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<SEC-DOCUMENT>0000893220-09-000100.txt : 20090515
<SEC-HEADER>0000893220-09-000100.hdr.sgml : 20090515
<ACCEPTANCE-DATETIME>20090123174810
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000893220-09-000100
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20090123

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			HEALTHCARE SERVICES GROUP INC
		CENTRAL INDEX KEY:			0000731012
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-TO DWELLINGS & OTHER BUILDINGS [7340]
		IRS NUMBER:				232018365
		STATE OF INCORPORATION:			PA
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		2643 HUNTINGDON PIKE
		CITY:			HUNTINGDON VALLEY
		STATE:			PA
		ZIP:			19006
		BUSINESS PHONE:		2159381661

	MAIL ADDRESS:	
		STREET 1:		2643 HUNTINGDON PIKEE
		CITY:			HUNTINGDON VALLEY
		STATE:			PA
		ZIP:			19006
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<HTML>
<HEAD>
<TITLE>corresp</TITLE>
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<BODY bgcolor="#FFFFFF">
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Via EDGAR System
</DIV>


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">January&nbsp;23, 2009
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Ms Karen J. Garnett<BR>
Assistant Director<BR>
Securities and Exchange Commission<BR>
Division of Corporate Finance<BR>
100 F Street N.E.<BR>
Mail Stop 4561<BR>
Washington, D.C. 20549

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD>RE:</TD>

    <TD>Healthcare Services Group, Inc.<br>
Form 10-K for Fiscal Year Ended December&nbsp;31, 2007<br>
Filed February&nbsp;19, 2008<br>
File No.&nbsp;0-12015</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Dear Ms Garnett:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On behalf of Healthcare Services Group, Inc., a Pennsylvania corporation (the &#147;Company&#148;, &#147;our&#148;
or &#147;we&#148;), please find enclosed for filing with the Securities and Exchange Commission (the
&#147;Commission&#148;) the Company&#146;s responses to the comments received from the Commission&#146;s staff (the
&#147;Staff&#148;) on December&nbsp;29, 2008, regarding the Company&#146;s Form 10-K for the fiscal year ended December
31, 2007 filed with the Commission on February&nbsp;19, 2008 (the &#147;Form&nbsp;10-K&#148;) and the Company&#146;s
Definitive Proxy Statement filed with the Commission on April&nbsp;7, 2008 (the &#147;Proxy Statement&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For ease of reference, each comment has been repeated below in italics, with our responses set
forth below each comment. The numbering below corresponds to that used in the Staff&#146;s comment
letter.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Form&nbsp;10-K for the fiscal year ended December&nbsp;31, 2007</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>(c)&nbsp;Available Information, page 7</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><I>1.</I></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Please note that the Securities and Exchange Commission is no longer located at 450 Fifth
Street, N.W. Washington, D.C. 20549. Our headquarters are located at 100 F Street, N.E. Washington,
D.C. 20549. Please use our current address in future filings.</I></TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Response:</B></TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will use the Commission&#146;s 100 F Street, N.E. Washington, D.C. 20549 address in all future
filings&#146; references to the Commission&#146;s headquarters.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Item&nbsp;7. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operation,
page 15</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Overview, page 16</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><I>2.</I></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Please expand the &#147;Overview&#148; to include the most important matters on which
management focuses in evaluating your financial condition and operating performance and
provide the context for the discussion and analysis of the financial statements. The
Overview should identify and address those key variables and other qualitative and
quantitative factors that are peculiar to and necessary for an understanding and
evaluation of the company. This discussion should address both past and prospective
financial condition and operating performance, including a discussion of known material
trends and uncertainties. Provide this disclosure in future filings and tell us how you
plan to comply.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company confirms that in future filings it will enhance our disclosure in the
&#147;Overview&#148; to address the Staff&#146;s comments. We intend to incorporate into the Overview an
expanded discussion and analysis, on a reportable segment basis, of our financial and
operational key indicators. Essentially, this discussion will provide information on the
relationships and volatility of the respective reportable segment&#146;s key indicators and their
impact on that reportable segment&#146;s financial condition and results of operations. We also
intend to provide this information in the context of historical and prospective industry
factors, as well as the impact of general economic conditions on our key indicators. An example
of such expanded disclosure would be discussion relating to the cost of supplies consumed in
providing our Food segment services, which account for approximately 40% of total reportable
segment costs. These costs are exposed to price volatility since they are affected by commodity
