SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

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COMTREX SYSTEMS CORPORATION
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HEALTHCARE SERVICES GROUP, INC.
3220 Tillman Drive
Suite 300
Bensalem, Pennsylvania 19020

---------------------

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

May 22, 2001

---------------------

To the Shareholders of
HEALTHCARE SERVICES GROUP, INC.

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Healthcare Services Group, Inc. (the "Company") will be held at the Radisson
Hotel of Bucks County, 2400 Old Lincoln Highway, Trevose, Pennsylvania 19047,
on May 22, 2001, at 10:00 A.M., for the following purposes:

1. To elect eight directors;

2. To approve and ratify the selection of Grant Thornton LLP as the
independent certified public accountants of the Company for its current
fiscal year ending December 31, 2001; and

3. To consider and act upon such other business as may properly come
before the meeting.

Only shareholders of record at the close of business on April 9, 2001 will
be entitled to notice of and to vote at the Annual Meeting.

Please sign and promptly mail the enclosed proxy, whether or not you
expect to attend the Meeting, in order that your shares may be voted for you. A
return envelope is provided for your convenience.

By Order of the Board of Directors

DANIEL P. MCCARTNEY
Chairman of the Board and
Chief Executive Officer

Dated: Bensalem, Pennsylvania
April 11, 2001

HEALTHCARE SERVICES GROUP, INC.
3220 Tillman Drive
Suite 300
Bensalem, Pennsylvania 19020

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PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
May 22, 2001

---------------------

This Proxy Statement is furnished to the Shareholders of Healthcare
Services Group, Inc. (the "Company") in connection with the solicitation by the
Board of Directors of the Company of proxies for the Annual Meeting of
Shareholders (the "Annual Meeting") to be held at the Radisson Hotel of Bucks
County, 2400 Old Lincoln Highway, Trevose, Pennsylvania 19047, on May 22, 2001
at 10:00 A.M. At the Annual Meeting the shareholders will consider the
following proposals: (1) to elect eight directors; (2) to approve and ratify
the selection of Grant Thornton LLP as the independent certified public
accountants of the Company for its current fiscal year ending December 31,
2001; and (3) to consider and act upon such other business as may properly come
before the Annual Meeting.

This Proxy Statement is being mailed to shareholders on or about April 11,
2001.

PROXIES; VOTING SECURITIES

Only holders of Common Stock $.01 par value (the "Common Stock") of record
at the close of business on record of April 9, 2001 (the "Record Date") are
entitled to notice of and to vote at the Annual Meeting. On the Record Date,
there were issued and outstanding approximately 10,918,632 shares of Common
Stock. Each share of Common Stock entitles the holder thereof to one vote. The
presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock is required to constitute a quorum at the
meeting. Holders of Common Stock are not entitled to cumulative voting rights.

All shares that are represented by properly executed proxies received
prior to or at the annual meeting, and not revoked, will be voted in accordance
with the instructions indicated in such proxies. If no instructions are
indicated with respect to any shares for which properly executed proxies are
received, such proxies will be voted FOR each of the proposals. For purposes of
determining the presence of a quorum for transacting business at the Annual
Meeting, abstentions and broker "non-votes" (i.e., proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares on a particular
matter with respect to which the brokers or nominees do not have discretionary
power), if applicable, will be treated as shares that are present but which
have not been voted.

A proxy may be revoked by delivery of a written statement to the Secretary
of the Company stating that the proxy is revoked, by a subsequent proxy
executed by the person executing the prior proxy and presented to the Annual
Meeting, or by voting in person at the Annual Meeting.

All expenses in connection with this solicitation will be borne by the
Company. It is expected that solicitation will be made primarily by mail, but
regular employees or representatives of the Company may also solicit proxies by
telephone, telegraph or in person, without additional compensation, except for
reimbursement of out-of-pocket expenses.

PROPOSAL NO. 1

ELECTION OF DIRECTORS

At the Annual Meeting, eight directors of the Company are to be elected,
each to hold office for a term of one year. Unless authority is specifically
withheld, management proxies will be voted FOR the election of the nominees
named below to serve as directors until the next annual meeting of shareholders
and until their successors have been chosen and qualify. Should any nominee not
be a candidate at the time of the Annual Meeting (a situation which is not now
anticipated), proxies will be voted in favor of the remaining nominees and may
also be voted for substitute nominees. If a quorum is present, the candidate or
candidates receiving the highest number of votes will be elected directors.
Brokers that do not receive instructions are entitled to vote for the election
of directors.

