FORM 10-Q



                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


          QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934


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

For the quarterly period ended         September 30, 1998

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

For the transition period from                     to


For Quarter Ended   September 30, 1998       Commission file number   000-17596

                 Meridian Healthcare Growth and Income Fund Limited Partnership
                      (Exact Name of Registrant as Specified in its Charter)


                 Delaware                                   52-1549486
         (State or Other Jurisdiction of                 (I.R.S. Employer
         Incorporation or Organization)               Identification Number)



     225 East Redwood Street, Baltimore, Maryland              21202
       (Address of Principal Executive Offices)             (Zip Code)

        Registrant's Telephone Number, Including Area Code:     (410) 727-4083

                                               N/A
                      (Former Name, Former Address, and Former Fiscal Year,
                                 if Changed Since Last Report.)

  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



<PAGE>


                                      INDEX


                                                                        Page No.

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS                      2

Part I.  Financial Information


     Item 1.  Financial Statements

              Consolidated Balance Sheets                                      3
              Consolidated Statements of Operations                            4
              Consolidated Statements of Partners' Capital                     5
              Consolidated Statements of Cash Flows                            6
              Notes to Consolidated Financial Statements                     7-8


     Item 2.  Management's Discussion and Analysis of
                 Financial Condition and Results of Operations              9-11



Part II.   Other Information


     Item 1. through Item 6.                                                  12

     Signatures                                                               13




<PAGE>


         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP






            Cautionary Statement Regarding Forward Looking Statements



Certain   statements   contained  herein,   including   certain   statements  in
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations"   concerning  the  Fund's   business   outlook  or  future  economic
performances,  anticipated profitability,  revenues, expenses or other financial
items  together  with  other  statements  that  are  not  historical  facts  are
"forward-looking   statements"  as  that  term  is  defined  under  the  Federal
Securities Law. Forward-looking  statements are necessarily estimates reflecting
the best  judgement  of the party  making  such  statements  based upon  correct
information and involve a number of risks, uncertainties and other factors which
could  cause  actual  results to differ  materially  from  those  stated in such
statements.  Risks, uncertainties and factors which could affect the accuracy of
such forward looking  statements are identified in the Fund's Prospectus and the
Fund's Registration Statement filed by the Fund with the Securities and Exchange
Commission,  and forward looking statements  contained herein or in other public
statements of the Fund should be considered in light of those factors. There can
be no  assurance  that  factors  will not affect the  accuracy  of such  forward
looking statements.


                                                        -2-

<PAGE>


MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
                                                              September 30,
                                                                  1998       December 31,
                                                               (Unaudited)       1997
Assets
Current Assets
<S>                                                           <C>           <C>
 Cash and cash equivalents                                    $     2,352   $      2,275
 Accounts receivable, net                                           7,468          6,437
 Estimated third-party payor settlements                              260            343
 Prepaid expenses                                                     625            565
   Total current assets                                            10,705          9,620

Property and equipment, net of accumulated depreciation            33,958         34,839

Other assets
 Goodwill, net                                                      5,058          5,239
 Loan acquisition costs, net                                           13              9
                                                                    5,071          5,248

   Total assets                                               $    49,734   $     49,707

Liabilities and Partners' Capital
Current liabilities
 Current portion of long-term debt                            $       737   $        707
 Accrued compensation and related costs                               759          1,054
 Accounts payable and other accrued expenses                        3,283          2,186
 Estimated third  party payor settlements                           2,264          4,234
   Total current liabilities                                        7,043          8,181

Deferred management fee payable                                       843            812
Loan payable to the Development General Partner                     1,074          1,035
Long-term debt                                                     22,750         23,328
                                                                   24,667         25,175

Partners' capital
 General partners                                                    (136)          (153)
 Assignee limited partners; 1,540,040
  units issued and outstanding                                     18,160         16,504
   Total partners' capital                                         18,024         16,351

   Total liabilities and
    partners' capital                                         $    49,734   $     49,707

</TABLE>

See accompanying notes to financial statements

-3-
<PAGE>
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Consolidated Statements of Earnings
(Unaudited)
(Dollars in thousands except per unit amounts)
<TABLE>
<CAPTION>

                                                              Three Months Ended              Nine Months Ended

                                                              September 30,   September 30,   September 30,   September 30,
                                                                  1998            1997            1998            1997


Revenues
<S>                                                          <C>             <C>             <C>             <C>
 Medicaid and Medicare patients                              $      12,030   $       9,863   $      31,455   $      28,523
 Private patients                                                    2,905           2,718           8,374           8,234
 Investment and other income                                           100              77             233             235
                                                                    15,035          12,658          40,062          36,992

