        97   $121,384  $22,900


Barbara L. Mauk, the Chairman of the Board, has been compensated $500 per
month (inclusive of attendance at regular Board meeting) and an additional
$150 per hour for committee meetings since July 1, 1994.  All other directors
have received $75 per hour for attendance at Board and committee meetings
since February 1, 1995.  The Chairman and directors compensation remained the
same through December 31, 1999.

EMPLOYMENT AGREEMENTS

On October 19, 1995, Gary R. Gannaway entered into a five year employment
agreement as the Company's President and Chief Executive Officer, filling the
vacancy created by the resignation in April 1995 of James G. Stumpfel.  Mr.
Gannaway commenced employment on January 16, 1996. Under his employment
agreement with First Choice, Mr. Gannaway will be employed for a five-year
term expiring January 15, 2001 and will receive an annual base salary of
$200,000 for 1996, subject to a minimum 5% annual increase, and will be
allowed $6,000 per annum for automobile expenses.  The Company has also agreed
to provide Mr. Gannaway with group life insurance coverage in a dollar amount
equal to twice his annual base salary as well as comprehensive medical, dental
and disability insurance coverage.

In each of the years of the employment agreement subsequent to the initial
year, Mr. Gannaway will be eligible to receive a bonus of up to 60% of his
annual base salary, based on achieving performance criteria established by the
Board of Directors.




                                        42

<PAGE>    43


At December 31, 1997, the respective employment agreements of Mr. Gannaway,
and Mr. Heyl provided that in the event the Company merges with, acquires or
is sold to another entity or business and it can reasonably be determined that
Mr. Gannaway or Mr. Heyl, as the case may be, is no longer being authorized to
perform substantially the duties of President and Chief Executive Officer
(with respect to Mr. Gannaway), or Vice President, Marketing (with respect to
Mr. Heyl), Mr. Gannaway or Mr. Heyl, as the case may be, may elect to
terminate his respective employment, in which event he shall be entitled to
the same severance pay and benefits that he would otherwise have been entitled
to following a termination without cause, for a period of 12 months (with
respect to Mr. Gannaway) or six months (with respect to Mr. Heyl) or until the
applicable person secures other employment, whichever occurs first.

At December 31, 1997, the respective employment agreements provided that Mr.
Gannaway may terminate his employment on 90 days' prior written notice, and
Mr. Heyl on 30 days' prior written notice, and that Mr. Gannaway, and Mr. Heyl
will keep information about the Company confidential and will not compete with
the Company by accepting employment or otherwise becoming associated with any
other managed care organization owned or operated in any geographic areas
served by the Company, for a period of 12 months ( with respect to Mr.
Gannaway) and nine months (with respect and Mr. Heyl) following their
respective voluntary termination's of employment.  Mr. Heyl's  employment
agreements at December 31, 1996 also provided that if, at the expiration of
the term of their respective contracts, the Company offers a new contracts Mr.
Heyl the terms of which are no less favorable than the terms of his present
contract, and Mr. Heyl do not accept such offer, then Mr. Heyl will not accept
employment by or be associated with any other managed care organization owned
and operated in geographic areas served by the Company for a period of 12
months following the expiration of his present contract.

At December 31, 1997, the respective employment agreements of Mr. Heyl also
provided that the Company will indemnify Mr. Heyl against  any liabilities
incurred by either in the conduct of his individual employment other than
those as to which they are adjudged to have been liable for misconduct in the
performance of his respective duties, as such standards of conduct are set
forth in the Company's Restated Articles of Incorporation and Bylaws.  The
Company has also agreed to obtain officers' and directors' liability
insurance, subject to its reasonable availability, providing coverage for  Mr.
Heyl for any liability incurred by him arising out of his position, whether or
not the Company would otherwise be  required to indemnify him.


