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                     SECURITIES AND EXCHANGE COMMISSION

                           Washington, D.C. 20549

                                ____________

                                  FORM 8-K

                               CURRENT REPORT


                   Pursuant to Section 13 or 15(d) of the

                      Securities Exchange Act of 1934


                           _____________________



                     Date of Report (Date of earliest 
                      event reported) August 14, 1996



              PARACELSUS HEALTHCARE CORPORATION                   
    (Exact name of registrant as specified in its charter)



  California              33-67040               95-3565943    
 (State of        (Commission File Number)    (IRS Employer
incorporation)                              Identification No.)


      515 W. Greens Road, Suite 800,
     Houston, Texas                                77067
(Address of principal executive offices)         (Zip Code)



                      (713) 583-5491 
             (Registrant's telephone number,
                    including area code)


                             N/A  
(Former name or former address, if changed since last report)


                         Exhibit Index is on Page 10

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Items 1-4. Not Applicable.

Item 5.      Other Events.

            On August 14, 1996, the Board of Directors of Paracelsus
Healthcare Corporation, a California corporation (the "Company"), declared
a dividend payable August 16, 1996 of one right (a "Right") for each
outstanding share of common stock,  no stated value per share ("Common
Stock"), of the Company held of record at the close of business on 
August 15, 1996 (the "Record Time"), or issued thereafter and prior to the
Separation Time (as hereinafter defined) and thereafter pursuant to options
and convertible securities outstanding at the Separation Time.  The Rights
will be issued pursuant to a Shareholder Protection Rights Agreement, dated
as of August 16, 1996 (the "Rights Agreement"), between the Company and
ChaseMellon Shareholder Services L.L.C., as Rights Agent (the "Rights
Agent").  Each Right entitles its registered holder to purchase from the
Company, after the Separation Time, one one-hundredth of a share of
Participating Preferred Stock, par value $.01 per share ("Participating
Preferred Stock"), for $42.50 (the "Exercise Price"), subject to
adjustment.

            The Rights will be evidenced by the Common Stock certificates
until the close of business on the earlier of (either, the "Separation
Time") (i) the tenth business day (or such later date as the qualified
directors of the Board of Directors of the Company may from time to time
fix by resolution adopted prior to the Separation Time that would otherwise
have occurred) after the date on which any Person (as defined in the Rights
Agreement) commences a tender or exchange offer which, if consummated,
would result in such Person's becoming an Acquiring Person, as defined
below, and (ii) the tenth day after the first date (the "Flip-in Date") (or
such earlier or later date as the qualified directors of the Board of
Directors of the Company may from time to time fix by resolution adopted
prior to the Flip-in Date that would otherwise have occurred) of public
announcement by the Company or any Person that such Person has become an
Acquiring Person, other than as a result of a Flip-over Transaction or
Event (as defined below); provided that if the foregoing results in the
Separation Time being prior to the Record Time, the Separation Time shall
be the Record Time; and provided further that if a tender or exchange offer
referred to in clause (i) is cancelled, terminated or otherwise withdrawn
prior to the Separation Time without the purchase of any shares of stock
pursuant thereto, such offer shall be deemed never to have been made.  An
Acquiring 
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Person is any Person having Beneficial Ownership (as defined in the Rights
Agreement) of 25% or more of the Total Voting Power (as defined in the
Rights Agreement) of the Company, which term shall not include (i) the
Company, any wholly-owned subsidiary of the Company or any employee stock
ownership or other employee benefit plan of the Company, (ii) any Person
who is the Beneficial Owner of 25% or more of the Total Voting Power of the
Company as of the date of the Rights Agreement or who shall become the
Beneficial Owner of 25% or more of the Total Voting Power of the Company
solely as a result of an acquisition of Voting Securities (as defined in
the Rights Agreement) by the Company, until such time as such Person
acquires any Voting Securities of the Company, other than through a
dividend or stock split or in accordance with the Shareholder Agreement
dated August 16, 1996 between the Company and Park Hospital GmbH (the
"Shareholder Agreement"), and is thereafter the Beneficial Owner of 25% or
more of the Total Voting Power of the Company, (iii) any Person who becomes
an Acquiring Person without any plan or intent to seek or affect control of
the Company if such Person, upon notice by the Company, promptly divests
sufficient securities such that such 25% or greater Beneficial Ownership
ceases, (iv) any Person who Beneficially Owns Voting Securities consisting
solely of (A) shares acquired pursuant to the grant or exercise of an
option granted by the Company in connection with an agreement to merge
with, or acquire, the Company at a time at which there is no Acquiring
Person, (B) shares owned by such Person and its Affiliates and Associates
at the time of such grant and (C) shares, amounting to less than 1% of the
Total Voting Power of the Company, acquired by Affiliates and Associates of
such Person after the time of such grant or (v) any Person who becomes the
Beneficial Owner of any Voting Securities of the Company solely as a result
of an acquisition of Voting Securities pursuant to the Shareholder
Agreement, for so long as such Person remains bound by and a party to the
Shareholder Agreement, until such time as such Person becomes the
Beneficial Owner (other than by means of a stock dividend, stock split or
an acquisition in accordance with the Shareholder Agreement) of any Voting
Securities of the Company and such Person thereafter is the Beneficial
Owner of 25% or more of the Total Voting Power of the Company.  The Rights
Agreement provides that, until the Separation Time, the Rights will be
transferred with and only with the Common Stock.  Common Stock certificates
issued after the Record Time but prior to the Separation Time shall
evidence one Right for each share of Common Stock represented thereby and
shall contain a legend incorporating by reference the terms of the Rights
Agreement (as such may 
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be amended from time to time).  Notwithstanding the absence of the
aforementioned legend, certificates evidencing shares of Common Stock
outstanding at the Record Time shall also evidence one Right for each share
of Common Stock evidenced thereby.  Promptly following the Separation Time,
separate certificates evidencing the Rights ("Rights Certificates") will be
mailed to holders of record of Common Stock at the Separation Time.

