<PAGE>
 
    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 31, 1997
                                                       REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                                ---------------
 
                                    FORM S-8
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
 
                                ---------------
 
                        DIAGNOSTIC HEALTH SERVICES, INC.
               (EXACT NAME OF ISSUER AS SPECIFIED IN ITS CHARTER)
 
                DELAWARE                               22-2960048
    (STATE OR OTHER JURISDICTION OF       (I.R.S. EMPLOYER IDENTIFICATION NO.)
     INCORPORATION OR ORGANIZATION)
 
      2777 STEMMONS FREEWAY, SUITE
           1525DALLAS, TEXAS                             75207
    (ADDRESS OF PRINCIPAL EXECUTIVE                    (ZIP CODE)
                OFFICES)
 
                             1992 STOCK OPTION PLAN
                        1995 INCENTIVE STOCK OPTION PLAN
                      1995 NON-QUALIFIED STOCK OPTION PLAN
                      1997 NON-QUALIFIED STOCK OPTION PLAN
                            (FULL TITLE OF THE PLAN)
 
                                 MAX W. BATZER
               CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
                        DIAGNOSTIC HEALTH SERVICES, INC.
                       2777 STEMMONS FREEWAY, SUITE 1525
                              DALLAS, TEXAS 75207
                    (NAME AND ADDRESS OF AGENT FOR SERVICE)
 
                                 (214) 634-0403
         (TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
 
                          COPIES OF COMMUNICATIONS TO:
                              SHAHE SINANIAN, ESQ.
                           GREENBERG TRAURIG HOFFMAN
                             LIPOFF ROSEN & QUENTEL
                              153 EAST 53RD STREET
                            NEW YORK, NEW YORK 10022
                              TEL: (212) 801-9200
                              FAX: (212) 223-7161
 
                        CALCULATION OF REGISTRATION FEE
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                               PROPOSED          PROPOSED
       TITLE OF               AMOUNT            MAXIMUM           MAXIMUM          AMOUNT OF
   SECURITIES TO BE            TO BE        OFFERING PRICE       AGGREGATE       REGISTRATION
      REGISTERED           REGISTERED(1)       PER SHARE      OFFERING PRICE          FEE
---------------------------------------------------------------------------------------------
<S>                      <C>               <C>               <C>               <C>
Common Stock, par value       770,310
 $.001 per share             shares(2)         $1.94(3)      $1,494,401.40(4)       $452.85
---------------------------------------------------------------------------------------------
Common Stock, par value
 $.001 per share         31,424 shares(5)      $11.75(6)      $369,232.00(7)        $111.89
---------------------------------------------------------------------------------------------
Common Stock, par value       137,550
 $.001 per share             shares(8)         $7.25(3)       $997,237.50(4)        $302.19
---------------------------------------------------------------------------------------------
Common Stock, par value       360,700
 $.001 per share             shares(9)         $11.75(6)     $4,238,225.00(7)      $1,284.31
---------------------------------------------------------------------------------------------
Common Stock, par value       420,800
 $.001 per share            shares(10)         $4.42(3)      $1,859,936.00(4)       $563.62
---------------------------------------------------------------------------------------------
Common Stock, par value       50,800
 $.001 per share            shares(11)         $11.75(6)      $596,900.00(7)        $180.88
---------------------------------------------------------------------------------------------
Common Stock, par value       461,000
 $.001 per share            shares(12)         $7.68(3)      $3,540,480.00(4)      $1,072.87
---------------------------------------------------------------------------------------------
Common Stock, par value       528,800
 $.001 per share            shares(13)         $11.75(6)     $6,213,400.00(7)      $1,882.85
---------------------------------------------------------------------------------------------
Common Stock, par value       106,125
 $.001 per share            shares(14)         $11.75(6)     $1,246,968.70(15)      $377.87
---------------------------------------------------------------------------------------------
 TOTAL:                  2,867,509 shares                     $20,556,780.60       $6,229.33
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
</TABLE>
 
                                               (Footnotes on the following page)
<PAGE>
 
 (1) Pursuant to Rule 416(a), the number of shares of Common Stock being
     registered shall be adjusted to include any additional shares which may
     become issuable as a result of stock splits, stock dividends, or similar
     transactions in accordance with the anti-dilution provisions of the 1992
     Stock Option Plan, the 1995 Incentive Stock Option Plan, the 1995 Non-
     Qualified Stock Option Plan and the 1997 Non-Qualified Stock Option Plan.
 
 (2) Represents the aggregate number of shares issuable upon exercise of
     currently outstanding options granted under the 1992 Stock Option Plan.
 
 (3) Represents the weighted average exercise price (rounded to the nearest
     cent) at which the shares will be issued.
 
 (4) Computed in accordance with Rule 457(h) under the Securities Act of 1933,
     as amended, solely for the purpose of calculating the total registration
     fee The aggregate offering price and amount of registration fee have been
     computed based on the weighted average exercise price (rounded to the
     nearest cent) at which the shares will be issued.
 
 (5) Represents the aggregate number of shares underlying options presently
     available for issuance under the 1992 Stock Option Plan.
 
 (6) Represents the average of the high and low prices of the Common Stock
     (rounded to the nearest cent) as reported on the Nasdaq National Market
     on October 30, 1997.
 
 (7) Computed in accordance with Rules 457(c) and (h) under the Securities Act
     of 1933, as amended, solely for the purpose of calculating the total
     registration fee. The aggregate offering price and amount of registration
     fee have been computed based on the average of the high and low prices of
     the Common Stock (rounded to the nearest cent) as reported on the Nasdaq
     National Market on October 30, 1997, because the exercise price at which
     the shares will be issued in the future is not currently determinable.
 
 (8) Represents the aggregate number of shares issuable upon exercise of
     currently outstanding options granted under the 1995 Incentive Stock
     Option Plan.
 
 (9) Represents the aggregate number of shares underlying options presently
     available for issuance under the 1995 Incentive Stock Option Plan.
 
(10) Represents the aggregate number of shares issuable upon exercise of
     currently outstanding options granted under the 1995 Non-Qualified Stock
     Option Plan.
 
(11) Represents the aggregate number of shares underlying options presently
     available for issuance under the 1995 Non-Qualified Stock Option Plan.
 
(12) Represents the aggregate number of shares issuable upon exercise of
     currently outstanding options granted under the 1997 Non-Qualified Stock
     Option Plan.
 
(13) Represents the aggregate number of shares underlying options presently
     available for issuance under the 1997 Non-Qualified Stock Option Plan.
 
(14) Represents shares heretofore issued upon exercise of options granted
     under the 1992 Stock Option Plan, the 1995 Incentive Stock Option Plan,
     the 1995 Non-Qualified Stock Option Plan and the 1997 Non-Qualified Stock
     Option Plan.
 
(15) Computed in accordance with Rule 457(c) under the Securities Act of 1933,
     as amended, solely for the purpose of calculating the total registration
     fee. The aggregate offering price and amount of registration fee have
     been computed based on the average of the high and low prices of the
     Common Stock (rounded to the nearest cent) as reported on the Nasdaq
     National Market on October 30, 1997.
 
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
 
<PAGE>
 
                                    PART I
 
             INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
 
  The documents containing the information specified in Part I of Form S-8
will be sent or given to participating employees as specified by Rule
428(b)(1) of the Securities Act of 1933, as amended (the "Securities Act").
Such documents are not required to be and are not filed with the Securities
and Exchange Commission either as part of this Registration Statement, or as a
prospectus or prospectus supplement pursuant to Rule 424. These documents and
the documents incorporated by reference into this Registration Statement
pursuant to Item 3 of Part II of this Registration Statement, taken together,
constitute a prospectus that meets the requirements of Section 10(a) of the
Securities Act.
 
  The following reoffer prospectus filed as part of the Registration Statement
has been prepared in accordance with the requirements of Part I of Form S-3
and, pursuant to General Instruction C of Form S-8, may be used by certain
officers, directors and controlling stockholders of the Company for the resale
to the public of Shares to be issued to them upon exercise of options
heretofore or hereafter granted under the 1992 Stock Option Plan, the 1995
Incentive Stock Option Plan, the 1995 Non-Qualified Stock Option Plan and the
1997 Non-Qualified Stock Option Plan (collectively, the "Plans"). Such persons
may be deemed to be in a control relationship with the Company within the
meaning of the Securities Act and the rules and regulations of the Commission
promulgated thereunder, and such Shares may be deemed to be "control
securities" within the meaning of General Instruction C to Form S-8. The
following reoffer prospectus may also be used for the resale to the public of
certain Shares heretofore issued upon exercise of options granted under the
Plans. Such Shares may be deemed to be "restricted securities" within the
meaning of General Instruction C to Form S-8.
 
                                      I-1
<PAGE>
 
PROSPECTUS
 
                               1,360,060 SHARES
 
                       DIAGNOSTIC HEALTH SERVICES, INC.
 
                                 COMMON STOCK
 
                                ---------------
 
  This Prospectus relates to 1,360,060 shares of common stock, par value $.001
per share (the "Common Stock"), of Diagnostic Health Services, Inc., a
Delaware corporation (the "Company"), which may be offered and sold from time
to time pursuant to this Prospectus (the "Shares") by the persons named in
this Prospectus as "Selling Stockholders" (the "Selling Stockholders"). The
Selling Stockholders have acquired or will acquire the Shares upon exercise of
options granted under the Company's 1992 Stock Option Plan, 1995 Incentive
Stock Option Plan, 1995 Non-Qualified Stock Option Plan, or 1997 Non-Qualified
Stock Option Plan (referred to herein, collectively, as the "Plans"). See
"SELLING STOCKHOLDERS."
 