ITEM  12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of March 31, 1998, information with respect
to the beneficial ownership of the Company's Class A Common Stock and Class B
Common Stock by (i) each person known by the Company to own beneficially more
than five percent of either the Class A Common Stock or Class B Common Stock,
(ii) each of the persons named in the Summary Compensation Table set forth in
"Item 10.  Executive Compensation" of this Part I of this Annual Report, (iii)
each director, and (iv) all directors and executive officers as a group,
together with their percentage ownership of each such class of Common Stock.



                                        43
<PAGE>    44


             				             Shares Owned  	         Percent of
	Name		      		             Class A   Class B		     Class A   Class B
------				                  -------   -------       -------   -------

Northwest Hospital               -      5,800             -       14.3%
1550 North 155th
Seattle, WA  98133

Providence-General               -      5,800             -       14.3%
14th and Colby
Everett, WA  98201

Good Samaritan                   -      5,800             -       14.3%
Community Healthcare
407-14th Avenue SE
Puyallup, WA  98371

Multicare Medical Center         -      5,800             -       14.3%
409 South J
Tacoma, WA  98405

Empire Health Services           -      5,800             -       14.3%
80 Fifth Avenue
Spokane, WA  99210

Swedish Medical Center           -      5,800             -       14.3%
747 Broadway
Seattle, WA  98114

Overlake Hospital Medical Center -      5,800             -       14.3%
1035 116th Avenue NE
Bellevue, WA  98004

Paul M. Elliott                  -        -               -        -

Andrew Fallat                    -        -               -        -

William F. Johnston, M.D.        1        -               *        -

Phillip J. Haas                  -        -               -        -

Barbara L. Mauk                  -        -               -        -

Richard A. McGee, M.D.           1        -               *        -

Richard H. Peterson              -        -               -        -

Richard E. Rust, M.D.            1        -               *        -




                                        44
<PAGE>      45

                               Shares Owned              Percent of
   Name                     Class A   Class B     	Class A    Class B
 --------                   -------   -------     	-------    -------

Richard Stubbs, M.D., M.B.A.     -        -               -        -

Robert H. Smith                  -        -               -        -

Clyde D. Walker                  -        -               -        -


Kenneth D. Graham                -        -               -        -

James J. Finley, M.D.            -        -               -        -

John Koster, M.D.                -        -               -        -

R. Dean Martz, M.D               -        -               -        -

All directors and executive
officers as a group (3 persons)  3     40,600             *        100%


Four additional hospitals in the state of Washington (Evergreen Hospital
Medical Center, 12040 Northeast 128th Street, Kirkland, WA  98034, Valley
Medical Center, 400 S. 43rd Street, Renton WA 98055, Stevens Memorial
Hospital, 21601 76th Avenue, Edmonds, WA  98026, and University of Washington
Medical Center, 1959 Northeast Pacific Street, Seattle, WA  98195) are not
shareholders of the Company, but have made capital contributions to the
Company in consideration of contractual rights substantially similar to the
rights to which each holder of Class B Common Stock is entitled, including
liquidation and dividend rights, but excluding voting rights.  See  "Item 8.
Description of Securities."


ITEM  13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In December 1996, Overlake Hospital Medical Center, a Washington non-profit
corporation, purchased  5,800 shares of the Company's Class B Common Stock at
a purchase price of $258.62 per share, or an aggregate of $1,500,000.  On
December 19, 1996, $1,000,000 was received by the Company and accordance with
the terms of the contract $250,000 is to be paid in December 1997 and $250,000
in December 1998.  The Company received the final payment in December 1998.

Pursuant to their respective health care facility service contracts with The
Network, the holders of the Class B Common Stock and the Hospital Participants
paid the following aggregate fee to First Choice in 1984:  Northwest Hospital:
$81,159;  Providence-General: $150,174;  Good Samaritan Community Healthcare:
$136,808;  Multicare Medical Center:  $207,271;  Empire Health Services:
$138,525;  Evergreen General Hospital:  $100,997; Valley Medical Center:
$134,144; and Stevens Memorial Hospital:  $88,093; Swedish Hospital:
$265,861; and Overlake Hospital Medical Center: $ 0.






                                        45

<PAGE>    46
                                        PART  IV

Item  14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K.