pricing factors, which are unpredictable and in many circumstances outside of our control
although if we did determine a material trend developing in respect to a cost it would be
disclosed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U> <B>Consolidated Operations, page 17</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Costs of Services Provided, page 19</B></U>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><I>3.</I></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Please provide more information about the reasons why there was an increase or
decrease in certain aspects of your business. For example, you state that the decrease in
housekeeping labor costs was due to &#147;efficiencies achieved&#148; and that the increase in food
labor costs was due to failure to manage those &#147;costs as efficiently as compared to prior
periods.&#148; In future filings, please describe those efficiencies in greater detail and tell
us how you plan to comply.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company confirms that in future filings it will enhance our disclosure to provide
additional qualitative and quantitative information with regard to changes in our primary cost
of services provided key indicators on a consolidated, as well as reportable segments basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With regards to your comment regarding such disclosure in our 2007 Form 10-K, we reference
&#147;efficiencies&#148; in respect to evaluating and monitoring actual labor costs against benchmarks
established for anticipated labor costs to be incurred. For example, we may benchmark our labor
hours for a specific service location facility to not include any overtime. In the event our
on-site account manager incurs overtime with his staff in accomplishing standard daily
routines, he has used his staff (and therefore labor) &#147;inefficiently&#148; in respect to actual
versus benchmarked labor costs. Additionally, in respect to your comment, as noted in our
response above, changes in the respective reportable segment&#146;s supplies costs are primarily a
result of commodity pricing factors, as well as variations in measuring actual supplies&#146; usage
versus benchmarked amounts.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><I>4.</I></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>We note that bad debt expense for the year has increased by approximately $5.5
million and is almost 21% of net earnings as of December&nbsp;31, 2007. Please provide us with
a more detailed explanation for the increase in bad debt expense. Additionally, based on
review of your third quarter </I><I>Form 10-Q</I><I> , it appears that this increased bad debt expense
will be a trend for the near future. Please revise your disclosure in future filings to
provide a more detailed discussion of the underlying causes of this trend and the
implications and significance of this trend on your current and future financial results.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company confirms that in future filings it will enhance our disclosure to provide more
detailed discussion concerning our bad debt expense to include known material trends and
related financial results&#146; significance and implications.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As your comment noted, our bad debt expense increased $5.5&nbsp;million in comparing the year ended
December&nbsp;31, 2007 to the year ended December&nbsp;31, 2006, such increase was primarily attributable
to nursing homes filing for bankruptcy during such year. Specifically, our 2007 $6.1&nbsp;million
bad debt expense resulted primarily as a result of our estimate of the potential recovery of
obligations owed us from two nursing home chains which filed for bankruptcy protection.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that the bankruptcies entered into by these clients, whose obligations to us
comprised principally the bad debt provision recorded in our allowance for doubtful accounts in
2007, were a result of factors specific to their respective financial conditions. We do not
believe, in general, that either current revisions to legislation pertaining to Medicare and
Medicaid reimbursement funding rates and mechanisms, or trends in the long-term care industry
have had a negative affect or adversely impacted our ability to collect amounts due from our
clients. Despite our belief that overall trends in factors previously noted which impact our
ability to collect amounts due from our clients have remained favorable, we may continue to
have clients file for bankruptcy protection based on their specific financial condition. In the
event of future client bankruptcies, we will continue our policy of recording in the quarter
that a client files for bankruptcy protection a reserve based on our best estimate of our
ultimate recovery against such client&#146;s obligation to us. If in the event the factors discussed
above would change, influencing or establishing a trend which would impact our ability to
collect amounts due from our clients, we would disclose such in future filings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Liquidity and Capital Resources, page 24</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><I>5.</I></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Please revise to include a table of contractual obligations, as required by Item
3</I><I>03(a)(5)</I><I> of Regulation&nbsp;S-K. We note, for example, the lease payment obligations disclosed
in Note 4 to your financial statements.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In response to your comment, please note below the revised table as of December&nbsp;31, 2007.