Expenses
 Operating, including $1,664,  $1,626,
  $5,192 and $5,014 to related parties                               9,998           9,873          29,835          29,541
 Management and administration fees
  to related parties                                                   963             814           2,586           2,375
 General and administrative                                            243             159             627             510
 Depreciation and amortization                                         497             498           1,466           1,483
 Interest expenses                                                     459             505           1,396           1,529
                                                                    12,160          11,849          35,910          35,438

Net earnings                                                 $       2,875   $         809   $       4,152   $       1,554


Net earnings per unit of assignee
 limited partnership interest-basic
 (computed based on 1,540,040
  units)                                                     $        1.85   $        0.52   $        2.67   $        1.00


</TABLE>


See accompanying notes to financial statements

-4-
<PAGE>
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
      Consolidated  Statements of Partners' Capital
  For the Nine Months Ended September 30, 1998 and 1997
                       (Unaudited)
                   Dollars in thousands
<TABLE>
<CAPTION>
                                                                        Assignee
                                                             General    Limited
                                                             Partners   Partners    Total



<S>                                                         <C>        <C>        <C>
Balance at December 31, 1997                                $   (153)  $ 16,504   $ 16,351

Net earnings                                                      42      4,110      4,152

Distributions to partners                                        (25)    (2,454)    (2,479)

Balance at September 30, 1998                               $   (136)  $ 18,160   $ 18,024





Balance at December 31, 1996                                $   (143)  $ 17,532   $ 17,389

Net earnings                                                      16      1,538      1,554

Distributions to partners                                        (25)    (2,454)    (2,479)

Balance at Septermber 30, 1997                              $   (152)  $ 16,616   $ 16,464

</TABLE>

      See accompanying notes to financial statements

                           -5-
<PAGE>
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMTIED PARTNERSHIP
Consolidated Statements of Cash Flows
For the Nine Months Ended September  30,
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
                                                                 1998       1997

Cash flows from operating activities
<S>                                                           <C>        <C>
 Net earnings                                                 $  4,152   $  1,554
 Adjustments to reconcile net earnings to net
  cash provided by operating activities
   Depreciation and amortization                                 1,466      1,483
   Minority interest in net earnings of operating
    partnerships                                                    45         18
   Increase in loan payable to Development General Partner          39         38
   Increase in deferred management fee payable                      31         31
   Change in other assets and liabilities
    Accounts receivable                                         (1,076)      (261)
    Estimated third-party payor settlements                     (1,887)       818
    Prepaid expenses                                               (60)      (189)
    Accrued compensation and related costs                        (295)      (777)
    Accounts payable and other accrued expenses                  1,097         72

Net cash provided by operating activities                        3,512      2,787

Cash flows from investing activities-
 additions to property and equipment                              (395)      (662)


Cash flows from financing activities
 Loan acquistion costs                                             (13)       -
 Repayment of line of credit borrowings                            -       (1,000)
 Repayment of long-term debt                                      (548)      (452)
 Distributions to partners                                      (2,479)    (2,479)

Net cash used in financing activities                           (3,040)    (3,931)

Net increase (decrease) in cash and cash equivalents                77     (1,806)
Cash and cash equivalents
 Beginning of period                                             2,275      3,962

 End of period                                                $  2,352   $  2,156

</TABLE>

See accompanying notes to financial statements

-6-

<PAGE>
         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP



                   Notes to Consolidated Financial Statements
                                Septemer 30, 1998
                                   (Unaudited)


NOTE 1 - THE FUND AND BASIS OF PREPARATION

The Fund, through its seven operating partnerships, derives substantially all of
its  revenue  from  extended  healthcare  provided to nursing  center  residents
including room and board, nursing care, drugs and other medical services.

The accompanying consolidated financial statements of Meridian Healthcare Growth
and Income  Fund  Limited  Partnership  (the  "Fund") do not  include all of the
information  and note  disclosures  normally  included in  financial  statements
prepared in  accordance  with  generally  accepted  accounting  principles.  The
unaudited  interim  consolidated  financial  statements  reflect all adjustments
which are, in the opinion of  management,  necessary to a fair  statement of the
results for the interim periods presented.  All such adjustments are of a normal
recurring nature. The unaudited interim financial  information  contained in the
consolidated  financial  statements  should  be read  in  conjunction  with  the
consolidated financial statements contained in the 1997 Annual Report.