(a)  Exhibits

2.1    Copy of Registrant's Restated Articles of
       Incorporation.*

2.2    Copy of Registrant's By-Laws.*

2.3    Copy of Contribution, Merger and Asset Purchase Agreement dated June
  	 2, 1997

2.4    Purchase agreement dated as November 12, 1998, among First Choice
       Health Network, Inc. and Providence Plan Partners.

10.1   Form of Agreement between Registrant and
       Physician participating in PPO. **

10.2   Form of Health Care Facility Service Contract
       between Registrant and Hospital participating in PPO.*

10.2a  Copy of Agreements dated May 1, 1985, and May 17, 1993,
       respectively, with Northwest Hospital.*

10.2b  Copy of Agreement dated May 1, 1985, with Providence-
       General (formerly General Hospital of Everett).*

10.2c  Copy of Agreement dated May 1, 1985, and amendment dated
       July 1, 1993, with  Good Samaritan Community Hospital.*


10.2d  Copy of Agreement dated March 10, 1986, with Multicare
       Medical Center.*

10.2e  Copy of Addendum to Agreement dated April 30, 1992, with
       Empire Health Services.*

10.2f  Copy of Agreement dated September 6, 1985, and addendum
       dated June 17, 1992, with Evergreen General Hospital .*

10.2g  Copy of Agreement dated November 19, 1993, with General
       Hospital of Everett.*

10.2h  Copy of Agreement dated December 9, 1991, and addendum dated
       November 1, 1992 with Stevens Memorial Hospital .*

10.3   Form of Agreement between Registrant and Health Care
       Provider other than Hospitals and Physicians participating in PPO.*

10.4   Form of Agreement between Registrant and Third Party Administrator.*

                                        46
<PAGE> 47

10.5   Form of Agreement between Registrant and Insurance Company .*

10.6   Copy of Participation Agreement dated March 27, 1985, between
       Registrant and King County Public Hospital District No.2 ( Evergreen
       General Hospital ).*

10.7   Copy of Participation Agreement dated March 26, 1985, between
       Registrant and Valley Medical Center.*

10.8   Copy of Participation Agreement dated December 19, 1991, between
       Registrant and Public Hospital District No.2 of Snohomish County
       (Stevens Memorial Hospital) and related Promissory Note in the
       aggregate  principal  amount  of  $ 566,000.*

10.9a  Copy of Promissory Note dated June 10, 1991, in aggregate principal
       amount of $453,000 issued by Empire Health Services.*

10.9b  Copy of Subscription Agreement dated July 25, 1991, between
       Registrant and Empire Health  Services.*

10.9c  Copy of Stock Pledge Agreement dated July 25, 1991, between
       Registrant and  Empire Health Services.*

10.10  Copy of Settlement Agreement effective December 16, 1993, among
       the Attorney General of the State     of Washington, the Sisters of
       Providence in Washington and General Hospital Medical Center .*

10.11  Copy of Employment Agreement dated September 1, 1993, as amended,
       between Registrant and Clayton S. Field.*

10.12  Copy of Employment Agreement dated January 17, 1994, between
       Registrant and James G. Stumpfel, and related Promissory Note dated
       March 18, 1994, in the aggregate principal amount of $18,500.*

10.13a Copy of Lease dated December 5, 1988, between Registrant and
       Martin  Selig.*

10.13b Copy of Lease Amendments  date  April 5, 1990, May 29, 1992,
       December 2, 1992,  and December 20, 1993, respectively, each
       between Registrant and Martin Selig.*

10.14  Copy of $300,000 Line of Credit dated June 13, 1991, from
       Seafirst  Bank.*

10.15  Copy of acquisition agreement dated February 1, 1995, between
       Registrant and Pacific Health Systems, Inc.


                                        47



<PAGE> 48

10.16  Copy of Employment Agreement dated March 1, 1994, between
       Registrant and Randolph R. Barker.**

10.17  Copy of Employment Agreement dated October 19, 1995 between
       Registrant and  Gary R. Gannaway.**

10.18  Copy of Registrant's Amended By-Laws dated June 29, 1995.

10.19  Copy of Subscription Agreement dated July  16, 1996, between
       Registrant and Swedish Medical Center.

10.20  Copy of Agreement dated April 22, 1996 between Registrant and
       Olympic Health Management Systems, Inc. Production Line
       Management - Medicare Select.