The nominees are as follows:

Name, Age, Principal Occupations
for the past five years and Current Director
Public Directorships or Trusteeships Since
------------------------------------ --------

Daniel P. McCartney, 49, Chief Executive Officer and Chairman of the Board since 1977 .... 1977

W. Thacher Longstreth, 80, elected to and a member of the Philadelphia City Council since
1983; Director of Tasty Baking Company, Delaware Management Company and Keystone
Insurance Company ....................................................................... 1983(1)

Barton D. Weisman, 73, President and Chief Executive Officer of H.B.A. Corporation and
H.B.A. Management, Inc., Florida based companies which own and/or manage nursing homes,
for more than five years ................................................................ 1983(2)

Joseph F. McCartney, 46, Divisional Vice President of the Company for more than five
years; brother of Daniel P. McCartney ................................................... 1983

Robert L. Frome, Esq., 63, Member of the law firm of Olshan Grundman Frome Rosenzweig &
Wolosky LLP for more than five years; Director of NuCo2, Inc. and Paradigm Medical
Industries, Inc. ....................................................................... 1983

Thomas A. Cook, 55, President and Chief Operating Officer of the Company for more than
five years.............................................................................. 1987

Robert J. Moss, Esq., 62, President, Moss Associates, a law firm, for more than five
years; Senior Assistant to United States Senator Arlen Specter for more than five years.. 1992(2)

John M. Briggs, CPA, 50, Partner of the certified public accounting firm of Briggs,
Bunting & Dougherty, LLP since May 1997; Partner of certified public accounting firm of
Tait, Weller & Baker from January 1980 to May 1997 .................................... 1993(1)(2)

- ------------
(1) Member of Stock Option Committee.
(2) Member of Audit Committee.

The Directors recommend a vote FOR all nominees.

BOARD OF DIRECTORS AND COMMITTEES

The business of the Company is managed under the direction of the Board of
Directors. The Board meets on a regularly scheduled basis during its fiscal
year to review significant developments affecting the Company and to act on
matters requiring Board approval. It also holds special meetings when an
important matter requires Board action between scheduled meetings. The Board of
Directors met four times during the 2000 fiscal year. During 2000, each member
of the Board participated in at least 75% of all Board and applicable committee
meetings held during the period for which he was director.

The Board of Directors has established audit and stock option committees
to devote attention to specific subjects and to assist it in the discharge of
its responsibilities. The functions of those committees, their current members
and the number of meetings held during 2000 are described below:

AUDIT COMMITTEE. The Audit Committee recommends to the Board of
Directors the appointment of the firm selected to be independent certified
public accountants for the Company and monitors the performance of such
firm; reviews and approves the scope of the annual audit and quarterly
reviews and evaluates problem areas having a potential financial impact on
the Company which may be brought to its attention by management, the
independent public accountants or the Board of Directors; and evaluates all
public financial reporting documents of the Company. Messrs. Robert J.
Moss, Barton D. Weisman and John M. Briggs currently are members of the
Audit Committee. The Audit Committee met four times during 2000. The report
of Audit Committee for the fiscal year ended December 31, 2000 is included
herein under "Audit Committee Report".

STOCK OPTION COMMITTEE. The Stock Option Committee (composed of
non-employee directors) administers the Company's 1995 Employee Stock
Option Plan, as amended (the "1995 Employee Plan") and the 1996
Non-Employee Directors' Plan, as amended and restated as of October 28,
1997, and options which may be granted outside of such Plans. With respect
to the 1995 Employee Plan, the Stock Option Committee has the power to
determine from time to time the individuals to whom options shall be
granted, the number of shares to be covered by each option and the time or
times at which options shall be granted. Mr. John M. Briggs and Mr. W.
Thacher Longstreth comprise the Stock Option Committee. The Stock Option
Committee met once during 2000.

The Company does not have a nominating, executive or compensation
committee. The functions customarily attributable to these committees are
performed by the Board of Directors as a whole.

PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP

The following table sets forth information as of April 9, 2001, regarding
the beneficial ownership of Common Stock by each person known by the Company to
own 5% or more of the outstanding shares of Common Stock, each director of the
Company, the Company's executive officers as defined in Item 402(a)(3) of
Regulation S-K and the directors and executive officers of the Company as a
group. The persons named in the table have sole voting and investment power
with respect to all shares of Common Stock owned by them, unless otherwise
noted.

