Northstar Health still feeling the effects of its disastrous 1995 merger. (Northstar Health Services Inc)

But the red ink has been cut substantially over last three years

INDIANA, Pa. - Northstar Health Services Inc. has reported its third straight year of losses.

But the provider of physical rehabilitation services may be benefiting from some rehabilitation of its own.

The company posted a net loss of $5.6 million for 1997, down from an $8.9 million loss a year earlier. In 1995, it was $13.1 million in the red.

The company recently emerged from a series of lawsuits stemming from a disastrous 1995 merger between Indiana-based Keystone Rehabilitation Services Inc. and Downtown-based Northstar Health Services Inc. Shortly after the merger occurred, the …