  The Shares may be sold from time to time to purchasers directly by any of
the Selling Stockholders. Alternatively, the Selling Stockholders may sell the
Shares in one or more transactions (which may involve one or more block
transactions) on the National Association of Securities Dealers, Inc.
Automated Quotation System National Market ("Nasdaq"), in sales occurring in
the public market off Nasdaq, in separately negotiated transactions, or in a
combination of such transactions. Each sale may be made either at market
prices prevailing at the time of such sale or at negotiated prices. Some or
all of the Shares may be sold through brokers acting on behalf of the Selling
Stockholders or to dealers for resale by such dealers, and in connection with
such sales, such brokers or dealers may receive compensation in the form of
discounts or commissions from the Selling Stockholders and/or the purchasers
of such Shares for whom they may act as broker or agent (which discounts or
commissions are not anticipated to exceed those customary in the types of
transactions involved). However, any Shares covered by this Prospectus that
qualify for sale pursuant to Rule 144 under the Securities Act may be sold
under Rule 144 rather than pursuant to this Prospectus. See "PLAN OF
DISTRIBUTION."
 
  The Shares will be sold, or otherwise disposed of, for the account of the
Selling Stockholders, and the Company will not be entitled to any of the
proceeds from such sales or dispositions. See "USE OF PROCEEDS." All expenses
incurred in connection with the registration of the Shares are being borne by
the Company, but all brokerage commissions and other expenses incurred by
individual Selling Stockholders will be borne by each such Selling
Stockholder. See "PLAN OF DISTRIBUTION."
 
  The Selling Stockholders and any dealer participating in the distribution of
any Shares or any broker executing selling orders on behalf of the Selling
Stockholders may be deemed to be "underwriters" within the meaning of the
Securities Act, in which event any profit on the sale of any or all of the
Shares by them and any discounts or commissions received by any such brokers
or dealers may be deemed to be underwriting discounts and commissions under
the Securities Act. See "PLAN OF DISTRIBUTION."
 
  The Selling Stockholders who are executive officers and directors of the
Company have agreed to certain restrictions on the sale of their Shares for a
period of one year following the date of this Prospectus. Upon the Company
being notified by a Selling Stockholder that any material arrangement has been
entered into with a broker or dealer for the sale of Shares through a block
trade, special offering or secondary distribution, or a purchase by a broker
or dealer, a supplement to this Prospectus will be filed, if required,
pursuant to Rule 424(b) under the Securities Act, disclosing (a) the name of
each such Selling Stockholder and of the participating broker or dealer, (b)
the number of Shares involved, (c) the price at which such Shares were sold,
(d) the commissions paid or the discounts or concessions allowed to such
broker or dealer, where applicable, (e) that such broker or dealer did not
conduct any investigation to verify the information set out or incorporated by
reference in this Prospectus, and (f) other facts material to the transaction.
See "PLAN OF DISTRIBUTION."
 
  There is no assurance that any of the Selling Stockholders will sell any or
all of the Shares. The Common Stock of the Company is listed on Nasdaq under
the symbol "DHSM". On October 30, 1997, the closing price of the Common Stock
as reported by Nasdaq was $11.50 per share. Prospective investors are urged to
obtain a current price quotation.
 
  Prospective investors should carefully consider the factors set forth under
"RISK FACTORS" beginning on page 5 of this Prospectus.
 
 THESE  SECURITIES HAVE NOT  BEEN APPROVED OR  DISAPPROVED BY THE  SECURITIES
   AND EXCHANGE COMMISSION  OR ANY STATE SECURITIES COMMISSION  NOR HAS THE
     SECURITIES  AND   EXCHANGE  COMMISSION   OR  ANY   STATE  SECURITIES
       COMMISSION  PASSED  UPON  THE   ACCURACY  OR  ADEQUACY  OF  THIS
         PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A  CRIMINAL
          OFFENSE.
 
               The date of this Prospectus is October 31, 1997.
<PAGE>
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
     <S>                                                                    <C>
     AVAILABLE INFORMATION.................................................   2
     INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.......................   3
     THE COMPANY...........................................................   4
     RISK FACTORS..........................................................   5
     USE OF PROCEEDS.......................................................   8
     SELLING STOCKHOLDERS..................................................   8
     PLAN OF DISTRIBUTION..................................................  11
     LEGAL MATTERS.........................................................  12
     EXPERTS...............................................................  12
</TABLE>
 
  No person has been authorized to give any information or to make any
representation not contained in this Prospectus in connection with any
offering made hereby and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company or any other person. This Prospectus does not constitute an offer to
buy, nor shall there be any offer to sell, solicitation of an offer to buy or
sale of these securities by any person in any jurisdiction in which it is
unlawful for such person to make such an offer, solicitation or sale. Neither
the delivery of this Prospectus at any time nor any sale made hereunder shall
under any circumstances create any implication that there has been no change
in the affairs of the Company since the date hereof or that the information
contained herein is correct as of any time subsequent to such date.
 
                               ----------------
 
                             AVAILABLE INFORMATION
 
  The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The reports, proxy
statements and other information filed with the Commission, as well as the
Registration Statement (as defined below) of which this Prospectus is a part,
may be inspected and copied at the public reference facilities of the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the Commission's Regional Offices at Seven World Trade Center, 13th Floor,
New York, New York 10048 and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60601-2511. Copies of such material also
can be obtained by mail from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In
addition, certain material filed by the Company can be inspected at the NASD
Public Reference Room of the National Association of Securities Dealers
Automated Quotation System, Inc. at 1735 K Street, N.W., Washington, D.C.
20006-1506, through which the Company's Common Stock is quoted. Also, the
Company files such reports, proxy statements and other information with the
Commission pursuant to the Commission's EDGAR system. The Commission maintains
a web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission
pursuant to the EDGAR system. The address of the Commission's web site is
"http://www.sec.gov".
 
  This Prospectus constitutes a part of a Registration Statement on Form S-8
(the "Registration Statement") filed by the Company on October 31, 1997 with
the Commission under the Securities Act. As permitted by the rules and
regulations of the Commission, this Prospectus omits certain information
contained in the Registration Statement and incorporates by reference certain
additional information. Such additional information can be inspected at and
obtained from the Commission in the manner set forth above. Statements
contained in this Prospectus or in any document incorporated herein by
reference as to the terms of any contract or other document
 
                                       2
<PAGE>
 
referred to herein or therein are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement or such other document, each
such statement being qualified in all respects by such reference.
 
                               ----------------
 
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
  The following documents heretofore filed by the Company with the Commission
(File No. 0-21758) under the Exchange Act are incorporated herein by
reference:
 
    (a) The Company's Annual Report on Form 10-KSB for the year ended
  December 31, 1996;
 
    (b) All other reports filed by the Company pursuant to Section 13(a) or
  15(d) of the Exchange Act since December 31, 1996, consisting of (i) the
  Company's Quarterly Reports on Form 10-QSB for the fiscal quarters ended
  March 31, 1997 and June 30, 1997, (ii) the Company's Current Reports on
  Form 8-K dated April 4, 1997 and May 2, 1997, (iii) Amendment No. 1 on Form
  8-K/A-1 to the Company's Current Report on Form 8-K dated April 4, 1997,
  and (iv) Amendment No. 1 on Form 8-K/A-1 to the Company's Current Report on
  Form 8-K dated May 2, 1997; and
 
    (c) The description of the Company's Common Stock contained in the
  Company's Registration Statement on Form 8-A, dated May 11, 1993, filed
  under Section 12 of the Exchange Act, including any subsequent amendment or
  any report or other filing with the Commission updating such description.
 
  In addition, all documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of
a post-effective amendment to the Registration Statement which indicates that
all securities offered hereby have been sold or which deregisters all such
securities then remaining unsold, shall be deemed to be incorporated herein by
reference and to be a part hereof from the date of filing of such documents.
 
  Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus. All
information appearing in this Prospectus is qualified in its entirety by the
information and financial statements (including the notes thereto) appearing
in the documents incorporated herein by reference, except to the extent set
forth in the immediately preceding sentence.
 
  Upon written or oral request, any of the documents incorporated by reference
in Item 3 of Part II of the Registration Statement (which documents are
incorporated by reference in this Section 10(a) Prospectus), other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference herein), as well as other documents required to be delivered to
employees pursuant to Rule 428(b), will be provided without charge to each
person (including any beneficial owner) to whom this Prospectus is delivered
upon the written or oral request of such person. Requests should be made to:
 
                       Diagnostic Health Services, Inc.
                       2777 Stemmons Freeway, Suite 1525
                              Dallas, Texas 75207
                  Attention: Stockholder Relations Department
                           Telephone: (214) 634-0403
 
                                       3
<PAGE>
 
                                  THE COMPANY
 
  The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information appearing
elsewhere in this Prospectus or incorporated herein by reference. Investors
should also carefully consider the information set forth under the heading
"RISK FACTORS."
 