Amount and
Nature of Percent
Beneficial of
Name and Beneficial Owner or Group (1) Ownership Class
- -------------------------------------- ---------- -------

Lord, Abbett & Co. ............................................... 1,722,584(2) 15.8%
Daniel P. McCartney .............................................. 1,342,159(3) 12.1%
Wellington Management Company, LLP ............................... 1,090,050(4) 10.0%
Pequot Capital Management, Inc. .................................. 1,011,100(5) 9.3%
Dimensional Fund Advisors Inc. ................................... 820,058(6) 7.5%
Thomas A. Cook ................................................... 342,419(7) 3.0%
Robert L. Frome .................................................. 166,055(8) 1.5%
Barton D. Weisman ................................................ 127,605(9) 1.2%
Joseph F. McCartney .............................................. 99,000(10) (17)
W. Thacher Longstreth ............................................ 52,684(11) (17)
Robert J. Moss ................................................... 37,455(12) (17)
John M. Briggs ................................................... 28,820(13) (17)
Brian M. Waters .................................................. 85,613(14) (17)
James L. DiStefano ............................................... 22,989(15) (17)
Directors and Executive Officers as a group (10 persons) ......... 2,304,799(16) 19.5%

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(1) The address of Lord, Abbett & Co. is 90 Hudson Street, Jersey City, NJ
07302. The address of Daniel P. McCartney is 3220 Tillman Drive, Suite 300,
Bensalem, PA 19020. The address of Wellington Management Company, LLP is 75
State Street, Boston, MA 02109. The address of Pequot Capital Management,
Inc. is 500 Nyala Farm Road, Westport, CT 06880. The address of Dimensional
Fund Advisors Inc. ("Dimensional") is 1299 Ocean Avenue, Santa Monica, CA
90401.

(2) According to a Schedule 13G filed by Lord, Abbett & Co., dated January 19,
2001, it has sole voting power and dispositive power with respect to the
1,722,584 shares.

(3) Includes incentive stock options to purchase 78,588 shares and nonqualified
stock options to purchase 123,912 shares, all exercisable within sixty days
of April 9, 2001. Also includes an aggregate of 52,500 shares that Mr.
McCartney holds as a co-trustee for the benefit of his children. Mr.
McCartney disclaims beneficial ownership of these shares. Mr. McCartney may
be deemed to be a "parent" of and deemed to control the Company, as such
terms are defined for purposes of the Securities Act of 1933, as amended
(the "Securities Act"), by virtue of his position as founder, director,
Chief Executive Officer and principal shareholder of the Company. Daniel P.
McCartney is the brother of Joseph F. McCartney.

(4) According to a Schedule 13G filed by Wellington Management Company, LLP,
dated February 14, 2001, it has shared dispositive power with respect to
1,090,050 shares (of which it has shared voting power with respect to
1,015,050 shares).

(5) According to a Schedule 13G filed by Pequot Capital Management, Inc. dated
February 13, 2001, it has sole voting power and dispositive power with
respect to the 1,011,100 shares.

(6) According to a Schedule 13G filed by Dimensional Fund Advisors Inc., dated
February 2, 2001, Dimensional, a registered investment advisor, may be
deemed to have beneficial ownership of 820,058 shares of the Company's
Common Stock as of December 31, 2000, all of which shares are held in
portfolios of DFA Investment Dimensions Group Inc., a registered open-end
investment company, or in series of the DFA

Investment Trust Company, a Delaware business trust, or the DFA Group Trust
and DFA Participation Group Trust, investment vehicles for qualified
employee benefit plans, for all of which Dimensional serves as investment
manager. Dimensional disclaims beneficial ownership of all such shares.

(7) Includes incentive stock options to purchase 104,084 shares and
nonqualified stock options to purchase 236,416 shares, all exercisable
within sixty days of April 9, 2001.

(8) Includes nonqualified stock options to purchase 29,955 shares, all
exercisable within sixty days of April 9, 2001.

(9) Includes nonqualified stock options to purchase 47,955 shares, all
exercisable within sixty days of April 9, 2001.

(10) Represents incentive stock options to purchase 56,314 shares and
nonqualified stock options to purchase 42,686 shares, all exercisable
within sixty days of April 9, 2001.

(11) Includes nonqualified stock options to purchase 52,455 shares, all
exercisable within sixty days of April 9, 2001.

(12) Represents nonqualified stock options to purchase 37,455 shares, all
exercisable within sixty days of April 9, 2001.