NOTE 2 - RELATED PARTY TRANSACTIONS

The Fund is  obligated  to pay the  Administrative  General  Partner  an  annual
administration fee of the greater of $75,000 per year or 1/2 of 1% of the Fund's
annual  revenues.  The nursing centers owned by the operating  partnerships  are
managed by Meridian  Healthcare,  Inc., an affiliate of the Development  General
Partner,  under the terms of ten year  management  agreements  which provide for
management  fees  equal to 6% of the annual  revenues  of each  nursing  center.
Certain of the operating  partnerships  also purchase drugs and medical supplies
and other services from  affiliates of the  Development  General  Partner.  Such
purchases  are in turn billed to patients or third party  payors at prices which
on average approximate the nursing center's cost.

     Transactions  with  these  related  parties  for  the  three  months  ended
September 30, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>

                                                                     1998                   1997

<S>                                                             <C>                     <C>
         Management and administration fees                     $ 963,000               $ 814,000
         Drug and medical supplies purchases                      430,000                 461,000
         Nursing and rehabilitation services                    1,234,000               1,165,000
         Interest expense on borrowings                            23,000                  23,000
</TABLE>

Loans outstanding  under an arrangement with the Development  General Partner to
fund operating  deficits  generated by the Mooresville,  Salisbury and Woodlands
nursing centers were $1,074,000 at September 30, 1998 and $1,035,000 at December
31, 1997.


NOTE 3 - DEBT

On March 3, 1998,  the Fund  entered  into a renewal  commitment  with a bank to
refinance all of the existing indebtedness.  Under the terms of the refinancing,
the  mortgages  will mature on February 28, 2000 and will bear interest at LIBOR
(5.69%  at June  30,  1998)  plus  1.55%.  The  refinancing  also  extended  the
$4,000,000  line of credit  commitment  until  February 28, 2000.  There were no
borrowings  outstanding  under the line of credit  commitment  at September  30,
1998.







                                                        -7-
<PAGE>


                   Notes to Consolidated Financial Statements
                                Septemer 30, 1998
                                   (Unaudited)



NOTE 4 - MEDICAID SETTLEMENT

The Fund has resolved  reimbursement  issues relating to Maryland  Medicaid that
resulted in additional  Medicaid  revenue of $2,584,000  recorded in the quarter
ended September 30, 1998. This amount reflects outstanding  reimbursement issues
for the years 1994 through 1998, of which $528,000 relates to 1998 reimbursement
issues and the remaining amount for prior years.


NOTE 5 - NET EARNINGS PER UNIT OF ASSIGNEE LIMITED PARTNERSHIP INTEREST

Net earnings per unit of assignee limited  partnership  interest is disclosed on
the Consolidated Statements of Operations and is based upon 1,540,040 units.





                                                        -8-

<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP

                Management's Discussion and Analysis of Financial
                       Condition and Results of Operations


Liquidity and Capital Resources

         The Fund has  sufficient  liquid  assets  and  other  available  credit
resources to satisfy its operating  expenditures and anticipated routine capital
improvements at each of the seven nursing home facilities.

         On March 3, 1998,  the Fund  entered into a renewal  commitment  with a
bank to  refinance  all of the  existing  indebtedness.  Under  the terms of the
refinancing,  the  mortgages  will  mature on  February  28,  2000 and will bear
interest at LIBOR plus 1.55%.  The refinancing also extended the $4,000,000 line
of credit  commitment  until  February  28,  2000.  The Fund's line of credit is
designated  for working  capital needs and is primarily  secured by the accounts
receivable  of the Fund.  At  September  30,  1998,  there  were no  outstanding
borrowings under this line of credit.

         Between 1988 and 1989 the  Development  General Partner loaned the Fund
$597,000 to support operating deficits  generated by the Mooresville,  Salisbury
and Woodlands nursing centers during each center's first two years of operation.
Loans outstanding  under this arrangement,  including accrued interest at 9% per
annum,  were  $1,074,000 at September  30, 1998.  The Fund is obligated to repay
these  loans  when  certain  specified  financial  criteria  are  met,  the most
significant  of which is the  payment  of a  preferred  return  to the  assignee
limited partners as defined in the Fund's partnership agreement.

         The  Fund  has  resolved  reimbursement  issues  relating  to  Maryland
Medicaid that resulted in additional revenue of $2,584,000 being recorded in the
quarter ended September 30, 1998. This amount reflects outstanding reimbursement
issues for the years 1994 through  1998, of which  $528,000  relates to 1998 and
the balance relates to prior years.

         On  November  15,  1998,  the Fund  will  make a cash  distribution  of
$826,410 to its  partners  which will be funded from third  quarter 1998 nursing
center operations after payment of approximately $84,000 of upper tier expenses.