  The Company is a leading outsource provider of medical services to
hospitals, physicians' offices and other healthcare facilities primarily in
the Midwest and South Central United States. The Company provides radiology
and cardiology diagnostic services and equipment, as well as departmental
management services to healthcare facilities on an in-house and shared basis.
The Company also provides skilled and allied healthcare personnel on a
temporary basis to perform a variety of functions in hospitals, long-term care
facilities, physicians' offices, clinics and home healthcare settings. The
Company is committed to offering a broad range of services in a manner
responsive to the healthcare industry's increased focus on cost containment
without compromising the quality of patient care.
 
  The market for the Company's services consists of hospitals, physicians and
other healthcare providers. According to the American Hospital Association
there are more than 5,000 hospitals, and according to the American Medical
Association there are more than 18,300 physician group practices, in the
United States. In the Company's core nineteen-state Midwestern and South
Central United States market, the Company estimates that there are
approximately 3,100 hospitals, approximately 13% of which are currently
serviced by the Company. Additional potential customers include long-term care
facilities, sub-acute care facilities and the expanding managed care
marketplace.
 
  The Company currently provides shared diagnostic services, and staffs,
equips, operates and/or manages in-house radiology or cardiology departments,
for approximately 1,200 customers. The Company has achieved this market
presence through internal growth and strategic acquisitions. The Company's
strategy is to capitalize, within its business lines, on its demonstrated
ability to reduce the costs of providing radiology and cardiology services and
to consolidate providers of these services. The Company intends to implement
this strategy by continuing its aggressive acquisition and development program
with a strong geographic focus, cross-marketing its service lines across its
customer base to generate internal growth, pursuing the conversion of shared
service arrangements to in-house service agreements, and offering ancillary
services to complement its core radiology and cardiology services. The Company
also intends to pursue acquisitions of other service providers, as this highly
fragmented sector of the healthcare industry continues to consolidate.
 
  In addition to diagnostic services, the Company provides, on a temporary
basis, allied healthcare personnel, including radiology technicians, physical
and occupational therapists and home healthcare professionals in its primary
market area and in Mexico City. Demand for such temporary personnel arises
from hiring freezes, the need to replace vacationing or sick personnel, and
other short-term needs. These services are complementary to the Company's core
business and afford the Company the opportunity to expand the services
provided to existing customers and to establish new client relationships.
 
  Since 1991, the Company has significantly expanded the breadth of its
radiology and cardiology services. From 1991 to 1996, through internal growth
and the acquisition of twelve local service providers, the Company's gross
revenues increased from approximately $3.5 million to approximately $24.1
million, and income from operations increased from approximately $0.4 million
to $3.9 million. During the same period, the Company's customer base increased
from 323 to approximately 1,120. From December 31, 1996 to the date of this
Prospectus, the Company consummated three additional business acquisitions.
 
  The Company was incorporated in Texas in 1983 and was reincorporated in
Delaware in 1992. Its principal executive office is located at 2777 Stemmons
Freeway, Suite 1525, Dallas, Texas 75207, and its telephone number is (214)
634-0403.
 
                                       4
<PAGE>
 
                                 RISK FACTORS
 
  Prospective investors should consider carefully the following factors
associated with the ownership of Common Stock together with the other
information contained in this Prospectus or incorporated herein by reference.
 
RISKS INHERENT IN GROWTH STRATEGY
 
  A significant component of the Company's historical growth has come through
acquisitions of other healthcare service providers, and the Company intends to
continue to seek acquisition opportunities in the future. This growth strategy
is dependent on the continued availability of suitable acquisition candidates.
As of the date of this Prospectus, although the Company has signed a letter of
intent for one acquisition, the Company has no binding commitments or
agreements with respect to any acquisitions, and there can be no assurance
that the Company will be able to identify or come to agreement with any future
acquisition candidates. The Company may also find itself in competition for
acquisition candidates with competitors who have greater financial and other
resources than the Company and who may be willing to pay higher prices for
acquisition targets.
 
  In addition, even if the Company is successful in consummating future
acquisitions, there can be no assurance that any such acquisitions will be
beneficial to the Company. Any growth or success through acquisitions will be
dependent upon a number of factors, including the Company's ability to
evaluate properly the potential benefits of each prospective acquisition, the
Company's ability to consummate the acquisition on terms favorable to the
Company, and the Company's ability to promptly and profitably integrate the
acquired operations and retain key personnel and customer relations.
Acquisitions also place significant demands on the Company's financial and
management resources, which can divert management's attention from other
business concerns. Furthermore, the Company generally records significant
amounts of goodwill in connection with acquisitions, and if the Company were
to determine that the carrying value of goodwill was impaired, the Company
would be required to write down such carrying value, which would result in a
charge to earnings that could have a material adverse effect on the Company's
financial results.
 
UNCERTAINTIES SURROUNDING DILUTIVE IMPACT OF AND CAPITAL REQUIREMENTS RELATING
TO GROWTH STRATEGY
 
  In order to grow its business by means of acquisitions, the Company will
require significant capital resources, both for the payment of the cost of
acquiring businesses, and for the effective integration, operation and
expansion of the acquired businesses. In the past, the Company has utilized
its Common Stock as a means of making payment for acquired businesses.
Depending on the agreed-upon value of the acquired business and the value of
the Common Stock, the Company may be required to issue a large number of
additional shares of Common Stock, thereby diluting existing stockholders,
including investors in this offering. Alternatively, to avoid such dilution,
or if the acquisition candidate is unwilling to accept Common Stock as all or
part of the consideration for the transaction, the Company might be required
to utilize more of its cash resources (if available), or may be required to
seek additional capital. There can be no assurance that such additional
capital, if and when required, will be available on terms acceptable to the
Company, if at all. If the Company is unable to obtain required capital
resources, its growth could be limited, and its existing operations could be
impaired.
 
DECREASE IN POTENTIAL ACQUISITION CANDIDATES
 
  As the current consolidation trend in the healthcare services industry
continues, the Company can expect to encounter greater difficulty in
identifying suitable acquisition candidates, and in consummating acquisitions
of such businesses on terms favorable to the Company. Failure to identify and
consummate favorable acquisitions could have a material adverse effect on the
Company's business.
 
REDUCED CUSTOMER BASE DUE TO INDUSTRY CONSOLIDATION
 
  As consolidation among healthcare providers continues, the Company's
customer base may be reduced either because customers are consolidated or
acquired by other entities, or because outsourcing decisions shift to
individuals with whom the Company has not had a prior relationship. There can
be no assurance that the
 
                                       5
<PAGE>
 
Company will be able to maintain relationships with its customers following
such an acquisition or consolidation. Any significant reduction in the
Company's customer base would have a material adverse effect on the Company's
business.
 
RELIANCE ON KEY EMPLOYEES
 
  The Company is substantially dependent on the personal efforts and abilities
of Max W. Batzer (Chairman of the Board and Chief Executive Officer) and Brad
A. Hummel (President and Chief Operating Officer). Each is a stockholder of
the Company and has an employment agreement with the Company. Mr. Batzer is
not required to devote his full time to the affairs of the Company, but is
prohibited from engaging in any other business activities which are
competitive with the business of the Company, or which materially interfere
with the performance of his duties and responsibilities to the Company. The
loss or unavailability of either of these officers or certain other key
employees for any significant period of time could have a material adverse
effect on the Company's business prospects or earning capacity. In addition to
$1.0 million per individual of key man life insurance payable to the Company's
commercial lender pursuant to a loan agreement, the Company maintains and is
sole beneficiary of key man life insurance policies on the lives of Messrs.
Batzer and Hummel in the amount of $500,000 per individual.
 
POTENTIAL FOR PROFESSIONAL LIABILITY CLAIMS
 
  The nature of the Company's business and services entails the risk of
professional liability claims, which could arise, for example, out of faulty
testing procedures or mishandling of test results. This concern is heightened
as the Company is called upon to perform services that might be deemed to be
"invasive" in nature (entering or placing objects inside a patient's body).
The Company maintains professional liability insurance coverage with limits of
$5.0 million per occurrence and $5.0 million in the aggregate in respect of
such contingencies. However, there can be no assurance that claims will not be
asserted in the future, or that any damages assessed against the Company will
not exceed the limits of available insurance coverage. In addition, the
potential negative publicity that could arise from a professional liability
claim could have a material adverse effect on the Company, even if the Company
were ultimately to prevail in the defense of the claim.
 
POSSIBLE SHORTAGE OF QUALIFIED PERSONNEL
 
  From time to time, the Company has experienced difficulties in obtaining
and/or retaining qualified healthcare professionals, and shortages of such
personnel may be expected from time to time in the future. The Company will be
competing for qualified personnel with numerous other healthcare providers,
many of whom have substantially greater financial and other resources than the
Company.
 
COMPETITION
 
  Radiology and cardiology diagnostic services, as well as the provision of
allied healthcare professionals, are characterized by a high degree of
competition. This competition comes from a number of independent local
operators specializing in one or two clinical applications, and from a few
large diversified healthcare companies (primarily larger hospitals having the
resources and capability to provide shared diagnostic services to other
healthcare facilities) which provide these services as part of their overall
business. Although the Company believes that it has a competitive advantage
over most of the small operators (primarily because most of them do not
provide the full range of services offered by the Company, and do not have the
same volume of revenues to absorb necessary fixed overhead costs), the Company
may be vulnerable to competition from the larger healthcare companies, at
least one of which can be found in each of the Company's geographic markets,
and all of which are substantially larger and possess greater financial
resources than the Company. There can be no assurance that the Company will be
able to compete successfully in its markets.
 