(13) Includes nonqualified stock options to purchase 14,970 shares, all
exercisable within sixty days of April 9, 2001.

(14) Includess incentive stock options to purchase 79,043 shares and
nonqualified options to purchase 1,957 shares, all exercisable within
sixty days of April 9, 2001.

(15) Includes incentive stock options to purchase 22,750 shares, all
exercisable within sixty days of April 9, 2001.

(16) Includes 928,540 shares underlying options granted to said group of
persons. All options are exercisable within sixty days of April 9, 2001.

(17) Less than 1% of the outstanding shares.

Directors' Fees

The Company paid each director who is not an employee of the Company $500
for each regular meeting of the Board of Directors attended. Mr. Frome bills
the Company at his customary rates for time spent on behalf of the Company
(whether as a director or in the performance of legal services for the Company)
and is reimbursed for expenses incurred in attending directors' meetings. The
Company also granted options to non-employee directors to purchase an aggregate
of 24,950 shares of Common Stock during the year ended December 31, 2000
pursuant to the 1996 Non-Employee Directors' Plan, as amended and restated as
of October 28, 1997.

MANAGEMENT COMPENSATION

Summary Compensation Table

The following table sets forth certain information regarding compensation
paid or accrued during each of the Company's last three fiscal years to the
Company's Chief Executive Officer and the four highest paid executive officers
whose total salary and bonus exceeded $100,000 in 2000 (the "Named Executive
Officers").

Long Term Compensation
--------------------------------------
Awards Payouts
Annual Compensation --------------------------- ---------
------------------------------------ Securities
Restricted Underlying
Name and Principal Fiscal Other Annual Stock Options/ LTIP All Other
Position Year Salary Bonus Compensation Awards SARs (1)(2) Payouts Compensation
- -------------------------- -------- ----------- ------- -------------- ------------ ------------- --------- -------------

Daniel P. McCartney, 2000 $489,201 0 $22,919 0 25,000 0 0
Chairman of the 1999 531,726 0 13,311 0 55,000 0 0
Board and Chief 1998 474,830 0 63,311 0 25,000 0 0
Executive Officer

Thomas A. Cook, 2000 $489,201 0 $ 1,779 0 25,000 0 0
President, Chief 1999 531,726 0 1,791 0 85,000 0 0
Operating Officer 1998 474,830 0 68,539 0 25,000 0 0
and Director

Brian M. Waters 2000 $164,000 0 $ 8,700 0 10,000 0 0
Vice President -- 1999 175,750 0 31,875 0 10,000 0 0
Operations 1998 172,431 0 49,387 0 10,000 0 0

James L. DiStefano 2000 $136,690 0 $ 0 0 5,000 0 0
Chief Financial Officer 1999 124,377 0 0 0 6,250 0 0
and Treasurer 1998 118,747 0 6,435 0 4,000 0 0

Joseph F. McCartney 2000 $139,737 0 $ 8,700 0 8,000 0 0
Divisional Vice 1999 108,471 0 8,700 0 20,000 0 0
President and Director 1998 119,431 0 96,185 0 8,000 0 0

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(1) Options to acquire shares of Common Stock. The Company has not awarded any
SAR's (Stock Appreciation Rights) as it is not currently authorized to do
so under the 1995 Employee Plan.

(2) Stock option amounts are adjusted to reflect the 3-for-2 stock split paid
in the form of a 50% stock dividend on August 27, 1998.

Option Grants During 2000 Fiscal Year

The following table provides information related to options to purchase
Common Stock granted to the Named Executive Officers during fiscal 2000.

Potential
Realizable Value
at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term (1)
- ------------------------------------------------------------------------------------------------------------------------
% of Total
Options
Options Granted to Exercise
Granted Employees in Price
Name (#) (2) Fiscal Year ($/Sh) (2) Expiration Date 5% 10%
- ------------------------- --------- ------------------- ------------------ ----------------- ---------- ----------

Daniel P. McCartney ..... 17,953 7.15% $5.5700(3) Dec. 6, 2005 $16,010 $ 55,493
Daniel P. McCartney ..... 7,047 2.80% 5.0630(4) Dec. 6, 2010 22,438 56,863
Thomas A. Cook .......... 25,000 9.95% 5.0630(4) Dec. 6, 2010 79,602 201,728
Brian M. Waters ......... 10,000 3.98% 5.0630(4) Dec. 6, 2010 31,841 80,691
James L. DiStefano ...... 5,000 1.99% 5.0630(4) Dec. 6, 2010 15,920 40,346
Joseph F. McCartney ..... 8,000 3.18% 5.0630(4) Dec. 6, 2010 25,473 64,553

