HEALTHCARE SERVICES GROUP, INC. DECLARES FOURTH QUARTER 2010 CASH DIVIDEND Bensalem, PA

HEALTHCARE SERVICES GROUP, INC.

DECLARES FOURTH QUARTER 2010 CASH

January 25, 2011- Healthcare Services Group, Inc. (NASDAQ-HCSG)

Directors has declared a regular quarterly cash dividend of $.15625 per common share, payable

on March 4, 2011 to shareholders of record at the close of business

February 11, 2011. This dividend represents a 12% increase over the 2009

same period payment. It is the 31st consecutive regular quarterly cash dividend

payment, as well as the 30th consecutive increase since our initiation of

regular quarterly cash dividend payments in 2003

release our results for the year ended December 31, 2010 during the week

of February 7, 2011, as well as to hold a conference call to discuss our

results after the release.

announces that it will make a presentation on February 8, 2011 regarding

the Company at the "UBS Warburg Global Healthcare Services

Conference" at the Grand Hyatt in New York City. Additionally, this

presentation will be audio webcast at www.ibb.ubs.com.

Cautionary Statement Regarding

Forward-Looking Statements

This release and any schedules

incorporated by reference into this report may contain forward-looking

statements within the meaning of Section 27A of the Securities Act of

1933, as amended, and Section 21E of the Securities Exchange Act of 1934

(the "Exchange Act"), as amended, which are not historical facts

but rather are based on current expectations, estimates and projections about

our business and industry, our beliefs and assumptions. Words such as

"believes," "anticipates," "plans,"

similar expressions are intended to identify forward-looking statements. The

inclusion of forward-looking statements should not be regarded as a

representation by us that any of our plans will be achieved. We undertake no

obligation to publicly update or revise any forward-looking statements, whether

as a result of new information, future events or otherwise. Such

forward-looking information is also subject to various risks and uncertainties.

Such risks and uncertainties include, but are not limited to, risks arising

from our providing services exclusively to the health care industry, primarily

providers of long-term care; credit and collection risks associated with this

industry; one client accounting for approximately 11% of revenues in the year

ended December 31, 2010; risks associated with our acquisition of Contract

Environmental Services, Inc., including integration risks or costs, or such

business not achieving expected financial results or synergies or failure to

otherwise perform as expected; our claims experience related to workers'

compensation and general liability insurance; the effects of changes in, or

interpretations of laws and regulations governing the industry, our workforce

and services provided, including state

and local regulations pertaining to

the taxability of our services; and the risk factors described in our

Form 10-K filed with the Securities and Exchange Commission for the year

ended December 31, 2009 in Part I thereof under

Government Regulation of Clients'',

Competition'' and Service

Agreements/Collections'', and under Item IA "Risk

Factors". Many of our clients' revenues are highly contingent on

Medicare and Medicaid reimbursement funding rates, which Congress has affected

through the enactment of a number of major laws during the past decade, most

recently the March 2010 enactment of the Patient Protection and Affordable

Care Act and the Health Care and Education Reconciliation Act of 2010.

Currently, the U.S. Congress is considering further changes or revising

legislation relating to health care in the United States which, among other

initiatives, may impose cost containment measures impacting our clients. These

laws and proposed laws and forthcoming regulations have significantly altered,

or threaten to alter, overall government reimbursement funding rates and

mechanisms. The overall effect of these laws and trends in the long-term care

industry have affected and could adversely affect the liquidity of our clients,

resulting in their inability to make payments to us on agreed upon payment

terms. These factors, in addition to delays in payments from clients, have

resulted in, and could continue to result in, significant additional bad debts

in the near future. Additionally, our operating results would be adversely

affected if unexpected increases in the costs of labor and labor related costs,

materials, supplies and equipment used in performing services could not be

passed on to our clients.

believe that to improve our financial performance we must continue to obtain

service agreements with new clients, provide new services to existing clients,

achieve modest price increases on current service agreements with existing

clients and maintain internal cost reduction strategies at our various

operational levels. Furthermore, we believe that our ability to sustain the

internal development of managerial personnel is an important factor impacting

future operating results and successfully executing projected growth

Group, Inc. is the largest national provider of professional housekeeping,

laundry and dietary services to long-term care and related facilities.

Chairman and Chief Executive Officer