Additionally, the Company confirms that in future filings it will provide such table, when
applicable.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Less than</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">More than</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Total</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">1 year</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">1
&#151; 3 years</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">3
&#151; 5 years</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">5 years</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Contractual Obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating Lease Obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,989,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,025,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">964,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">-0-</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">-0-</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Item&nbsp;8. Financial Statements and Supplementary Data</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Consolidated Statement of Income, page 33</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><I>6.</I></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Regarding your Costs of Services Provided, we note you disclose detail of the nature
of certain subcaptions on a percentage basis within your Results of Operations section of
your MD &#038; A. Please provide detail concerning the nature of your Costs of Services
Provided for those subcaptions greater than ten percent of the Costs of Services Provided
on your Statement of Operations, or indicate to us why such disclosure is not meaningful.
Refer to Rule&nbsp;5-</I><I>03(b)</I><I> of Regulation&nbsp;S-X.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With respect to your comment, please be advised that labor and other direct labor costs is
the only Cost of Services Provided subcaption which is 10% or greater when compared to total
Cost of Services Provided. Such cost is comprised of payroll, payroll related taxes, and
health, welfare and pension costs of our district management, account management and service
location facility staffs. Although we do report upon and discuss other cost subcaptions (bad
debts, workers&#146; compensation and general liability insurance, and supplies) as key indicators
based on management&#146;s attention to, and monitoring of these costs in respect to its overall
evaluation of financial and operational performance and decision making, none of those
subcaptions, individually, exceed 10% or greater of total Cost of Services Provided.
Therefore, we do not believe any additional disclosure is necessary at this time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Item&nbsp;15. Exhibits and Financial Statement Schedules</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Exhibits 31.1 and 31.2, pages 63 and 64</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><I>7.</I></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>We note that you have made certain modifications to the exact form of the required
certifications including modification of the language within paragraph </I><I>4(d)</I><I> and
elimination of language in paragraph 5, as well as the</I></TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>inclusion of the title of each certifying individual at the beginning of the
certification and the inclusion of &#147;annual&#148; when discussing the current report. Please
discontinue the use of these and other modifications in future filings as
certifications required under Exchange Act Rules&nbsp;13a-</I><I>14(a)</I><I> and 15d-</I><I>14(a)</I><I> must be in the
exact form set forth in Item&nbsp;</I><I>601(b)(31)</I><I> of Regulation&nbsp;S-K.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company confirms that in future filings it will provide the certifications required
under Exchange Act Rules&nbsp;13a-14(a) and 15d-14(a) in the exact form set forth in Item&nbsp;601(b)(31)
of Regulation&nbsp;S-K.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Definitive Proxy Statement filed April&nbsp;7, 2008</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Management Compensation, page 8</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><I>8.</I></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>We note that you disclosed the compensation for your chief executive officer, former and
current chief financial officers, chief operating officer and division vice president, Please
explain why you did not include another highly compensated executive officer as required by
Item&nbsp;</I><I>402(a)(3)(iii)</I><I> of Regulation&nbsp;S-K.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Response</B></U><B>:</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Staff is advised no additional disclosure was provided pursuant to Item 402(a) (3)(iii)
because, other than the individuals already included in the Summary Compensation Table, the Company
has no other executive officers. In addition, except as provided in the Summary Compensation
Table, no other persons served as executive officers during the course of 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Compensation Objectives, Page 8</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><I>9.</I></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>One of the factors that you considered in executive compensation decisions is &#147;publicly
available data relating to the compensation practices and polices of other companies within
and outside &#091;y&#093;our industry.&#148; Furthermore, you state that you generally target the executive
base salaries to the &#147;median range of salaries for executives in similar positions at
comparable companies . .&#148; Please identify the external data used in making your compensation
decisions.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Response</B></U><B>:</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Staff is advised as indicated under &#147;Compensation Discussion and Analysis &#151; Compensation
Objectives&#148; the Company only relies on publicity available data &#147;to the
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">extent available&#148; and while the Company targets taking into consideration the medium of the
range of salaries, &#147;executive management... may deviate from the general principle of targeting
total compensation at the medium level for the peer group.&#148; While the Company has not retained a