10.20a Copy of Agreement dated April 22, 1996 between Registrant and
       Olympic Health Management Systems, Inc. for Administrative
       Agreement.

10.20b Copy of Agreement dated April 22, 1996 between Registrant and
       Olympic Health Management Systems, Inc. for Independent Agent
       Agreement.

10.20c Copy of Agreement dated April 22, 1996 between Registrant and
       Olympic Health Management Systems, Inc. for Supervising Agent
       Addendum to Independent Agent Agreement.

10.21  Copy of Subscription Agreement dated July 16,1996, between
       Registrant and Overlake Hospital Medical Center.

10.22  Copy of Employment Agreement dated March 1, 1994 between
       Registrant and Mr. Ross D. Heyl.**

10.23  Copy of Participation Agreement dated December 20, 1999, between
       Registrant and University of Washington Medical Center and related
       Promissory Note in the aggregate principal amount of  $ 1,260,000.*

16     Letter of change in certifying accountant (b)

*    Filed as same numbered Exhibit in Registrant's Registration Statement
     on Form 10-SB.

**   Denotes a management contract or compensatory plan or arrangement
     required to be filed as an exhibit to this Annual Report on Form 10K-SB.


(b)  Reports on Form 8-K.

16   Report dated December 30, 1999. Participation Agreement of University
     of Washington Medical Center.

                                        48

<PAGE>  49

                                  SIGNATURES


In accordance with Section 13 or 15 (d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized, on the 14th day of April 2000.


          FIRST CHOICE HEALTH NETWORK, INC.

          By:   /s/DAVID PEEL
               --------------------------------------
                   DAVID PEEL
                   Chief Financial Officer


In accordance with the Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated on April 14, 2000.

          SIGNATURE                          TITLE
          --------- 		              -------


/ s / GARY R. GANNAWAY             Principal Executive Officer
----------------------------
      GARY R. GANNAWAY


/ s / DAVID PEEL                   Principal Financial Officer
----------------------------
      DAVID PEEL



/ s / WILLIAM F. JOHNSTON          Director
----------------------------
      WILLIAM F. JOHNSTON


/ s / PAUL M. ELLIOTT              Director
----------------------------
      PAUL M. ELLIOTT


/ s / ANDREW FALLAT                Director
----------------------------
      ANDREW FALLAT


/ s / RICHARD STUBBS               Director
----------------------------
      RICHARD STUBBS
                                        49

<PAGE>      50


/ s / PHILLIP  J. HAAS             Director
----------------------------
      PHILLIP J. HAAS


/ s / BARBARA L. MAUK              Director
----------------------------
      BARBARA L. MAUK


/ s / RICHARD A. MCGEE, M.D.       Director
----------------------------
      RICHARD A. MCGEE, M.D.


/ s / RICHARD H. PETERSON          Director
----------------------------
      RICHARD H. PETERSON


/ s / RICHARD E. RUST, M.D.        Director
----------------------------
      RICHARD E. RUST, M.D.


/ s / ROBERT H. SMITH, III         Director
----------------------------
      ROBERT H. SMITH, III


/ s / CLYDE D. WALKER              Director
----------------------------
      CLYDE D. WALKER

/ s / KENNETH D. GRAHAM            Director
----------------------------
      KENNETH D. GRAHAM

/ s / JAMES J. FINLEY              Director
----------------------------
      JAMES J. FINLEY, M.D.

/ s / JOHN KOSTER                  Director
----------------------------
      JOHN KOSTER, M.D.

/ s / R. DEAN MARTZ                Director
----------------------------
      R. DEAN MARTZ, M.D.


                                      50