8-K

                    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):  July 10, 1995

______________________________________________________________________________


                     CONTINENTAL MEDICAL SYSTEMS, INC.

          (Exact name of registrant as specified in its charter)


______________________________________________________________________________


          DELAWARE                     0-15088                51-027965
(State or other jurisdiction   (Commission File Number)   (I.R.S. Employer
     of incorporation)                                    Identification No.)

______________________________________________________________________________


600 WILSON LANE, P.O. BOX 715, MECHANICSBURG, PA                  17055
     (Address of principal executive offices)                   (Zip Code)


______________________________________________________________________________



    Registrant's telephone number, including area code:  (717) 790-8300





ITEM 1.  CHANGES IN CONTROL OF REGISTRANT.
     Pursuant to the Amended and Restated Agreement and Plan of Merger,
dated as of May 23, 1995 (the "Merger Agreement"), by and among Horizon
Healthcare Corporation ("Horizon"), CMS Merger Corporation, a wholly owned
subsidiary of Horizon ("Merger Sub"), and Continental Medical Systems, Inc.
("CMS"), Merger Sub was merged with and into CMS on July 10, 1995 (the
"Merger").  As a result of the Merger, each outstanding share of CMS Common
Stock, par value $.01 per share, was converted into .5397 of one share of
Horizon Common Stock, par value $.001 per share, and CMS became a wholly
owned subsidiary of Horizon.  In connection with the Merger, Horizon changed
its name to Horizon/CMS Healthcare Corporation.

     For additional information regarding the Merger and the Merger
Agreement, see the Joint Proxy Statement/Prospectus of Horizon and CMS dated
June 6, 1995 and the Joint Proxy Statement/Prospectus Supplement of June 21,
1995, which are incorporated herein by reference.

     The Merger Agreement and press release announcing the consummation of
the Merger are filed as Exhibits 2 and 99 hereto, respectively, and are
specifically incorporated herein by reference.

ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS.

  2       Amended and Restated Agreement and Plan of Merger, dated as of
          May 23, 1995, by and among Horizon, Merger Sub and CMS (incorporated
          by reference to Exhibit 2.3 to Amendment No. 1 to Horizon's
          Registration Statement on Form S-4 filed June 2, 1995
          (Registration No. 33-59561)).

 99.1     Joint Proxy Statement/Prospectus of Horizon and CMS dated June 6,
          1995 (as supplemented by the Joint Proxy Statement/Prospectus
          Supplement of June 21, 1995) (incorporated by reference to
          Horizon's Registration Statement on Form S-4 (Registration
          No. 33-59561)).

 99.2     Press Release of Horizon dated July 10, 1995.


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                                 SIGNATURE

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

                                       CONTINENTAL MEDICAL SYSTEMS, INC.



                                       By: /s/ SCOT SAUDER
                                          ____________________________________
                                       Name:  Scot Sauder
                                       Title: Secretary and General Counsel


Dated:  July 25, 1995


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                                EXHIBIT INDEX





EXHIBIT                                                           SEQUENTIAL
NUMBER                  DESCRIPTION OF EXHIBITS                  PAGE NUMBER
- ------                  -----------------------                  ------------
                                                           

  2        Amended and Restated Agreement and Plan of Merger,
           dated as of May 23, 1995, by and among Horizon
           Healthcare Corporation, CMS Merger Corporation and
           Continental Medical Systems, Inc.

 99.1      Joint Proxy Statement/Prospectus of Horizon and CMS dated June 6,
           1995 (as supplemented by the Joint Proxy Statement/Prospectus
           Supplement of June 21, 1995) (incorporated by reference to
           Horizon's Registration Statement on Form S-4 (Registration
           No. 33-59561)).


 99.2      Press Release of Horizon/CMS Healthcare Corporation
           dated July 10, 1995.



                                    -3-

EX-99.2

                                 HORIZON LOGO

       HORIZON HEALTHCARE CORP. AND CONTINENTAL MEDICAL SYSTEMS INC.
              STOCKHOLDERS EACH APPROVE MERGER TRANSACTION

   ALBUQUERQUE, N.M. and MECHANICSBURG, Pa., July 6 /PRNewswire/ --
At Horizon Healthcare Corp.'s (NYSE: HHC) and Continental Medical Systems
Inc.'s (NYSE: CNM) respective special stockholder meetings today, stockholders
of each company approved the previously announced merger. In the merger, each
share of Continental Medical Systems Inc. will be converted into .5397 of a
share of Horizon common stock. Horizon anticipates that the merger will be
completed in the near future. The combined company will be known as
Horizon/CMS Healthcare Corp.
   Commenting on the merger vote, Neal Elliott, Horizon's chairman and CEO
noted, "We are very pleased with the vote and very excited about the merger,
which represents a significant growth opportunity for our company. The merger
will create one of the largest post-acute networks in the United States. The
ability to deliver a full continuum of lower cost post-acute health care
services in several markets will provide a competitive advantage and
positions the company for a more cost conscious health care market in the
future. We also plan to expand Horizon's specialty services and programs into
the CMS markets."
   The merger will add 37 rehabilitation hospitals in 14 states with 2,515
beds, outpatient rehabilitation services at more than 130 locations, 13
in-patient rehabilitation units, and contract therapy services in more than
30 states serving more than 2,400 facilities with over 4,000 therapists.
The merger will expand the number of facilities operated by Horizon to 167
with 18,972 beds.


                                   -more-




   When the merger is completed, Horizon/CMS Healthcare Corp. headquartered
in Albuquerque, will be one of the nation's largest diversified health care
providers of acute rehabilitation services, long-term nursing care and
contract therapy services. Additionally, the company will provide an extensive
array of specialty healthcare services including subacute care, pharmacy
services, rehabilitation therapies, clinical laboratory services, physician
placement and management services, medical and sleep diagnostic services, home
respiratory care services and Alzheimer's care. Horizon/CMS Healthcare Corp.
will operate thirty-seven acute rehabilitation hospitals and 125 long-term
care centers totaling 18,972 beds. The company also will provide subacute
care through 25 specialty hospitals and specialty subacute care units; and
out-patient rehabilitation services at more than 130 locations. In addition,
the company will provide contract therapy services in 31 states and
institutional pharmacy services in 16 states.
   -0-                            7/6/95
   /NOTE TO EDITORS: Horizon Health Care  press releases are available at no
charge through PR Newswire's Company News On-Call fax service. For a menu of
available Horizon Health Care press releases or to retrieve a specific
release, call 800-758-5804, ext. 418784./
   /CONTACT: Michael H. Seeliger of Horizon Healthcare, 505-881-4961; or
Warren H. McInteer of Continental Medical Systems, 717-790-8300/
   (HHC  CNM)

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