                                       6
<PAGE>
 
GOVERNMENT REGULATION; POTENTIAL NATIONAL HEALTHCARE REFORM
 
  Many aspects of the medical industry in the United States are presently
subject to extensive federal and state governmental regulation, including
reimbursement rates and policies imposed by Medicare and other third-party
reimbursement programs (from which the Company receives a material portion of
its revenues). Laws and regulations affecting the Company's business include
federal and state "kickback laws," conflict of interest laws (such as the
federal "Stark" legislation), and licensing requirements relating to the
operation of independent physiological laboratories and the handling of
nuclear materials. In addition, both the Clinton Administration and the
Congress have periodically asserted a need to overhaul or reform the nation's
healthcare system. Such legislative initiatives, if enacted, could impose
pressures on the pricing structures applicable to the Company's services. In
particular, there is a possibility that a significant portion of healthcare
services will be rendered and administered through managed care systems, which
could have the effect of forcing price concessions and reductions on the part
of service providers such as the Company. Moreover, healthcare reform could
also entail a greater analysis of each patient's need for diagnostic testing,
with the aim of reducing the total volume of testing and the overall cost of
medical care. Depending on the nature and extent of any new laws and/or
regulations, or possible changes in the interpretation of existing laws and/or
regulations, any such changes may have a material adverse effect on the
Company's revenues, operating margins and profitability.
 
LIMITATIONS BROUGHT ON BY REIMBURSEMENT PROGRAMS
 
  In 1995 and 1996, the Company derived approximately 4.9% and 9.3%,
respectively, of its total revenues from Medicare and Medicaid, and
approximately 2.2% and 5.6%, respectively, from other third-party indemnity
payors. In January 1992, the federal government implemented, through the
Medicare program, a resource-based relative value scale ("RBRVS") payment
methodology. Implementation of RBRVS reduced reimbursement rates for certain
of the Company's diagnostic procedures. Policymakers have from time to time
advocated that a RBRVS type of reimbursement system be imposed on private-
sector third-party payors. Implementation of such a program would reduce
reimbursements by private third-party payors, and would adversely affect the
Company's operating margins to the extent that costs on these procedures could
not be concomitantly reduced. There can be no assurance that some or any of
these reduced operating margins could be recouped through cost reductions or
otherwise.
 
TECHNOLOGICAL CHANGE AND OBSOLESCENCE
 
  Diagnostic imaging technology is constantly undergoing development and
change. New technologies may be developed, or existing technologies refined,
which could render the Company's existing equipment technologically or
economically obsolete. Due to cost factors, competitive considerations or
other constraints, there can be no assurance that the Company will be able to
acquire or have access to any new or improved equipment that the Company may
need in order to serve its clients and customers.
 
POTENTIAL VOLATILITY OF STOCK PRICE
 
  The market price of the Common Stock has been and may continue to be highly
volatile, and could in the future be subject to wide fluctuations in response
to the timing and size of acquisitions, quarter to quarter variations in
operating results, changes in earnings estimates by analysts, market
conditions in the industry, prospects of healthcare reform, changes in
government regulation, and general economic conditions. In addition, the stock
market has from time to time experienced significant price and volume
fluctuations that have been unrelated to the operating performance of
particular companies. Investors in the Common Stock must be willing to bear
the risk of such fluctuations in earnings and stock price.
 
ANTI-TAKEOVER CONSIDERATIONS
 
  Certain provisions of the Company's Certificate of Incorporation, By-Laws,
Delaware law and certain executive employment agreements could, together or
separately, discourage potential acquisition proposals, delay or prevent a
change in control of the Company, and limit the price that certain investors
might be willing to pay in the future for the Company's Common Stock. These
provisions include a classified board of directors and the
 
                                       7
<PAGE>
 
issuance, without further stockholder approval, of preferred stock with rights
and preferences which could be senior to the Common Stock. The Company is also
subject to Section 203 of the Delaware General Corporation Law, which may also
inhibit a change in control of the Company. In addition, the provisions of
certain executive employment agreements and stock option agreements may result
in economic benefits to the holders thereof upon the occurrence of a change in
control.
 
NO ANTICIPATED DIVIDENDS
 
  The Company has not previously paid any dividends on its Common Stock and
for the foreseeable future intends to continue its policy of retaining any
earnings to finance the development and expansion of its business. In
addition, the loan agreement between the Company and its commercial lender
prohibits the payment of dividends.
 
FORWARD-LOOKING STATEMENTS
 
  This Prospectus and the documents incorporated herein by reference contain
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. Such forward-looking statements may
be deemed to include, among other things, statements related to anticipated
improvements in financial performance and management's long-term performance
goals, as well as statements relating to the Company's business and growth
strategies, including anticipated internal growth and plans to pursue
additional acquisitions of other healthcare service providers. Actual results
could differ materially from those addressed in the forward-looking statements
as a result of the factors discussed in this "RISK FACTORS" section and
elsewhere herein and in the documents incorporated herein by reference.
 
                                USE OF PROCEEDS
 
  The Company will not receive any proceeds from the sale or other disposition
of the Shares by the Selling Stockholders hereunder.
 
                             SELLING STOCKHOLDERS
 
  This Prospectus may be used by certain officers, directors and controlling
stockholders of the Company for the resale to the public of Shares to be
issued to them upon exercise of options heretofore or hereafter granted under
the Plans. Such persons may be deemed to be in a control relationship with the
Company within the meaning of the Securities Act and the rules and regulations
of the Commission thereunder, and such Shares may be deemed to be "control
securities" within the meaning of General Instruction C to Form S-8. This
Prospectus may also be used for the resale to the public of certain Shares
heretofore issued upon exercise of options granted under the Plans. Such
Shares may be deemed to be "restricted securities" within the meaning of
General Instruction C to Form S-8. The securities referred to in this
paragraph may also be resold pursuant to Rule 144 under the Securities Act or
in other transactions exempt from registration.
 
                                       8
<PAGE>
 
  The persons who may resell Shares pursuant to this Prospectus are referred
to in this Prospectus collectively as "Selling Stockholders." The following
table sets forth as to each Selling Stockholder: the name of the Selling
Stockholder; the nature of any position, office or other material relationship
with the Company or its affiliates within the past three (3) years; the number
of shares of Common Stock of the Company and the percentage of the outstanding
shares of such class owned as of October 30, 1997; the number of such shares
which may be sold hereby for the account of the Selling Stockholder; and the
number of such shares and percentage of the outstanding shares of such class
that will be owned by the Selling Stockholder, assuming the sale of all the
Shares offered hereby.
 
<TABLE>
<CAPTION>
                               SHARES OF                        SHARES OF
                              COMMON STOCK                     COMMON STOCK
                             OWNED PRIOR TO                    OWNED AFTER
                              THE SALE(1)      NUMBER OF         THE SALE
                           ------------------    SHARES     ---------------------
NAME AND                                      WHICH MAY BE
POSITION/RELATIONSHIP      NUMBER  PERCENT(2) SOLD HEREBY   NUMBER     PERCENT(2)
---------------------      ------- ---------- ------------  -------    ----------
<S>                        <C>     <C>        <C>           <C>        <C>
Max W. Batzer............  581,395    5.8%      420,227(3)  161,168       1.6%
 Chairman of the Board
 and Chief Executive
 Officer
Brad A. Hummel...........  288,238    2.9%      288,227(4)       11         *
 President and
 Chief Operating Officer
Thomas M. Sestak.........  313,066    3.1%      186,645     126,421       1.3%
 Director
Bo W. Lycke..............   83,000      *        82,000       1,000         *
 Director
James R. Angelica........  445,052    4.5%       38,000(5)  407,052       4.1%
 Senior Vice President
 and
 Director
Carol J. Gannon..........  215,500    2.2%       15,000     200,500       2.0%
 Senior Vice President
Christopher L. Turner....  153,000    1.5%      153,000         -0-         *
 Chief Financial Officer
Bonnie G. Lankford.......  117,911    1.2%      117,911(6)      -0-         *
 Senior Vice President
Don W. Caughron..........   36,000      *        36,000         -0-         *
 Senior Vice President
Mark J. Foley............   10,000      *        10,000         -0-         *
 Vice President-Marketing
 and Sales
Gregory P. Blome.........    3,250      *         2,750(7)      500(8)      *
 Employee
Janice E. Bowser.........      200      *           200(7)      -0-         *
 Employee
Miriam Lopez Candelario..    1,750      *           500(7)    1,250(8)      *
 Employee
Michael Cooksey..........      500      *           500(7)      -0-         *
 Employee
</TABLE>
 