         Based on the  operating  results  through  the  third  quarter  and the
estimate for the remainder of the year,  1998 operating  results are expected to
improve  significantly when compared to 1997, due primarily to the settlement of
the Maryland  Medicaid  reimbursement  issue discussed  above.  Distributions to
partners  are  expected to remain at current  levels and be fully  funded by the
operations of the facilities. The major challenge to the Fund in the foreseeable
future is to  control  operating  expenses  while  maximizing  revenues  through
strategic admissions policies.

         Pursuant to the Balanced  Budget Act of 1997 (the "Act"),  beginning on
January 1, 1999,  Medicare  reimbursement for skilled nursing facilities such as
those  owned by the  Fund,  will be on a  prospective  payment  system  ("PPS").
Skilled nursing facilities will be paid for a per diem rate for all covered Part
A skilled nursing  facility  services as well as many services for which payment
may be made under Part B during a period when a beneficiary is provided  covered
skilled  nursing  facility  care.  The per diem rate is adjusted  based upon the
resource utilization group of a resident. This payment will cover rehabilitation
and  nonrehabilitation  ancillary services;  however, the per diem rate will not
cover physician,  nursing, physician assistant and certain related services. For
the first three cost  reporting  periods  beginning on January 1, 1999,  the per
diem will be based on a blend of a facility specific rate and a federal per diem
rate. In subsequent periods,  the federal per diem rate will be used without any
facility specific blending.

         The Act also  repealed  the Boren  Amendment  which  required  Medicaid
payments to nursing  facilities  to be  "reasonable  and  adequate" to cover the
costs of efficiently and economically operated facilities. Under the Act, states
must now use a public notice and comment process for determining  Medicaid rates
and give  interested  parties a  reasonable  opportunity  to comment on proposed
rates,  rate  methodology  and  justifications.  It is unclear  what  impact the
Balanced Budget Act of 1997 will have on the Fund.

                                                        -9-

<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP


                Management's Discussion and Analysis of Financial
                 Condition and Results of Operations (continued)


Year 2000

         The Development  General Partner is aware of the issues associated with
the programming  code in many existing  computer systems (the "Year 2000" issue)
as the millennium  approaches.  The Development  General Partner has conducted a
review of its computer  systems (on whose system the Fund  operates) to identify
hardware  and  software  affected  by the Year 2000  issue.  This issue  affects
computer systems having date sensitive  programs that may not properly recognize
the Year 2000.  Systems that do not properly  recognize such  information  could
generate  erroneous  data  or  cause a  system  to fail  resulting  in  business
interruption.

         With respect to its existing computer systems,  the Development General
Partner has converted to a Year 2000 compliant  system with the exception of its
billing  system  which is being  upgraded  in order to meet the  demands  of its
expanding  business.  In the process,  the Development General Partner is taking
steps to identify, correct and/or reprogram and test its existing billing system
for Year 2000  compliance.  It is  anticipated  that all new system  upgrades or
reprogramming  efforts will be completed by late  calendar  year 1998,  allowing
adequate time for testing.  The Development  General Partner presently  believes
that  with  modification  to  existing  software  the  Year  2000  issue  can be
mitigated.  However,  given the complexity of the Year 2000 issues, there can be
no assurances that the  Development  General Partner will be able to address the
problem  without  costs and  uncertainties  that might affect  future  financial
results of the Fund or cause reported  financial  information of the Fund not to
be  necessarily  indicative  of future  operating  results  or future  financial
condition.  The Development  General Partner is developing a contingency plan to
allow for  continued  operations in the event that systems are not compliant for
Year 2000.

         The  Development  General  Partner has  incurred,  and expects to incur
additional,  internal  costs as well as other  expenses to address the necessary
software upgrades, training, data conversion, testing and implementation related
to the Year  2000  issue.  Such  costs  are  being  expensed  as  incurred.  The
Development  General Partner does not expect the amounts required to be expensed
to have a  material  effect on the  Fund's  financial  position  or  results  of
operations.  The Year 2000 issue is  expected  to affect the  systems of various
entities  with  which  the Fund and the  Development  General  Partner  interact
including  payors,  suppliers and vendors.  There can be no assurance  that data
produced by systems of other entities on which the Development General Partner's
systems  rely will be  converted  on a timely basis or that a failure by another
entity's  systems to be Year 2000  compliant  will not have a  material  adverse
effect on the Fund.

Results of Operations

 Three Months Ended September 30, 1998 vs. Three Months Ended September 30, 1997

         Net earnings  increased to $2,875,000  during the third quarter of 1998
as  compared  to  $809,000  during the third  quarter of 1997,  representing  an
increase of $2,066,000.

