8-K

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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 8-K

                                 CURRENT REPORT


                       PURSUANT TO SECTION 13 OR 15(D) OF
                     THE SECURITIES AND EXCHANGE ACT OF 1934


         DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): May 25, 2001


                        Commission file number 001-12055



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





              CALIFORNIA                                     95-3565943
   (State or other jurisdiction of                         (IRS Employer
 incorporation or organization)                          Identification No.)


                  515 W. Greens Road, Suite 500, Houston, Texas
                    (Address of principal executive offices)


   77067                                                (281) 774-5100
(Zip Code)                                       (Registrant's telephone number,
                                                     including area code)



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ITEM 5.  OTHER EVENTS

Paracelsus Healthcare Corporation announced today that it has received oral
confirmation from the United States Bankruptcy Court in Houston, Texas of its
Chapter 11 Amended Plan of Reorganization and approval of the terms of its
previously announced $5.5 million settlement of government claims. The plan of
reorganization will become effective after entry of the final order by the
court, expiration of the normal 10 day appeal period, and satisfaction of
various conditions precedent to effectiveness contained in the Plan, ("Effective
Date"), which the Company expects to occur in the next few weeks.

The confirmed reorganization plan provides, among other things, that all
principal and interest outstanding on the 10% Senior Subordinated Notes and all
allowed general unsecured claims will be exchanged for a combination of cash,
new debt and new common stock of reorganized Paracelsus, which will
reincorporate in Delaware and change its corporate name to Clarent Hospital
Corporation. Upon the Effective Date of the Amended Plan, the shares of the
Company's common stock held by existing equity holders will be canceled and
rendered null and void. The former equity holders will neither receive nor
retain any interest in the Company under the approved plan. The 6.51%
Subordinated Note and interest outstanding will be deemed to be exchanged for
existing equity, which will be concurrently eliminated under the Amended Plan.
The complete Amended Plan of Reorganization is on file with the United States
Bankruptcy Court.

The Company has retained an investment banking firm to review its strategic
alternatives following emergence from Chapter 11 bankruptcy protection. The
investment banking firm is in the preliminary stage of its work, and the Company
cannot predict the timing or ultimate outcome of this initiative.

Item 7.  Financial Statements and Exhibits.

         (c) Exhibits.

             Exhibit 99.2   Press Release dated May 31, 2001 issued by the
                            Paracelsus Healthcare Corporation.




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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
                                  (Registrant)


Dated: June 1, 2001                By: /s/ Lawrence A. Humphrey
                                     ----------------------------------
                                          Lawrence A. Humphrey
                                        Executive Vice President,
                                       & Chief Financial Officer



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                                 EXHIBIT INDEX


Exhibit No.            Description
- ----------             -----------

   99.2                Press Release dated May 31, 2001 issued by the
                       Paracelsus Healthcare Corporation.

EX-99.2

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                                                                    EXHIBIT 99.2

FOR IMMEDIATE RELEASE               CONTACT:  DEBORAH H. FRANKOVICH
                                              SENIOR VICE PRESIDENT  AND
                                              TREASURER
                                              (281) 774-5166

                        PARACELSUS HEALTHCARE CORPORATION
                    AMENDED PLAN OF REORGANIZATION CONFIRMED
                     TERMS OF GOVERNMENT SETTLEMENT APPROVED
             CORPORATE NAME CHANGING TO CLARENT HOSPITAL CORPORATION

HOUSTON, Texas, May 31, 2001 - Paracelsus Healthcare Corporation (OTC Bulletin
Board: PLHCQ) announced today that it has received oral confirmation from the
United States Bankruptcy Court in Houston, Texas of its Chapter 11 Amended Plan
of Reorganization and approval of the terms of its previously announced $5.5
million settlement of government claims. The plan of reorganization will become
effective after entry of the final order by the court, expiration of the normal
10 day appeal period, and satisfaction of various conditions precedent to
effectiveness contained in the Plan, ("Effective Date"), which the Company
expects to occur in the next few weeks.