 
                                       9
<PAGE>
 
<TABLE>
<CAPTION>
                              SHARES OF                         SHARES OF
                             COMMON STOCK                      COMMON STOCK
                            OWNED PRIOR TO                     OWNED AFTER
                             THE SALE(1)        NUMBER OF        THE SALE
                         --------------------    SHARES     -----------------------
NAME AND                                      WHICH MAY BE
POSITION/RELATIONSHIP     NUMBER   PERCENT(2)  SOLD HEREBY  NUMBER       PERCENT(2)
---------------------    --------- ---------- ------------- -------      ----------
<S>                      <C>       <C>        <C>           <C>          <C>
Larry B. Dees...........     3,400       *        1,000 (7)   2,400 (8)       *
 Employee
Linda Drum..............       500       *          500 (7)     -0-           *
 Employee
Alan B. Jones...........     1,900       *          200 (7)   1,700 (8)       *
 Employee
James S. Krieg..........     2,500       *          300 (7)   2,200 (8)       *
 Employee
Jeffery S. Lee..........     5,500       *        1,750 (7)   3,750 (9)       *
 Employee
Jeff Manor..............     1,000       *        1,000 (7)     -0-           *
 Employee
David Mayfield..........     2,950       *        1,000 (7)   1,950 (8)       *
 Employee
Susan E. McBride........       500       *          100 (7)     400 (8)       *
 Employee
Julie McCullough........       500       *          500 (7)     -0-           *
 Employee
Tina M. Naumann.........    11,250       *          500 (7)  10,750 (10)      *
 Employee
Craig H. Sidwell........     1,500       *        1,000 (7)     500 (8)       *
 Employee
Michele R. Walton.......     3,250       *          500 (7)   2,750 (11)      *
 Employee
Andrew P. Wynne.........     3,400       *          750 (7)   2,650 (8)       *
 Employee
  Total................. 2,285,012    22.9%   1,360,060     924,952         9.3%
</TABLE>
--------
   * Represents less than 1% of outstanding Common Stock.
 (1) Shares of Common Stock issued or issuable to the Selling Stockholders
   upon exercise of options granted under the Plans or other employee benefit
   plans of the Company or currently outstanding warrants, whether or not
   exercisable, are included. Those individuals named as executive officers
   and/or directors have agreed to certain limitations on the amount of shares
   under the Plans which such individuals may sell from time to time. See
   "Plan of Distribution."
 (2) Percentages based on 9,987,757 shares of Common Stock outstanding as of
   October 30, 1997.
 (3) Includes 13,582 shares of Common Stock issued to Mr. Batzer in August
   1997 upon exercise of options granted under one or more of the Plans.
 (4) Includes 8,582 shares of Common Stock issued to Mr. Hummel in October
   1997 upon exercise of options granted under one or more of the Plans.
 (5) Represents 38,000 shares of Common Stock issued to Mr. Angelica in
   September 1997 upon exercise of options granted under one or more of the
   Plans.
 
                                      10
<PAGE>
 
 (6) Includes 32,911 shares of Common Stock issued to Ms. Lankford in
   September 1997 upon exercise of options granted under one or more of the
   Plans.
 (7) Represents shares of Common Stock heretofore issued by the Company upon
   exercise of options granted under one or more of the Plans.
 (8) Represents shares of Common Stock underlying currently outstanding
   options heretofore granted under one or more of the Plans, which shares are
   being registered pursuant to the Registration Statement of which this
   Prospectus is a part.
 (9) Includes (a) 1,750 shares of Common Stock underlying currently
   outstanding options heretofore granted under one or more of the Plans,
   which shares are being registered pursuant to the Registration Statement of
   which this Prospectus is a part, and (b) 2,000 shares of Common Stock held
   directly by Mr. Lee.
(10) Includes (a) 1,350 shares of Common Stock underlying currently
   outstanding options heretofore granted under one or more of the Plans,
   which shares are being registered pursuant to the Registration Statement of
   which this Prospectus is a part, and (b) 9,400 shares of Common Stock held
   directly by Ms. Naumann.
(11) Includes (a) 1,750 shares of Common Stock underlying currently
   outstanding options heretofore granted under one or more of the Plans,
   which shares are being registered pursuant to the Registration Statement of
   which this Prospectus is a part, and (b) 1,000 shares of Common Stock held
   directly by Ms. Walton.
 
  The Company does not know whether any of the Selling Stockholders will use
this Prospectus in connection with the offer or sale of any Shares, or, if
this Prospectus is so used, how many Shares will be offered or sold. The
information set forth in this section may be updated by the Company by use of
supplements to this Prospectus issued subsequent to the date hereof.
 
                             PLAN OF DISTRIBUTION
 
  The Shares may be sold from time to time to purchasers directly by any of
the Selling Stockholders. Alternatively, the Selling Stockholders may sell the
Shares in one or more transactions (which may involve one or more block
transactions) on Nasdaq, in sales occurring in the public market off Nasdaq,
in separately negotiated transactions, or in a combination of such
transactions. Each sale may be made either at market prices prevailing at the
time of such sale or at negotiated prices. Some or all of the Shares may be
sold through brokers acting on behalf of the Selling Stockholders or to
dealers for resale by such dealers, and in connection with such sales, such
brokers or dealers may receive compensation in the form of discounts or
commissions from the Selling Stockholders and/or the purchasers of such Shares
for whom they may act as broker or agent (which discounts or commissions are
not anticipated to exceed those customary in the types of transactions
involved). However, any Shares covered by this Prospectus that qualify for
sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144
rather than pursuant to this Prospectus.
 
  The Selling Stockholders and any dealer participating in the distribution of
any Shares or any broker executing selling orders on behalf of the Selling
Stockholders may be deemed to be "underwriters" within the meaning of the
Securities Act, in which event any profit on the sale of any or all of the
Shares by them and any discounts or commissions received by any such brokers
or dealers may be deemed to be underwriting discounts and commissions under
the Securities Act.
 
  Any broker or dealer participating in any distribution of Shares in
connection with this offering may be deemed to be an "underwriter" within the
meaning of the Securities Act, and if so deemed will be required to deliver a
copy of this Prospectus, including a Prospectus Supplement, if required, to
any person who purchases any of the Shares from or through such broker or
dealer.
 
  The Company will inform the Selling Stockholders that the anti-manipulation
rules under the Exchange Act may apply to sales in the market and will furnish
the Selling Stockholders upon request with a copy of such rules. The Company
will also inform the Selling Stockholders of the need for delivery of copies
of this Prospectus.
 
                                      11
<PAGE>
 
  The Selling Stockholders who are executive officers and/or directors of the
Company have agreed to restrict the sale of their Shares for a period of one
year following the date of this Prospectus as follows: none of the Shares held
by such individuals from time to time may be sold except within 20 business
days after the Company's filing of its then-current quarterly or annual report
with the Commission; and within such time periods, each such Selling
Stockholder may sell up to 10% of his or her Shares following the filing of
the Company's quarterly report for the third quarter of 1997, up to an
additional 15% of his or her Shares following the filing of the Company's
annual report for the year ending December 31, 1997, up to an additional 15%
of his or her Shares following the filing of the Company's quarterly report
for the first quarter of 1998, up to an additional 20% of his or her Shares
following the filing of the Company's filing of its quarterly report for the
second quarter of 1998, and all remaining Shares commencing one year after the
date of this Prospectus.
 
  Upon the Company being notified by a Selling Stockholder that any material
arrangement has been entered into with a broker or dealer for the sale of
Shares through a block trade, special offering or secondary distribution, or a
purchase by a broker or dealer, a supplement to this Prospectus will be filed,
if required, pursuant to Rule 424(b) under the Securities Act, disclosing (a)
the name of each such Selling Stockholder and of the participating broker or
dealer, (b) the number of Shares involved, (c) the price at which such Shares
were sold, (d) the commissions paid or the discounts or concessions allowed to
such broker or dealer, where applicable, (e) that such broker or dealer did
not conduct any investigation to verify the information set out or
incorporated by reference in this Prospectus, and (f) other facts material to
the transaction.
 
  In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold only through registered or licensed
brokers or dealers. In addition, in certain states, the Shares may not be sold
unless they have been registered or qualified for sale in such state or an
exemption from such registration or qualification requirement is available and
is complied with.
 
  There is no assurance that any of the Selling Stockholders will sell any or
all of the Shares offered hereby.
 
  All expenses incurred in connection with the registration of the Shares are
being borne by the Company, but all brokerage commissions and other expenses
incurred by individual Selling Stockholders will be borne by each such Selling
Stockholder.
 
                                 LEGAL MATTERS
 
  The validity of the Common Stock offered hereby will be passed upon for the
Company by Greenberg Traurig Hoffman Lipoff Rosen & Quentel, New York, New
York ("Greenberg Traurig"). Shahe Sinanian, a shareholder of Greenberg
Traurig, serves as the Secretary of the Company.
 
                                    EXPERTS
 
  The consolidated financial statements of the Company appearing in its Annual
Report (Form 10-KSB) for the year ended December 31, 1996 have been audited by
Simonton, Kutac & Barnidge, L.L.P., Independent Certified Public Accountants,
as set forth in their report thereon included therein and incorporated herein
by reference. Such consolidated financial statements are incorporated herein
by reference in reliance upon such report given upon the authority of such
firm as experts in auditing and accounting. Audited consolidated financial
statements to be included in subsequently filed documents will be incorporated
herein by reference in reliance upon the reports pertaining to such
consolidated financial statements of such independent accountants as are the
Company's auditors from time to time (to the extent covered by consents filed
with the Commission) and upon the authority of such accountants as experts in
auditing and accounting.
 