compensation consultant, as part of the review of compensation, the compensation policies of the
following companies have been examined: AMN Healthcare Services, Inc. (a healthcare staffing
company), ABM Industries Incorporated (a provider of janitorial, parking, security and engineering
services for commercial and industrial facilities), and ARAMARK Corporation (a food, hospitality
and facility service company). As none of these companies are specifically engaged in the
Company&#146;s business and the Company is unaware of any other public company which provides solely
housekeeping and food services to the health care industry, the Company believes that compensation
comparisons with the aforementioned other companies is not apt. Accordingly, while the Nominating,
Compensation and Stock Option Committee (the &#147;Committee&#148;) is aware of the compensation practices of
the companies set forth above, the Committee has not necessarily relied on comparisons with such
entities for purposes of making compensation decisions for Company executive officers. The Company
proposes modifying the disclosure in its next proxy statement to reflect the foregoing.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><I>10.</I></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Since you appear to benchmark compensation, you are required to identify the companies that
comprise the peer group. If you have benchmarked different elements of your compensation
against different peer groups, please identify the companies that comprise each group. Refer
to Item&nbsp;</I><I>402(b)(2)(xiv)</I><I> of Regulation&nbsp;S-K. This disclosure should include a discussion of where
actual payments fall within targeted parameters. To the extent actual compensation was outside
a targeted range, include an explanation.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Response</B></U><B>:</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As indicated in response to question 9, our Nominating, Compensation and Stock Option
Committee examines the compensation policies of certain public companies. While the Company is
aware of the compensation policies at such companies, due to the different business model of the
Company as compared with such public companies, the Company does not benchmark compensation against
other such companies. Accordingly, the Company proposes modifying the disclosure in its next proxy
statement to indicate that it does not benchmark compensation.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Elements of Compensation, page 9</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><I>11.</I></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Please expand your discussion of compensation awards to explain specifically why each named
executive officer received the base salary, performance-based compensation and long-term
equity incentive awards that he did. For example, your discussion of base salary should
explain specifically how each factor, such as individual responsibilities, performance and
experience, was used to determine individual base salaries and why you decided to award base
salaries based on the respective executive officer&#146;s ability to meet those factors. Please
refer to </I><I>Item 402(b)</I><I> of Regulation&nbsp;S-K for guidance.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Response</B></U><B>:</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Staff is advised that the base salaries of Messrs.&nbsp;Daniel McCartney, Joseph McCartney and
Thomas Cook in 2007 were lower than most base salaries for senior executives in companies with a
similar market capitalization as the Company because most of their salary is performance-based as
described in the proxy statement for its 2008 Annual Meeting of Shareholders (the &#147;2008 Proxy
Statement&#148;). The Company proposes that disclosure in its next proxy statement be revised to
indicate the basis for the base salaries of Messrs.&nbsp;Daniel McCartney and Joseph McCartney. The
Company believes the disclosure under &#147;Elements of Compensation &#151; Performance-Based Compensation&#148;
in the 2008 Proxy Statement sufficiently explains how the performance-based element of compensation
is determined. With respect to Mr.&nbsp;Cook, the Staff is advised that, as indicated in response to
Question 12 below, the criteria for determining his compensation has changed because he is no
longer the Chief Operating Officer of the Company. With respect to Messrs.&nbsp;Hudson and DiStefano
(who retired as of March&nbsp;31, 2008) while the Committee took into account their individual
responsibilities, performance and experience, the Committee did not specifically quantify how much
any of these factors impacted their base salary and as a result the Company does not believe
additional disclosure is necessary. The Committee reserves the right to adjust Mr.&nbsp;Hudson&#146;s
compensation based upon his individual performance (see Item&nbsp;12 below). The Staff is advised that
the Company did not grant any long-term equity incentive awards in 2007. Accordingly, the Company
believes no additional disclosure of long-term equity incentive awards was necessary in the 2008
Proxy Statement. Since the Company has granted stock options in 2008, the Company&#146;s proxy
statement for the 2009 Annual
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Meeting of Shareholders will specifically explain why each named executive officer received
the long-term equity incentive award that he did.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Performance-Based Compensation, page 9</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><I>12.</I></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Please explain why only Messrs.&nbsp;Joseph F. McCartney and Thomas A. Cook received
performance-based compensation in 2007 and why only Mr.&nbsp;McCartney will receive
performance-based compensation for 2008.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Response</B></U><B>:</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Staff is advised that Mr.&nbsp;Cook did not receive performance-based compensation in 2008
because he is no longer the Chief Operating Officer of the Company (as of June&nbsp;1, 2008). The
Committee has historically tied the compensation of Messrs.&nbsp;Daniel McCartney and Cook into the
Company&#146;s financial performance because they have had responsibility for all key strategic and
policy decisions impacting the Company. Accordingly, the Committee believed the compensation of
Messrs.&nbsp;Cook and McCartney should be based primarily on the Company&#146;s financial performance.