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(1) The potential realizable value portion of the foregoing table illustrates
value that might be realized upon exercise of the options immediately
prior to the expiration of their term, assuming the specified compounded
rates of appreciation on the Common Stock over the term of the options.
These numbers do not take into account provisions of certain options
providing for termination of the option following termination of
employment, nontransferability or differences in vesting periods.
Regardless of the theoretical value of an option, its ultimate value will
depend on the market value of the Common Stock at a future date, and that
value will depend on a variety of factors, including the overall condition
of the stock market and the Company's results of operations and financial
condition. There can be no assurance that the values reflected in this
table will be achieved.

(2) The option exercise price may be paid in shares of Common Stock owned by
the Named Executive Officer, in cash, or a combination of any of the
foregoing, as determined by the Stock Option Committee.

(3) The exercise price was 110% of the fair market value of the Common Stock on
the date of grant.

(4) The exercise price was the market value (i.e., closing market price) of the
Common Stock on the date of grant.

Aggregated Option Exercises During 2000 Fiscal Year and Fiscal Year End Option
Values

The following table provides information related to the number and value
of options held at fiscal year end by each of the Named Executive Officers.
(The Company does not have any outstanding stock appreciation rights.) No Named
Executive Officer exercised any options during the fiscal year ended December
31, 2000.

Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at FY-End (#) at FY-End ($) (1)
------------------------------- ------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------

Daniel P. McCartney ......... 177,500 25,000 $ 0 $23,698
Thomas A. Cook .............. 315,500 25,000 28,125 32,800
Brian M. Waters ............. 71,000 10,000 11,250 13,120
Joseph F. McCartney ......... 91,000 8,000 17,437 10,496
James L. DiStefano .......... 17,750 5,000 135 6,560

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(1) The closing price of the Common Stock as reported by the Nasdaq National
Market System on December 31, 2000 was $6.375. Value is calculated on the
basis of the difference between the option exercise price and $6.375
multiplied by the number of shares of Common Stock underlying the option.

REPORT FROM THE AUDIT COMMITTEE

The members of the Audit Committee from January 1, 2000 to December 31,
2000 were Messrs. John M. Briggs, Robert J. Moss and Barton D. Weisman. The
Audit Committee met four times during the fiscal year. The Audit Committee is
responsible for considering management's recommendation of independent
certified public accountant for each fiscal year, recommending the appointment
or discharge of independent accountants to the board of directors and
confirming the independence of the accountants. It is also responsible for
reviewing and approving the scope of the planned audit, the results of the
audit and the accountants' compensation for performing such audit; review the
Company's audited financial statements; and reviewing and approving the
Company's internal accounting controls and discussing such controls with the
independent accountants.

The audit Committee adopted a written charter during fiscal 2000, a copy
of which is attached to this proxy statement as Exhibit A.

The Company's independent auditors are responsible for auditing the
financial statements. The activities of the Committee are in no way designed to
supersede or alter those traditional responsibilities. The Committee's role
does not provide any special assurances with regard to the Company's financial
statements, nor does it involve a professional evaluation of the quality of the
audits performed by the independent auditors.

In connection with the audit of Healthcare Services Group, Inc.'s
financial statements for the year ended December 31, 2000, the Audit Committee
met with representatives from Grant Thornton LLP, the Company's independent
auditors. The Audit Committee reviewed and discussed with Grant Thornton LLP
the Company's financial management and financial structure, as well as the
matters relating to the audit required to be discussed by Statements on
Auditing Standards 61 and 90.

The Audit Committee and Grant Thornton LLP also discussed Grant Thornton
LLP's independence. On January 3, 2001, the Audit Committee received from Grant
Thornton LLP the written disclosures and the letter regarding Grant Thornton
LLP's independence required by Independence Standards Board of Standard No. 1.

In addition, the Audit Committee reviewed and discussed with Healthcare
Services Group, Inc.'s management the Company's audited financial statements
relating to fiscal year ended December 31, 2000 and has discussed with Grant
Thornton LLP the independence of Grant Thornton LLP.

Based upon review and discussions described above, the Audit Committee
recommended to the Board of Directors that Healthcare Services Group, Inc.'s
financial statements audited by Grant Thornton LLP be included in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2000.