                                      12
<PAGE>
 
                                    PART II
 
              INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
 
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
 
  Diagnostic Health Services, Inc. (the "Company") hereby incorporates by
reference into this Registration Statement the following documents heretofore
filed by the Company with the Securities and Exchange Commission (the
"Commission") (File No. 0-21758) pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"):
 
    (a) The Company's Annual Report on Form 10-KSB for the year ended
  December 31, 1996;
 
    (b) All other reports filed by the Company pursuant to Section 13(a) or
  15(d) of the Exchange Act since December 31, 1996, consisting of (i) the
  Company's Quarterly Reports on Form 10-QSB for the fiscal quarters ended
  March 31, 1997 and June 30, 1997, (ii) the Company's Current Reports on
  Form 8-K dated April 4, 1997 and May 2, 1997, (iii) Amendment No. 1 on Form
  8-K/A-1 to the Company's Current Report on Form 8-K dated April 4, 1997,
  and (iv) Amendment No. 1 on Form 8-K/A-1 to the Company's Current Report on
  Form 8-K dated May 2, 1997; and
 
    (c) The description of the Company's common stock, par value $.001 per
  share (the "Common Stock"), contained in the Company's Registration
  Statement on Form 8-A, dated May 11, 1993, filed under Section 12 of the
  Exchange Act, including any subsequent amendment or any report or other
  filing with the Commission updating such description.
 
  In addition, all documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of
a post-effective amendment to this Registration Statement which indicates that
all securities offered hereby have been sold or which deregisters all such
securities then remaining unsold, shall be deemed to be incorporated herein by
reference and to be a part hereof from the date of filing of such documents.
 
  Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
 
ITEM 4. DESCRIPTION OF SECURITIES.
 
  Not applicable.
 
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
 
  The validity of the Common Stock to which this Registration Statement
relates will be passed upon for the Company by Greenberg Traurig Hoffman
Lipoff Rosen & Quentel, New York, New York ("Greenberg Traurig"). Shahe
Sinanian, a shareholder of Greenberg Traurig, serves as the Secretary of the
Company.
 
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
  Section 145(a) of the General Corporation Law of the State of Delaware (the
"General Corporation Law") provides that a Delaware corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation or enterprise, against expenses, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no cause to believe his or her conduct was unlawful.
 
 
                                     II-1
<PAGE>
 
  Section 145(b) of the General Corporation Law provides that a Delaware
corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or
in the right of the corporation to procure a judgment in its favor by reason
of the fact that such person acted in any of the capacities set forth above,
against expenses actually and reasonably incurred by him or her in connection
with the defense or settlement of such action or suit if he or she acted under
similar standards as set forth above, except that no indemnification may be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the
extent that the court in which such action or suit was brought shall determine
that despite the adjudication of liability, but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to be
indemnified for such expenses which the court shall deem proper.
 
  Section 145 of the General Corporation Law further provides that to the
extent a director or officer of a corporation has been successful on the
merits or otherwise in the defense of any action, suit or proceeding referred
to in subsections (a) and (b) or in the defense of any claim, issue or matter
therein, he or she shall be indemnified against expenses actually and
reasonably incurred by him or her in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of
any other rights to which the indemnified party may be entitled; and that the
corporation may purchase and maintain insurance on behalf of such person
against any liability asserted against him or her or incurred by him or her in
any such capacity or arising out of his or her status as such, whether or not
the corporation would have the power to indemnify him or her against such
liabilities under such Section 145.
 
  Section 102(b)(7) of the General Corporation Law provides that a corporation
in its original certificate of incorporation or an amendment thereto validly
approved by stockholders may eliminate or limit personal liability of members
of its board of directors or governing body for monetary damages for breach of
a director's fiduciary duty. However, no such provision may eliminate or limit
the liability of a director for breaching his or her duty of loyalty, failing
to act in good faith, engaging in intentional misconduct or knowingly
violating a law, paying a dividend or approving a stock repurchase or
redemption which was illegal, or obtaining an improper personal benefit. A
provision of this type has no effect on the availability of equitable
remedies, such as injunction or rescission, for breach of fiduciary duty. The
Company's Certificate of Incorporation contains such a provision.
 
  Article Ninth of the Company's Certificate of Incorporation eliminates the
personal liability of directors and/or officers to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director;
provided that such elimination of the personal liability of a director and/or
officer of the Company does not apply to (i) any breach of such person's duty
of loyalty to the Company or its stockholders, (ii) acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) actions prohibited under Section 174 of the General Corporation Law
(i.e., liabilities imposed upon directors who vote for or assent to the
unlawful payment of dividends, unlawful repurchases or redemption of stock,
unlawful distribution of assets of the Company to the stockholders without the
prior payment or discharge of the Company's debts or obligations, or unlawful
making or guaranteeing of loans to directors and/or officers), or (iv) any
transaction from which the director derived an improper personal benefit. In
addition, Article Tenth of the Company's Certificate of Incorporation and
Article IV of the Company's By-Laws provide that the Company shall indemnify
its corporate personnel, directors and officers to the fullest extent
permitted by the General Corporation Law, as amended from time to time.
 
  The Company has in force an insurance policy under which its directors and
officers are insured, with limits of $5,000,000 per occurrence and $5,000,000
in the aggregate, against certain expenses in connection with the defense of
such actions, suits or proceedings to which they are parties by reason of
being or having been directors or officers of the Company.
 
  The Company and its officers, directors and other persons are entitled to be
indemnified under certain circumstances for certain securities law violations
in accordance with the provisions of an underwriting agreement dated June 6,
1996 (the "Underwriting Agreement"), by and among the Company, certain selling
shareholders named in Schedule II to the Underwriting Agreement, and Rodman &
Renshaw, Inc., as representative of the several underwriters named in Schedule
I to the Underwriting Agreement.
 
                                     II-2
<PAGE>
 
  Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company as
disclosed above, the Company has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
 
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
 
  The restricted securities to be reoffered and resold pursuant to this
Registration Statement were issued in transactions exempt from registration
pursuant to Section 4(2) of the Securities Act. Each such transaction involved
the issuance of shares of Common Stock pursuant to the exercise of options
granted under the Plans to persons who were officers, employees or directors
of the Company and who had access to material information with respect to the
Company.
 
ITEM 8. EXHIBITS.
 
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                                DESCRIPTION
 -------                               -----------
 <C>     <S>
  4.1    Specimen Form of Common Stock Certificate.
  4.2    1992 Stock Option Plan.
  4.3    1995 Incentive Stock Option Plan.
  4.4    1995 Non-Qualified Stock Option Plan.
  4.5    1997 Non-Qualified Stock Option Plan.
  5.1    Opinion of Greenberg Traurig Hoffman Lipoff Rosen & Quentel.
 23.1    Consent of Simonton, Kutac & Barnidge, LLP.
         Consent of Greenberg Traurig Hoffman Lipoff Rosen & Quentel (contained
 23.2    in Exhibit 5.1).
 25.1    Power of Attorney (included as part of the signature page to this
         Registration Statement and incorporated herein by reference).
</TABLE>
 
ITEM 9. UNDERTAKINGS.
 
  (a) The Company hereby undertakes:
 
    (1) To file, during any period in which offers or sales are being made, a
  post-effective amendment to this Registration Statement:
 
      (i) To include any prospectus required by Section 10(a)(3) of the
    Securities Act;
 
      (ii) To reflect in the prospectus any facts or events arising after
    the effective date of this Registration Statement (or the most recent
    post-effective amendment thereof) which, individually or in the
    aggregate, represent a fundamental change in the information set forth
    in this Registration Statement. Notwithstanding the foregoing, any
    increase or decrease in volume of securities offered (if the total
    dollar value of securities offered would not exceed that which was
    registered) and any deviation from the low or high and of the estimated
    maximum offering range may be reflected in the form of prospectus filed
    with the Commission Pursuant to Rule 424(b) if, in the aggregate, the
    changes in volume and price represent no more than 20 percent change in
    the maximum aggregate offering price set forth in the "Calculation of
    Registration Fee" table in the effective Registration Statement; and
 
      (iii) To include any material information with respect to the plan of
    distribution not previously disclosed in this Registration Statement or
    any material change to such information in this Registration Statement;
 
  provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) shall not apply
  if the information required to be included in a post-effective amendment by
  those paragraphs is contained in periodic reports filed by the Company
  pursuant to Section 13 or Section 15(d) of the Exchange Act that are
  incorporated by reference in this Registration Statement.
 
                                     II-3
<PAGE>
 
    (2) That, for the purpose of determining any liability under the
  Securities Act, each such post-effective amendment shall be deemed to be a
  new registration statement relating to the securities offered therein, and
  the offering of such securities at that time shall be deemed to be the
  initial bona fide offering thereof.
 
    (3) To remove from registration by means of a post-effective amendment
  any of the securities being registered which remain unsold at the
  termination of the offering.
 
  (b) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of the annual report of the employee benefit plans
pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
 
  (c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
 
                                     II-4
<PAGE>
 
                                  SIGNATURES
 
  Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Dallas, State of Texas, on October
31, 1997.
 
                                          Diagnostic Health Services, Inc.
 
                                             
                                          By: /s/ Max W. Batzer
                                             __________________________________
                                             Max W. Batzer
                                             Chairman of the Board
                                             and Chief Executive Officer
 
                               ----------------
 
                               POWER OF ATTORNEY
 
  KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Max W. Batzer and Brad A. Hummel, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-
effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, and any other regulatory authority,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them, or their
substitutes, may lawfully do or cause to be done by virtue hereof.
 