            The Rights will not be exercisable until the Business Day (as
defined in the Rights Agreement) following the Separation Time.  The Rights
will expire on the earliest of (i) the Exchange Time (as defined below),
(ii) the close of business on August 16, 2006, (iii) the date on which the
Rights are redeemed as described below and (iv) upon the merger of the
Company into another corporation pursuant to an agreement entered into when
there is no Acquiring Person (in any such case, the "Expiration Time").

            The Exercise Price and the number of Rights outstanding, or in
certain circumstances the securities purchasable upon exercise of the
Rights, are subject to adjustment from time to time to prevent dilution in
the event of a Common Stock dividend on, or a subdivision or a combination
into a smaller number of shares of, Common Stock, or the issuance or
distribution of any securities or assets in respect of, in lieu of or in
exchange for Common Stock.  

            In the event that prior to the Expiration Time a Flip-in Date
occurs, the Company shall take such action as shall be necessary to ensure
and provide, to the extent permitted by applicable law, that each Right
(other than Rights Beneficially Owned by the Acquiring Person or any
affiliate or associate thereof, which Rights shall become void) shall
constitute the right to purchase from the Company, upon the exercise
thereof in accordance with the terms of the Rights Agreement, that number
of shares of Common Stock or Participating Preferred Stock of the Company
having an aggregate Market Price (as defined in the Rights Agreement), on
the date of the public announcement of an Acquiring Person's becoming such
(the "Stock Acquisition Date") that gave rise to the Flip-in Date, equal to
twice the Exercise Price for an amount in cash equal to the then current
Exercise Price.  In addition, the qualified directors of the Board of
Directors of the Company may, at their option, at any time after a Flip-in
Date and prior to the time that an Acquiring Person becomes the Beneficial
Owner of more than 50% of the Total Voting Power of the 

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Company, elect to exchange all (but not less than all) the then outstanding
Rights (other than Rights Beneficially Owned by the Acquiring Person or any
affiliate or associate thereof, which Rights become void) for shares of
Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date of the Separation Time (the
"Exchange Ratio").  Immediately upon such action by the Board of Directors
(the "Exchange Time"), the right to exercise the Rights will terminate and
each Right will thereafter represent only the right to receive a number of
shares of Common Stock equal to the Exchange Ratio.  