John M. Briggs
Robert J. Moss
Barton D. Weisman

STOCK PERFORMANCE GRAPH

The following graph compares the total cumulative return (assuming
dividends are reinvested) on the Common Stock during the five fiscal years
ended December 31, 2000 with the cumulative total return on the S&P 500 Index
and the S&P Healthcare Industry -- Miscellaneous Services Group Index.

[GRAPHIC OMITTED]

TOTAL SHAREHOLDER RETURNS

INDEXED RETURNS
Base Years Ending
Period
Company/Index Dec95 Dec96 Dec97 Dec98 Dec99 Dec00
- ---------------------------------------------------------------------------------------------------------------

HEALTHCARE SERVICES GROUP 100 106.67 134.67 146.00 112.00 102.00
S&P 500 INDEX 100 122.96 163.98 210.85 255.21 231.98
HEALTH CARE (SPEC SVC)-500 100 104.54 131.37 236.68 72.11 148.55

Report of the Board of Directors on Executive Compensation

The compensation of the Chief Executive Officer of the Company is
determined by the Board of Directors. The Board's determinations regarding such
compensation are based on a number of factors including, in order of
importance:

o Consideration of the operating and financial performance of the Company,
primarily its income before income taxes during the preceding fiscal
year, as compared with prior operating periods;

o Attainment of a level of compensation designed to retain a superior
executive in a highly competitive environment; and

o Consideration of the individual's overall contribution to the Company.

Compensation for Company executive officers (referred to in the summary
compensation table) other than the Chief Executive Officer is determined based
upon the recommendation of the Chief Executive Officer, taking into account the
same factors considered by the Board in determining the Chief Executive
Officer's compensation as described above. Except as set forth below, the
Company has not established a policy with regard to Section 162(m) of the
Internal Revenue Code of 1986, as amended ("the Internal Revenue Code"), since
the Company has not and does not currently anticipate paying compensation in
excess of $1 million per annum to any employee. Under the 1995 Employee Plan,
as amended, no recipient of options may be granted options to purchase more
than 125,000 shares of Common Stock. Therefore, compensation received as a
result of options granted under the 1995 Employee Plan qualify as
"performance-based" for purposes of Section 162(m) of the Internal Revenue
Code.

The Company applies a consistent approach to compensation for all
employees, including senior management. This approach is based on the belief
that the achievements of the Company result from the coordinated efforts of all
employees working toward common objectives.

Mr. Daniel P. McCartney and Mr. Cook each received annual base salaries of
$227,000 for year ending December 31, 2000 and an additional 3% of the income
from operations before income taxes of the Company attributable to the fiscal
year immediately preceding the year for which his annual salary is calculated.
Their compensation will be similarly determined with respect to the calendar
year ending December 31, 2001.

The Board of Directors

Daniel P. McCartney (Chairman)
W. Thacher Longstreth
Barton D. Weisman
Joseph F. McCartney
Robert L. Frome
Thomas A. Cook
Robert J. Moss
John M. Briggs

Messrs. Daniel P. McCartney, Thomas A. Cook and Joseph F. McCartney did
not serve as directors, executive officers or members of the Compensation
Committee of any other entity during the fiscal year ended December 31, 2000
and currently do not serve in such capacities.

Interlocks and Insider Participation and Other Matters

Mr. Barton D. Weisman, a director of the Company, has an ownership
interest in ten nursing homes that have entered into service agreements with
the Company. During the year ended December 31, 2000, these agreements resulted
in gross revenues of approximately $3,265,000 to the Company. Management
believes that the terms of each of the transactions with the nursing homes
described herein are comparable to those available to unaffiliated third
parties.

Mr. Robert L. Frome, a director of the Company, is a member of the law
firm of Olshan Grundman Frome Rosenzweig & Wolosky LLP, which law firm has been
retained by the Company during the last fiscal year. Fees received from the
Company by such firm during the last fiscal year did not exceed 5% of such
firm's or the Company's revenues.