The confirmed reorganization plan provides, among other things, that all
principal and interest outstanding on the 10% Senior Subordinated Notes and all
allowed general unsecured claims will be exchanged for a combination of cash,
new debt and new common stock of reorganized Paracelsus, which will
reincorporate in Delaware and change its corporate name to Clarent Hospital
Corporation. Upon the Effective Date of the Amended Plan, the shares of the
Company's common stock held by existing equity holders will be canceled and
rendered null and void. The former equity holders will neither receive nor
retain any interest in the Company under the approved plan. The 6.51%
Subordinated Note and interest outstanding will be deemed to be exchanged for
existing equity, which will be concurrently eliminated under the Amended Plan.
The complete Amended Plan of Reorganization is on file with the United States
Bankruptcy Court.

Robert L. Smith, CEO, said, "The Company is glad to be nearing the end of the
bankruptcy restructuring process so we may fully focus our resources on the
operations of our hospitals and the profitability of the Company as a whole.
This process has been very challenging, and we sincerely appreciate the loyal
support of our employees, members of our medical staffs, and our vendors who
stood by us patiently while we completed the reorganization process."

The Company has retained an investment banking firm to review its strategic
alternatives following emergence from Chapter 11 bankruptcy protection. The
investment banking firm is in the preliminary stage of its work, and the Company
cannot predict the timing or ultimate outcome of this initiative.

Paracelsus Healthcare Corporation, a public company currently listed on the OTC
Bulletin Board, was founded in 1981 and is headquartered in Houston, Texas.
Including a hospital partnership, Paracelsus presently owns the stock of
hospital corporations that own or operate 10 hospitals in seven states with a
total of 1,287 beds. Additional Company information may be accessed through
http://www.prnewswire.com under the Company's name.

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         Certain statements contained herein are "forward-looking statements"
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements involve a number of risks and
uncertainties. All statements regarding the Company's expected future financial
position, results of operations, cash flows, liquidity, financing plans,
business strategy, budgets, projected costs and capital expenditures,
competitive position, growth opportunities, plans and objectives of management
for future operations and words such as "anticipate," "believe," "plan,"
"estimate," "expect," "intend," "may" and other similar expressions are
forward-looking statements. Such forward-looking statements are inherently
uncertain, and stockholders must recognize that actual results may differ
materially from the Company's expectations as a result of a variety of factors,
including, without limitation, those discussed below.

         o    Factors which may cause the Company's actual results in future
              periods to differ materially from forecast results include, but
              are not limited to: (i) the Company's ability to comply with the
              terms of the subsidiary level credit facility; (ii) the Company's
              inability to access capital markets given the Company's current
              financial condition; (iii) the excessive amount of time and effort
              that the Company's senior management must devote to dealing with
              the Company's financial condition thereby reducing time spent
              directly on the operations of its businesses; (iv) the Company may
              be unable to retain top management and other key personnel,
              including physicians; (v) competition, including the impact of a
              new competing hospital opened in November 2000 in the Fargo, North
              Dakota market, and general economic, demographic and business
              conditions, both nationally and in the regions in which the
              Company operates; (vi) existing government regulations and changes
              in legislative proposals for healthcare reform, including changes
              in Medicare and Medicaid reimbursement levels; (vii) the ability
              to enter into managed care provider arrangements on acceptable
              terms; (viii) liabilities and other claims asserted against the
              Company; (ix) the loss of any significant customer, including but
              not limited to managed care contracts; (x) the Company's ability
              to achieve profitable operations after the confirmation of the
              Plan of Reorganization, as amended; (xi) the Company's ability to
              generate sufficient cash from operations to meet its obligations;
              and (xii) the Company's ability to comply with the terms of the
              corporate integrity agreement.

         The Company is generally not required to, and does not undertake to,
update or revise its forward-looking statements.