            Whenever the Company shall become obligated under the preceding
paragraph to issue shares of Common Stock upon exercise of or in exchange
for Rights, the Company, at its option, may substitute therefor shares of
Participating Preferred Stock, at a ratio of one one-hundredth of a share
of Participating Preferred Stock for each share of Common Stock so
issuable.

            In the event that prior to the Expiration Time the Company
enters into, consummates or permits to occur a transaction or series of
transactions after the time an Acquiring Person has become such in which,
directly or indirectly, (i) the Company shall consolidate or merge or
participate in a binding share exchange with any other Person if, at the
time of the consolidation, merger or share exchange or at the time the
Company enters into an agreement with respect to such consolidation, merger
or share exchange, the Acquiring Person controls the Board of Directors of
the Company and any term of or arrangement concerning the treatment of
shares of capital stock in such merger, consolidation or share exchange
relating to the Acquiring Person is not identical to the terms and
arrangements relating to other holders of Voting Securities, (ii) the
Company shall sell or otherwise transfer (or one or more of its
subsidiaries shall sell or otherwise transfer) assets (A) aggregating more
than 50% of the assets (measured by either book value or fair market value)
or (B) generating more than 50% of the operating income or cash flow, of
the Company and its subsidiaries (taken as a whole) to any other Person
(other than the Company or one or more of its wholly owned subsidiaries) or
to two or more such Persons which are affiliated or otherwise acting in
concert, if, at the time of such sale or transfer of assets or at the time
the Company (or any such subsidiary) enters into an agreement with respect
to such sale or transfer, the Acquiring Person 

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controls the Board of Directors of the Company or (iii) any Acquiring
Person shall (A) sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise acquire or dispose of, to, from, or with, as the case
may be, the Company or any of its Subsidiaries, over any period of
12 consecutive calendar months, assets (x) having an aggregate fair market
value of more than $15,000,000 or (y) on terms and conditions less
favorable to the Company than the Company would be able to obtain through
arm's-length negotiations with an unaffiliated third party, (B) receive any
compensation for services from the Company or any of its subsidiaries,
other than compensation for full-time employment as a regular employee at
rates in accordance with the Company's (or its subsidiaries') past
practices, (C) receive the benefit, directly or indirectly (except
proportionately as a shareholder), over any period of 12 consecutive
calendar months, of any loans, advances, guarantees, pledges, insurance,
reinsurance or other financial assistance or any tax credits or other tax
advantage provided by the Company or any of its subsidiaries involving an
aggregate principal amount in excess of $5,000,000 or an aggregate cost or
transfer of benefits from the Company or any of its subsidiaries in excess
of $5,000,000 or, in any case, on terms and conditions less favorable to
the Company than the Company would be able to obtain through arm's-length
negotiations with a third party, or (D) increase by more than 1% its
proportionate share of the outstanding shares of any class of equity
securities or securities convertible into any class of equity securities of
the Company or any of its subsidiaries as a result of any acquisition from
the Company (with or without consideration), any reclassification of
securities (including any reverse stock split), or recapitalization, of the
Company, or any merger or consolidation of the Company with any of its
subsidiaries or any other transaction or series of transactions (whether or
not with or into or otherwise involving an Acquiring Person), (a "Flip-over
Transaction or Event"), the Company shall take such action as shall be
necessary to ensure, and shall not enter into, consummate or permit to
occur such Flip-over Transaction or Event until it shall have entered into
a supplemental agreement with the Person engaging in such Flip-over
Transaction or Event or the parent corporation thereof (the "Flip-over
Entity"), for the benefit of the holders of the Rights, providing, that
upon consummation or occurrence of the Flip-over Transaction or Event
(i) each Right shall thereafter constitute the right to purchase from the
Flip-over Entity, upon exercise thereof in accordance with the terms of the
Rights Agreement, that number of shares of common stock of the Flip-over
Entity 