PROPOSAL NO. 3

INDEPENDENT PUBLIC ACCOUNTANTS

The accounting firm of Grant Thornton LLP was selected by the Audit
Committee of the Board of Directors as the independent public accountants of
the Company for the year ended December 31, 2001. Said firm has no other
relationship to the Company. The Board of Directors recommends the ratification
of the selection of the firm of Grant Thornton LLP to serve as the independent
public accountants of the Company for the year ending December 31, 2001. A
representative of Grant Thornton LLP, which has served as the Company's
independent public accountants since December 1992, will be present at the
forthcoming shareholders' meeting with the opportunity to make a statement if
he so desires and such representative will be available to respond to
appropriate questions. The approval of the proposal to ratify the appointment
of Grant Thornton LLP requires the affirmative vote of a majority of the votes
cast by all shareholders represented and entitled to vote thereon. An
abstention, withholding of authority to vote or broker non-vote, therefore,
will not have the same legal effect as an "against" vote and will not be
counted in determining whether the proposal has received the required
shareholder vote. However, brokers that do not receive instructions on this
proposal are entitled to vote for the selection of the independent public
accountants.

Fees billed to Company by Grant Thornton LLP during Fiscal 2000

Audit Fees:

Audit fees billed to the Company by Grant Thornton LLP during the
Company's 2000 fiscal year for audit of the Company's annual financial
statements and reviews of those financial statements included in the Company's
quarterly reports on Form 10-Q totaled approximately $277,000.

Financial Information Systems Design and Implementation Fees:

The Company did not engage Grant Thornton LLP to provide advice to the
Company regarding financial information systems design and implementation
during the fiscal year ended December 31, 2000.

All Other Fees:

Fees billed to the Company by Grant Thornton LLP during the Company's 2000
fiscal year for all other services rendered to the Company, including tax
related services totaled approximately $56,000.

The Audit Committee of the Board of Directors considered whether Grant
Thornton LLP's provision of the services covered above under "All Other Fees"
is compatible with maintaining Grant Thornton LLP's independence.

OTHER MATTERS

So far as is now known, there is no business other than that described
above to be presented for action by the shareholders at the meeting, but it is
intended that the proxies will be exercised upon any other matters and
proposals that may legally come before the meeting, or any adjournment thereof,
in accordance with the discretion of the persons named therein.

DEADLINE FOR SHAREHOLDER PROPOSALS

To the extent permitted by law, any shareholder proposal intended for
presentation at next year's annual shareholders' meeting must be received in
proper form at the Company's principal office no later than December 9, 2001.

If the Company is not notified of a shareholder proposal by December 9,
2001, such proposal will not be included in the proxy statement for the next
year's annual shareholders' meeting and the Company will be permitted to use
its discretionary authority in respect thereof in accordance with Rule
14a-4(c)(1) of the Securities Exchange Act of 1934, as amended.

ANNUAL REPORT

The 2000 Annual Report to Shareholders, including financial statements, is
being mailed herewith. If you do not receive your copy please advise the
Company and another will be sent to you.

By Order of the Board of Directors,

DANIEL P. MCCARTNEY
Chairman and
Chief Executive Officer

Dated: Bensalem, Pennsylvania
April 11, 2001

A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000, as filed with the Securities and Exchange Commission,
may be obtained without charge by any shareholder of record on the record date
upon written request addressed to: Secretary, Healthcare Services Group, Inc.,
3220 Tillman Drive, Suite 300, Bensalem, PA 19020.

EXHIBIT A

CHARTER AND POWERS OF THE AUDIT COMMITTEE

Organization

The Audit Committee is a committee of the Board of Directors. The Audit
Committee shall be composed of at least three directors who are independent of
the management of Healthcare Services Group, Inc. and free from any
relationship that, in the opinion of the Board, would interfere with the
exercise of his 'or her independent judgment as a member of the Audit
Committee. The members of the Audit Committee shall meet the independence and
experience requirements of the NASDAQ Stock Market.

Statement of Policy

The Audit Committee shall provide assistance to the corporate directors in
fulfilling their responsibility to the shareholders, potential shareholders,
and investment community related to corporate accounting, reporting practices
of HCSG, and the quality and integrity of the financial reports of HCSG.

Responsibilities

In meeting its responsibilities, the Audit Committee is expected to:

1. Review and reassess the adequacy of this Charter annually and recommend
any proposed changes to the Board for approval.

2. Review and recommend to the directors the independent accountant to be
selected to audit the financial statements of HCSG.

3. Provide an open avenue of communications between the independent
accountant and the Board of Directors.

4. Hold regular meetings as may be necessary and such special meetings as
may be called by the Chairman of the Audit Committee.

5. Confer with management and the independent accountant about significant
risks and exposures and assess the steps management has taken to
minimize such risks to the company.

6. Review with the independent accountants and management the adequacy and
effectiveness of the accounting and financial controls of the company,
eliciting any recommendations for the improvement of such internal
control procedures.