         The Fund's  overall  revenue  increased by $2,377,000  (or 19%) for the
three  months ended  September  30, 1998 as compared to the same period in 1997.
This  increase  was  principally  due to the  favorable  settlement  of Maryland
Medicaid  reimbursement  issues  dating back to 1994. As a direct result of this
settlement, Medicaid revenues increased by $2,584,000, of which $176,000 relates
to the third quarter, $352,000 relates to the first half of 1998 and the balance
relates to prior years.  Also  contributing to the rise in the Fund's  quarterly
revenues were rate increases  which resulted in increased  revenues of $258,000.
Offsetting these increases, in part, was a decrease in the overall census at the
Fund's  facilities  from 93.4% during the third quarter of 1997, to 91.7% during
the third quarter of 1998.  The decreased  census  translates  into a decline in
total patient days of 1,779 (of which 1,733 were Medicare  days),  and decreased
quarterly revenues by $388,000.

         Third quarter 1998 expenses were $12,160,000 and increased $311,000 (or
2.1%) when compared to similar  expenses  during the third quarter of 1997.  The
increase was primarily a result of higher  management  fees  associated with the
Medicaid  revenue  settlement  discussed  above.  Operating  expenses  increased
$125,000 due to



                                                       -10-

<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP

                Management's Discussion and Analysis of Financial
                 Condition and Results of Operations (continued)

Results of Operations, (continued)

higher benefit expenses and physical therapy charges. General and Administrative
expenses  incurred  during the third quarter of the year increased  $84,000 when
compared  to  the  third  quarter  of  1997  due  to  increased  consulting  and
professional fees.  Offsetting these increases in part is a decrease in interest
expense of $46,000  related to the  refinancing  of the Fund's debt which became
effective March 3, 1998.


  Nine Months Ended September 30, 1998 vs. Nine Months Ended September 30, 1997

         Net  earnings  for the  nine  months  ended  September  30,  1998  were
$4,152,000 as compared to $1,554,000 for the same period in 1997 representing an
increase of $2,598,000.

         Fund revenues increased $3,070,000 principally due to the resolution of
the Maryland  Medicaid  reimbursement  issues  dating back to 1994.  As a direct
result of this settlement,  Medicaid revenues increased by $2,584,000,  of which
$528,000  relates to the nine months  ended  September  30, 1998 and the balance
relates to prior years.  Rate  increases  resulted in  $1,720,000  of additional
revenue,  while a decline in patient days of 4,382 (or 1.5%) reduced revenues by
$1,160,000. Overall patient occupancy, or census, decreased from 93.6% to 91.8%.
Both  Private  and  Medicare  census  decreased  as a  percentage  of the  total
occupancy  from  21.1%  and 9.9%  respectively,  to 19.7%  and 9.1% for the nine
months ended  September  30, 1997,  versus the nine months ended  September  30,
1998.

         Overall, expenses increased $472,000 to $35,910,000 for the nine months
ended  September 30, 1998, as compared to $35,438,000  for the nine months ended
September 30, 1997.  Operating expenses increased $294,000 due to higher benefit
costs and physical therapy expenses. Management fees (calculated as a percentage
of revenues) increased $211,000 due to the rise in overall revenues. General and
Administrative   fees  increased  $117,000  due  to  increased   consulting  and
professional services.  Interest expense declined $133,000 due to lower interest
rates resulting from the refinancing of the Fund's debt,  which became effective
March 3, 1998.





                                                       -11-

<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP



                           PART II. OTHER INFORMATION




Item 1.     Legal Proceedings

                  Inapplicable

Item 2.     Changes in Securities and Use of Proceeds

                  Inapplicable

Item 3.     Defaults upon Senior Securities

                  Inapplicable

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

                  Inapplicable

Item 5.     Other Information

                  Inapplicable

Item 6.     Exhibits and Reports on Form 8-K

                  a)  Exhibits:    None

                  b)  Reports on Form 8-K:     None






                                                       -12-
<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP




                                   SIGNATURES




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


                                MERIDIAN HEALTHCARE GROWTH AND INCOME FUND
                                      LIMITED PARTNERSHIP




DATE:    11/13/98                        By:             /s/ John M.  Prugh
                                         John M. Prugh
                                         President and Director
                                         Brown-Healthcare, Inc.
                                         Administrative General Partner




DATE:    11/13/98                        By:           /s/ Timothy M.  Gisriel
                                         Timothy M. Gisriel
                                         Treasurer
                                         Brown-Healthcare, Inc.
                                         Administrative General Partner




                                                       -13-