                               ----------------
 
  Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
 
              SIGNATURE                      CAPACITY               DATE
 
          /s/ Max W. Batzer            Chairman of the        October 31, 1997
_____________________________________  Board and Chief
            MAX W. BATZER              Executive Officer
                                       (principal executive officer)
 
      /s/ Christopher L. Turner        Chief Financial        October 31, 1997
_____________________________________  Officer
        CHRISTOPHER L. TURNER          (principal financial
                                       and accounting
                                       officer)
 
         /s/ Brad A. Hummel            President, Chief       October 31, 1997
_____________________________________  Operating Officer
           BRAD A. HUMMEL              and Director
 
        /s/ Thomas M. Sestak           Director               October 31, 1997
_____________________________________
          THOMAS M. SESTAK
 
           /s/ Bo W. Lycke             Director               October 31, 1997
_____________________________________
             BO W. LYCKE
 
                                     II-5
<PAGE>
 
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
 EHIBITX
  UMBERN                                           DESCRIPTION
-------                                            -----------
  <S>      <C>
    4.1    Specimen Form of Common Stock Certificate.
    4.2    1992 Stock Option Plan.
    4.3    1995 Incentive Stock Option Plan.
    4.4    1995 Non-Qualified Stock Option Plan.
    4.5    1997 Non-Qualified Stock Option Plan.
    5.1    Opinion of Greenberg Traurig Hoffman Lipoff Rosen & Quentel.
   23.1    Consent of Simonton, Kutac & Barnidge, LLP.
   23.2    Consent of Greenberg Traurig Hoffman Lipoff Rosen & Quentel (contained in Exhibit 5.1).
   25.1    Power of Attorney (included as part of the signature page to this Registration Statement and
            incorporated herein by reference).
</TABLE>
--------
All exhibits are filed herewith electronically.
[{"type": "S-8", "sequence": "1", "description": "FORM S-8", "secsgml_size_bytes": 79311}]
{"company-data": {"conformed-name": "DIAGNOSTIC HEALTH SERVICES INC /DE/", "cik": "0000895659", "assigned-sic": "8071", "irs-number": "22960048", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-39197", "film-number": "97705647"}, "business-address": {"street1": "2777 STEMMONS FREEWAY", "street2": "STE 1525", "city": "DALLAS", "state": "TX", "zip": "75207", "phone": "2146340403"}, "mail-address": {"street1": "2777 STEMMONS FREEWAY", "street2": "SUITE 1525", "city": "DALLAS", "state": "TX", "zip": "75207"}}
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 31, 1997
                                                       REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                                ---------------
 
                                    FORM S-8
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
 
                                ---------------
 
                        DIAGNOSTIC HEALTH SERVICES, INC.
               (EXACT NAME OF ISSUER AS SPECIFIED IN ITS CHARTER)
 
                DELAWARE                               22-2960048
    (STATE OR OTHER JURISDICTION OF       (I.R.S. EMPLOYER IDENTIFICATION NO.)
     INCORPORATION OR ORGANIZATION)
 
      2777 STEMMONS FREEWAY, SUITE
           1525DALLAS, TEXAS                             75207
    (ADDRESS OF PRINCIPAL EXECUTIVE                    (ZIP CODE)
                OFFICES)
 
                             1992 STOCK OPTION PLAN
                        1995 INCENTIVE STOCK OPTION PLAN
                      1995 NON-QUALIFIED STOCK OPTION PLAN
                      1997 NON-QUALIFIED STOCK OPTION PLAN
                            (FULL TITLE OF THE PLAN)
 
                                 MAX W. BATZER
               CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
                        DIAGNOSTIC HEALTH SERVICES, INC.
                       2777 STEMMONS FREEWAY, SUITE 1525
                              DALLAS, TEXAS 75207
                    (NAME AND ADDRESS OF AGENT FOR SERVICE)
 
                                 (214) 634-0403
         (TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
 
                          COPIES OF COMMUNICATIONS TO:
                              SHAHE SINANIAN, ESQ.
                           GREENBERG TRAURIG HOFFMAN
                             LIPOFF ROSEN & QUENTEL
                              153 EAST 53RD STREET
                            NEW YORK, NEW YORK 10022
                              TEL: (212) 801-9200
                              FAX: (212) 223-7161
 
                        CALCULATION OF REGISTRATION FEE
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PROPOSED          PROPOSED
       TITLE OF               AMOUNT            MAXIMUM           MAXIMUM          AMOUNT OF
   SECURITIES TO BE            TO BE        OFFERING PRICE       AGGREGATE       REGISTRATION
      REGISTERED           REGISTERED(1)       PER SHARE      OFFERING PRICE          FEE
---------------------------------------------------------------------------------------------
Common Stock, par value       770,310
 $.001 per share             shares(2)         $1.94(3)      $1,494,401.40(4)       $452.85
---------------------------------------------------------------------------------------------
Common Stock, par value
 $.001 per share         31,424 shares(5)      $11.75(6)      $369,232.00(7)        $111.89
---------------------------------------------------------------------------------------------
Common Stock, par value       137,550
 $.001 per share             shares(8)         $7.25(3)       $997,237.50(4)        $302.19
---------------------------------------------------------------------------------------------
Common Stock, par value       360,700
 $.001 per share             shares(9)         $11.75(6)     $4,238,225.00(7)      $1,284.31
---------------------------------------------------------------------------------------------
Common Stock, par value       420,800
 $.001 per share            shares(10)         $4.42(3)      $1,859,936.00(4)       $563.62
---------------------------------------------------------------------------------------------
Common Stock, par value       50,800
 $.001 per share            shares(11)         $11.75(6)      $596,900.00(7)        $180.88
---------------------------------------------------------------------------------------------
Common Stock, par value       461,000
 $.001 per share            shares(12)         $7.68(3)      $3,540,480.00(4)      $1,072.87
---------------------------------------------------------------------------------------------
Common Stock, par value       528,800
 $.001 per share            shares(13)         $11.75(6)     $6,213,400.00(7)      $1,882.85
---------------------------------------------------------------------------------------------
Common Stock, par value       106,125
 $.001 per share            shares(14)         $11.75(6)     $1,246,968.70(15)      $377.87
---------------------------------------------------------------------------------------------
 TOTAL:                  2,867,509 shares                     $20,556,780.60       $6,229.33
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
(Footnotes on the following page)
(1) Pursuant to Rule 416(a), the number of shares of Common Stock being
     registered shall be adjusted to include any additional shares which may
     become issuable as a result of stock splits, stock dividends, or similar
     transactions in accordance with the anti-dilution provisions of the 1992
     Stock Option Plan, the 1995 Incentive Stock Option Plan, the 1995 Non-
     Qualified Stock Option Plan and the 1997 Non-Qualified Stock Option Plan.
 
 (2) Represents the aggregate number of shares issuable upon exercise of
     currently outstanding options granted under the 1992 Stock Option Plan.
 
 (3) Represents the weighted average exercise price (rounded to the nearest
     cent) at which the shares will be issued.
 
 (4) Computed in accordance with Rule 457(h) under the Securities Act of 1933,
     as amended, solely for the purpose of calculating the total registration
     fee The aggregate offering price and amount of registration fee have been
     computed based on the weighted average exercise price (rounded to the
     nearest cent) at which the shares will be issued.
 
 (5) Represents the aggregate number of shares underlying options presently
     available for issuance under the 1992 Stock Option Plan.
 
 (6) Represents the average of the high and low prices of the Common Stock
     (rounded to the nearest cent) as reported on the Nasdaq National Market
     on October 30, 1997.
 
 (7) Computed in accordance with Rules 457(c) and (h) under the Securities Act
     of 1933, as amended, solely for the purpose of calculating the total
     registration fee. The aggregate offering price and amount of registration
     fee have been computed based on the average of the high and low prices of
     the Common Stock (rounded to the nearest cent) as reported on the Nasdaq
     National Market on October 30, 1997, because the exercise price at which
     the shares will be issued in the future is not currently determinable.
 
 (8) Represents the aggregate number of shares issuable upon exercise of
     currently outstanding options granted under the 1995 Incentive Stock
     Option Plan.
 
 (9) Represents the aggregate number of shares underlying options presently
     available for issuance under the 1995 Incentive Stock Option Plan.
 
(10) Represents the aggregate number of shares issuable upon exercise of
     currently outstanding options granted under the 1995 Non-Qualified Stock
     Option Plan.
 
(11) Represents the aggregate number of shares underlying options presently
     available for issuance under the 1995 Non-Qualified Stock Option Plan.
 
(12) Represents the aggregate number of shares issuable upon exercise of
     currently outstanding options granted under the 1997 Non-Qualified Stock
     Option Plan.
 
(13) Represents the aggregate number of shares underlying options presently
     available for issuance under the 1997 Non-Qualified Stock Option Plan.
 
(14) Represents shares heretofore issued upon exercise of options granted
     under the 1992 Stock Option Plan, the 1995 Incentive Stock Option Plan,
     the 1995 Non-Qualified Stock Option Plan and the 1997 Non-Qualified Stock
     Option Plan.
 
(15) Computed in accordance with Rule 457(c) under the Securities Act of 1933,
     as amended, solely for the purpose of calculating the total registration
     fee. The aggregate offering price and amount of registration fee have
     been computed based on the average of the high and low prices of the
     Common Stock (rounded to the nearest cent) as reported on the Nasdaq
     National Market on October 30, 1997.
 