7. Review with management and the independent accountant at the completion
of the annual examination, the company's annual financial statements
and footnotes before it is filed with the SEC,

8. Review with management and the independent accountant the interim
financial report before it is filed with the SEC.

9. Review with the independent accountant any difficulties encountered in
the course of their audit, including any restrictions on the scope of
their work or access to required information.

10. Determine whether the independent accountant had any serious
difficulties or disputes with management during the course of the
audit.

11. Establish, review and update periodically a Code of Ethics and ensure
that management has established a system to enforce the Code.

12. Establish, review and update Sales and Billing Compliance Program and
ensure that management has established a system to enforce the Program.

13. The Audit Committee shall have the power to investigate any matter
brought to its attention within the scope of its duties.

14. The Audit Committee shall maintain minutes or other records of its
meetings and activities.

15. Review the planning of the independent audit and any special audit
procedures required.

16. Review the significant reports to management prepared by the internal
auditor and management responses.

17. Receive periodic reports from the independent accountant regarding the
auditor's independence consistent with the Independence Standards Board
Standard I which requires that the auditors discuss with the Audit
Committee any significant relationship that could impair their
independence.

18. Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy report.

19. Such other oversight duties and responsibilities as may be assigned to
the Audit Committee by the Board of Directors and Chairman.

A [X] Please mark your
votes as in this
example using
dark ink only.
- ----------------------------------------------------------------------------------------------------------------------------------

FOR WITHHELD

1. TO ELECT EIGHT [ ] [ ] Nominees: Daniel P. McCartney; W.
DIRECTORS; Thacher Longstreth; Barton
D. Weisman; Joseph F.
FOR all nominees listedon the right McCartney; Robert L.
(except as marked to the contrary Frome; Thomas A. Cook;
below) Robert J. Moss; and John M.
Briggs; and in accordance
with proxy Statement
(Instruction: To withhold authority to vote for
any individual nominee, print that nominee's
name on the space provided at left.)
___________________________________

FOR AGAINST ABSTAIN

(2) TO APPROVE AND RATIFY THE SELECTION OF GRANT THORNTON LLP AS THE INDEPENDENT [ ] [ ] [ ]
CERTIFIED PUBLIC ACCOUNTANTS OF THE COMPANY FOR ITS CURRENT FISCAL YEAR
ENDING DECEMBER 31, 2001; AND

(3) TO CONSIDER AND ACT UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE [ ] [ ] [ ]
MEETING.

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_____________________________________ Date _____________ 2001 _____________________________________ Date _____________ 2001
SIGNATURE SIGNATURE IF HELD JOINTLY
Please sign exactly as name appears on tne certificate or certificates representing shares to be voted by this proxy, as
shown on the label above. When signing as executor, administrator, attorney, trustee, or guardian, please give full title
as such. If a corporation, please sign full corporation name by president or other authorized officer. If a partnership,
please sign in partnership name by authorized person(s).

HEALTHCARE SERVICES GROUP, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

Annual Meeting of Shareholders to be held at The Radisson Hotel of Bucks County,
2400 Old Lincoln Highway, Trevose, PA, 19047 on May 22, 2001 at 10:00 A.M.

The undersigned, revoking all previous proxies, hereby appoints Daniel P.
McCartney and Thomas A. Cook, or either of them, attorneys and proxies with full
power of substitution and with all the powers the undersigned would possess if
personally present, to vote all shares of Common Stock of HEALTHCARE SERVICES
GROUP, INC. owned by the undersigned at the Annual Meeting of Shareholders of
said Corporation to be held at the time and place set forth above, and at any
adjournment thereof, in the transaction of such business as may properly come
before the meeting or any adjournment thereof, all as more fully described in
the Proxy Statement, and particularly to vote as designated below.

THE SHARES REPRESENTED HEREBY WILL BE VOTED AS DIRECTED BY THIS PROXY, BUT
IF NO DIRECTION IS MADE THEY WILL BE VOTED FOR THE ELECTION OF THE NOMINATED
DIRECTORS, AND THE RATIFICATION OF THE INDEPENDENT PUBLIC ACCOUNTANTS, ALL AS
RECOMMENDED IN THE PROXY STATEMENT, AND IN ACCORDANCE WITH THE DISCRETION OF THE
PROXIES OR PROXY ON ANY OTHER BUSINESS TRANSACTED AT THE ANNUAL MEETING.

(To be Signed on Reverse Side)