Similarly, since a key function of Mr.&nbsp;Joseph McCartney is supervising many of the Company&#146;s
service locations, the Committee believes his compensation should be based in part on the
attainment of the goals and objectives set forth in the business plans formulated for the service
locations under his supervision. In contrast, the Committee does not believe that Mr.&nbsp;Hudson&#146;s
compensation should be based on criteria relating to the overall operating performance of the
Company, but rather to his individual performance as Chief Financial Offer and the conduct of
matters and functions relating thereto. Accordingly, the Committee does not believe the
compensation of Messrs.&nbsp;Thomas Cook and Richard Hudson should be based on criteria relating to the
performance of the Company. The Company proposes modifying the disclosure in its next Proxy
Statement to reflect the foregoing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Grant of Plan-Based Awards, page 12</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><I>13.</I></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>We note your disclosure in footnote 1 to this table that the required goals for threshold and
target amounts are not quantifiable in profit dollars. Please note that the threshold, target
and maximum amounts disclosed in this table should reflect the possible amount payable to Mr.
McCartney if the respective level of performance is achieved. Disclosure of the specific
performance goals is not</I></TD>
</TR>

</TABLE>
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>required in this table. Please refer to Instruction 2 to </I><I>Item 402(d)</I><I> of Regulation&nbsp;S-K.
Please tell us in more detail why you cannot provide the required disclosure.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Response</B></U><B>:</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Staff is advised that the amount that Mr.&nbsp;Joseph McCartney can receive under the
Non-Equity Incentive Plan Awards varies from zero to $84,000. Essentially, the facilities under
Mr.&nbsp;McCartney&#146;s supervision must meet certain monthly gross profit targets. Mr.&nbsp;McCartney
essentially receives approximately $7,000 for each month the target is satisfied. The Company
proposes in its next proxy statement to modify the table to indicate the &#147;Threshold&#148; is zero. The
Company does not believe, however, that it can specifically quantify the &#147;Target&#148; because the
monthly targets of the service locations, under Mr.&nbsp;McCartney&#146;s supervision occasionally adjust
during the course of a year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Certain Relationships and Related Party Transactions, page 18</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><I>14.</I></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Please describe your policies and procedures for review, approval or ratification of
transactions with related persons as required by </I><I>Item 404(b)</I><I> of Regulation&nbsp;S-K.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Response</B></U><B>:</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Staff is advised that, as stated in the Audit Committee Charter, the Company&#146;s Audit
Committee is responsible for reviewing and approving all related party transactions involving the
Company and any director, executive officer, other employee or family member thereof. The Audit
Committee does not have a formal written policy which sets forth its policies and procedures with
respect to reviewing a related party transaction. The Audit Committee, however, will not approve
any transaction unless the transaction is on terms comparable to those available to unaffiliated
third parties and have terms reasonably expected to benefit the Company. The Company proposes
modifying the disclosure in its next Proxy Statement to reflect the foregoing.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By way of this letter, the Company hereby acknowledges that: the Company is responsible
for the adequacy and accuracy of the disclosure in the filings; and staff comments or changes
to disclosure in response to staff comments do not foreclose the Commission from taking any
action with respect to the filings; and the Company may
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">not assert staff comments as a defense in any proceeding initiated by the Commission or any
person under the federal securities laws of the United States.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe this resolves your comments, and appreciate your consideration. If you have any
questions, please contact the undersigned at 215-639-4274 extension 119.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>
<TR>
    <TD colspan="3" align="left">Very truly yours,<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top" align="left">&nbsp;</TD>
</TR><TR>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ Richard W. Hudson
&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
</TR><TR>
    <TD colspan="3" align="left">Richard W. Hudson&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
</TR><TR>
    <TD colspan="3" align="left">Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<DIV style="margin-top: 6pt">
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%">cc:</TD>
    <TD width="2%"></TD>
    <TD>Mark Rakip<br>
Robert Telewicz<br>
Erin Martin</TD>
</TR>

</TABLE>
</DIV>


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