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having an aggregate Market Price on the date of consummation or occurrence
of such Flip-over Transaction or Event equal to twice the Exercise Price
for an amount in cash equal to the then current Exercise Price and (ii) the
Flip-over Entity shall thereafter be liable for, and shall assume, by
virtue of such Flip-over Transaction or Event and such supplemental
agreement, all the obligations and duties of the Company pursuant to the
Rights Agreement.  For purposes of the foregoing description, the term
"Acquiring Person" shall include any Acquiring Person and its Affiliates
and Associates counted together as a single Person.

            The qualified directors of the Board of Directors of the Com-
pany may, at their option, at any time prior to the close of business on
the Flip-in Date, redeem all (but not less than all) the then outstanding
Rights at a price of $0.01 per Right) (the "Redemption Price"), as provided
in the Rights Agreement.  Immediately upon the action of the qualified
directors of the Board of Directors of the Company electing to redeem the
Rights, without any further action and without any notice, the right to
exercise the Rights will terminate and each Right will thereafter represent
only the right to receive the Redemption Price in cash for each Right so
held.  

            The holders of Rights will, solely by reason of their ownership
of Rights, have no rights as shareholders of the Company, including,
without limitation, the right to vote or to receive dividends.

            The Rights will not prevent a takeover of the Company. 
However, the Rights may cause substantial dilution to a person or group
that acquires 25% or more of the Total Voting Power of the Company unless
the Rights are first redeemed by the Company.  Nevertheless, the Rights
should not interfere with a transaction that is in the best interests of
the Company and its shareholders because the Rights can be redeemed on or
prior to the close of business on the Flip-in Date, before the consummation
of such transaction.

            As of August 20, 1996 there were 54,733,417 shares of Common
Stock issued (of which all were outstanding and none were held in treasury)
and 10,087,137 shares reserved for issuance pursuant to employee benefit
plans, options, warrants, subscription rights and convertible securities. 
As long as the Rights are attached to the Common Stock, the Company will
issue one Right with each new share of Common Stock so that all such shares
will have Rights attached.  

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The Company's Board of Directors has reserved for issuance upon exercise of
the Rights 1,500,000 shares of Participating Preferred Stock.

            The Rights Agreement (which includes as Exhibit A the forms of
Rights Certificate and Election to Exercise and as Exhibit B the form of
Certificate of Designation and Terms of the Participating Preferred Stock)
is attached hereto as an exhibit and is incorporated herein by reference. 
The foregoing description of the Rights is qualified in its entirety by
reference to the Rights Agreement and such exhibits thereto.

Item 6.     Not Applicable.

Item 7.     Exhibits.

 (1)        Rights Agreement, which includes as Exhibit A the forms of
            Rights Certificate and Election to Exercise and as Exhibit B
            the form of Certificate of Designation and Terms of the
            Participating Preferred Stock.

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                            SIGNATURE



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

                              PARACELSUS HEALTHCARE CORPORATION



                              By:/s/ James G. VanDevender
                                 ------------------------
                                 James G. VanDevender
                                 Executive Vice President and
                                   Chief Financial Officer




Date:  August 21, 1996

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                               EXHIBIT INDEX

 Exhibit No.         Description

      4.1            Shareholder Protection Rights Agreement,
                     dated as of August 16, 1996 (the "Rights
                     Agreement"), between Paracelsus
                     Healthcare Corporation (the "Company")
                     and ChaseMellon Shareholder Services
                     L.L.C., as Rights Agent, including as
                     Exhibit A the forms of Rights Certificate
                     and of Election to Exercise and as
                     Exhibit B the form of Certificate of
                     Designation and Terms of the
                     Participating Preferred Stock of the
                     Company.*


____________________
*     Filed as Exhibit 4.1 to the Registration Statement on Form 8-A filed
      by the Company on August 21, 1996 and incorporated herein by
      reference.