FPA Downsizes As Part of Strategic Plan; Says Constructive Talks Continue With Lenders on Restructuring and Recapitalization of Company.

SAN DIEGO, CA.--(BUSINESS WIRE)--July 10, 1998--FPA Medical Management, Inc. (NASDAQ:FPAM) today said that pursuant to new management's strategic plan, it has closed or is in the process of closing approximately 50 facilities and is ceasing certain operations in markets that were either unprofitable or outside of the Company's new core business areas. These markets include Nevada and parts of North Carolina, Texas, Arizona, California and Georgia. In connection with these actions, the Company said that it has transitioned the provision of medical care of approximately 300,000 patients.

"These steps will help allow the Company to focus its attention and resources on its core businesses, which include Axminster Medical Group, Cornerstone, Health Partners, Meridian Medical Group, Gonzaba Medical Group and Sterling Healthcare, and certain medical clinics and networks in California, Florida, North Carolina and Texas," said Stephen J. Dresnick, MD, FACEP, who was appointed President and Chief Executive Officer of FPA on March 26,

1998.

He said that the Company is continuing to review and refine its strategic operational plan. Dr. Dresnick added that while management was pleased with the results of its previously announced cost reduction program, which is expected to result in annualized savings in excess of $25 million, it is continuing to pursue additional cash conservation programs.

Dr. Dresnick said that restructuring talks are continuing with the Company's lenders on a broader recapitalization of the Company and that FPA has expanded the role of its financial advisor, Wasserstein Perella & Co., Inc., to include the evaluation of strategic alternatives and to assist the Company in the restructuring of its capital structure. FPA recently announced that it had appointed Thomas Allison, a partner of Arthur Andersen's Corporate Recovery Services Practice, as Executive Vice President and Chief Financial Officer. Arthur Andersen's Corporate Recovery Services group, which has been working with FPA since mid-June on the turnaround of the Company, will continue to work closely with both management and Wasserstein Perella & Co.

Dr. Dresnick continued, "Although we face significant challenges, we remain confident that with the continued support of our banks, as well as the continued cooperation and support of our payors, health care providers and creditors, we will, over time, be able to successfully restructure the Company, preserve our core businesses and return to profitability once again."

FPA Medical Management, Inc. is a national physician practice management organization that organizes and manages primary care physician networks to contract with HMOs and other prepaid insurance to provide physician and related health care services and provides contract management support services to hospital emergency departments.

This Press Release contains statements which constitute "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" in this Press Release include the intent, belief or current expectations of the Company and members of its senior management team with respect to the timing of, completion of and scope of the current strategic business plan, bank financing, and the public or private offering of debt and/or equity securities, debt and equity market conditions and the Company's future liquidity as well as the assumptions upon which such statements are based. While the Company believes that its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance, and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those contemplated by the forward-looking statements in this Press Release include, but are not limited to, further adverse developments with respect to the Company's liquidity position or operations of the Company's various businesses, adverse developments in the Company's efforts to renegotiate its funding and adverse developments in the bank financing or public or private markets for debt or equity securities, or adverse developments in the timing or results of the Company's current strategic business plan, the difficulty in controlling health care costs and integrating new operations, the ability of the Company to realize the anticipated general and administrative expense savings and overhead reductions presently contemplated, the ability of the Company to return the Company's operations to profitability, the level and nature of any restructuring and other one-time charges, the difficulty in estimating costs relating to exiting certain markets and consolidating and closing certain operations, and the possible negative effects of prospective health care reform. Additional factors that would cause actual results to differ materially from those contemplated within this Press Release can also be found in the Company's Form 8-K periodic filings during 1998, Form 10-Q for the quarter ended March 31, 1998, and the Company's Form 10-K for the year ended December 31, 1997.

    CONTACT:  Sitrick And Company
               Michael Sitrick or Steven Seiler, 310/788-2850
                       or
               John Grimaldi, 212/755-2850