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PART I
 
             INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
 
  The documents containing the information specified in Part I of Form S-8
will be sent or given to participating employees as specified by Rule
428(b)(1) of the Securities Act of 1933, as amended (the "Securities Act").
Such documents are not required to be and are not filed with the Securities
and Exchange Commission either as part of this Registration Statement, or as a
prospectus or prospectus supplement pursuant to Rule 424. These documents and
the documents incorporated by reference into this Registration Statement
pursuant to Item 3 of Part II of this Registration Statement, taken together,
constitute a prospectus that meets the requirements of Section 10(a) of the
Securities Act.
 
  The following reoffer prospectus filed as part of the Registration Statement
has been prepared in accordance with the requirements of Part I of Form S-3
and, pursuant to General Instruction C of Form S-8, may be used by certain
officers, directors and controlling stockholders of the Company for the resale
to the public of Shares to be issued to them upon exercise of options
heretofore or hereafter granted under the 1992 Stock Option Plan, the 1995
Incentive Stock Option Plan, the 1995 Non-Qualified Stock Option Plan and the
1997 Non-Qualified Stock Option Plan (collectively, the "Plans"). Such persons
may be deemed to be in a control relationship with the Company within the
meaning of the Securities Act and the rules and regulations of the Commission
promulgated thereunder, and such Shares may be deemed to be "control
securities" within the meaning of General Instruction C to Form S-8. The
following reoffer prospectus may also be used for the resale to the public of
certain Shares heretofore issued upon exercise of options granted under the
Plans. Such Shares may be deemed to be "restricted securities" within the
meaning of General Instruction C to Form S-8.
 
                                      I-1
PROSPECTUS
 
                               1,360,060 SHARES
 
                       DIAGNOSTIC HEALTH SERVICES, INC.
 
                                 COMMON STOCK
 
                                ---------------
 
  This Prospectus relates to 1,360,060 shares of common stock, par value $.001
per share (the "Common Stock"), of Diagnostic Health Services, Inc., a
Delaware corporation (the "Company"), which may be offered and sold from time
to time pursuant to this Prospectus (the "Shares") by the persons named in
this Prospectus as "Selling Stockholders" (the "Selling Stockholders"). The
Selling Stockholders have acquired or will acquire the Shares upon exercise of
options granted under the Company's 1992 Stock Option Plan, 1995 Incentive
Stock Option Plan, 1995 Non-Qualified Stock Option Plan, or 1997 Non-Qualified
Stock Option Plan (referred to herein, collectively, as the "Plans"). See
"SELLING STOCKHOLDERS."
 
  The Shares may be sold from time to time to purchasers directly by any of
the Selling Stockholders. Alternatively, the Selling Stockholders may sell the
Shares in one or more transactions (which may involve one or more block
transactions) on the National Association of Securities Dealers, Inc.
Automated Quotation System National Market ("Nasdaq"), in sales occurring in
the public market off Nasdaq, in separately negotiated transactions, or in a
combination of such transactions. Each sale may be made either at market
prices prevailing at the time of such sale or at negotiated prices. Some or
all of the Shares may be sold through brokers acting on behalf of the Selling
Stockholders or to dealers for resale by such dealers, and in connection with
such sales, such brokers or dealers may receive compensation in the form of
discounts or commissions from the Selling Stockholders and/or the purchasers
of such Shares for whom they may act as broker or agent (which discounts or
commissions are not anticipated to exceed those customary in the types of
transactions involved). However, any Shares covered by this Prospectus that
qualify for sale pursuant to Rule 144 under the Securities Act may be sold
under Rule 144 rather than pursuant to this Prospectus. See "PLAN OF
DISTRIBUTION."
 
  The Shares will be sold, or otherwise disposed of, for the account of the
Selling Stockholders, and the Company will not be entitled to any of the
proceeds from such sales or dispositions. See "USE OF PROCEEDS." All expenses
incurred in connection with the registration of the Shares are being borne by
the Company, but all brokerage commissions and other expenses incurred by
individual Selling Stockholders will be borne by each such Selling
Stockholder. See "PLAN OF DISTRIBUTION."
 
  The Selling Stockholders and any dealer participating in the distribution of
any Shares or any broker executing selling orders on behalf of the Selling
Stockholders may be deemed to be "underwriters" within the meaning of the
Securities Act, in which event any profit on the sale of any or all of the
Shares by them and any discounts or commissions received by any such brokers
or dealers may be deemed to be underwriting discounts and commissions under
the Securities Act. See "PLAN OF DISTRIBUTION."
 
  The Selling Stockholders who are executive officers and directors of the
Company have agreed to certain restrictions on the sale of their Shares for a
period of one year following the date of this Prospectus. Upon the Company
being notified by a Selling Stockholder that any material arrangement has been
entered into with a broker or dealer for the sale of Shares through a block
trade, special offering or secondary distribution, or a purchase by a broker
or dealer, a supplement to this Prospectus will be filed, if required,
pursuant to Rule 424(b) under the Securities Act, disclosing (a) the name of
each such Selling Stockholder and of the participating broker or dealer, (b)
the number of Shares involved, (c) the price at which such Shares were sold,
(d) the commissions paid or the discounts or concessions allowed to such
broker or dealer, where applicable, (e) that such broker or dealer did not
conduct any investigation to verify the information set out or incorporated by
reference in this Prospectus, and (f) other facts material to the transaction.
See "PLAN OF DISTRIBUTION."
 
  There is no assurance that any of the Selling Stockholders will sell any or
all of the Shares. The Common Stock of the Company is listed on Nasdaq under
the symbol "DHSM". On October 30, 1997, the closing price of the Common Stock
as reported by Nasdaq was $11.50 per share. Prospective investors are urged to
obtain a current price quotation.
 
  Prospective investors should carefully consider the factors set forth under
"RISK FACTORS" beginning on page 5 of this Prospectus.
 
 THESE  SECURITIES HAVE NOT  BEEN APPROVED OR  DISAPPROVED BY THE  SECURITIES
   AND EXCHANGE COMMISSION  OR ANY STATE SECURITIES COMMISSION  NOR HAS THE
     SECURITIES  AND   EXCHANGE  COMMISSION   OR  ANY   STATE  SECURITIES
       COMMISSION  PASSED  UPON  THE   ACCURACY  OR  ADEQUACY  OF  THIS
         PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A  CRIMINAL
          OFFENSE.
 
               The date of this Prospectus is October 31, 1997.
TABLE OF CONTENTS
PAGE
                                                                            ----
AVAILABLE INFORMATION.................................................   2
     INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.......................   3
     THE COMPANY...........................................................   4
     RISK FACTORS..........................................................   5
     USE OF PROCEEDS.......................................................   8
     SELLING STOCKHOLDERS..................................................   8
     PLAN OF DISTRIBUTION..................................................  11
     LEGAL MATTERS.........................................................  12
     EXPERTS...............................................................  12
No person has been authorized to give any information or to make any
representation not contained in this Prospectus in connection with any
offering made hereby and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company or any other person. This Prospectus does not constitute an offer to
buy, nor shall there be any offer to sell, solicitation of an offer to buy or
sale of these securities by any person in any jurisdiction in which it is
unlawful for such person to make such an offer, solicitation or sale. Neither
the delivery of this Prospectus at any time nor any sale made hereunder shall
under any circumstances create any implication that there has been no change
in the affairs of the Company since the date hereof or that the information
contained herein is correct as of any time subsequent to such date.
 
                               ----------------
 
                             AVAILABLE INFORMATION
 
  The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The reports, proxy
statements and other information filed with the Commission, as well as the
Registration Statement (as defined below) of which this Prospectus is a part,
may be inspected and copied at the public reference facilities of the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the Commission's Regional Offices at Seven World Trade Center, 13th Floor,
New York, New York 10048 and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60601-2511. Copies of such material also
can be obtained by mail from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In
addition, certain material filed by the Company can be inspected at the NASD
Public Reference Room of the National Association of Securities Dealers
Automated Quotation System, Inc. at 1735 K Street, N.W., Washington, D.C.
20006-1506, through which the Company's Common Stock is quoted. Also, the
Company files such reports, proxy statements and other information with the
Commission pursuant to the Commission's EDGAR system. The Commission maintains
a web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission
pursuant to the EDGAR system. The address of the Commission's web site is
"http://www.sec.gov".
 
  This Prospectus constitutes a part of a Registration Statement on Form S-8
(the "Registration Statement") filed by the Company on October 31, 1997 with
the Commission under the Securities Act. As permitted by the rules and
regulations of the Commission, this Prospectus omits certain information
contained in the Registration Statement and incorporates by reference certain
additional information. Such additional information can be inspected at and
obtained from the Commission in the manner set forth above. Statements
contained in this Prospectus or in any document incorporated herein by
reference as to the terms of any contract or other document
 
                                       2
referred to herein or therein are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement or such other document, each
such statement being qualified in all respects by such reference.
 
                               ----------------
 
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
  The following documents heretofore filed by the Company with the Commission
(File No. 0-21758) under the Exchange Act are incorporated herein by
reference:
 
    (a) The Company's Annual Report on Form 10-KSB for the year ended
  December 31, 1996;
 
    (b) All other reports filed by the Company pursuant to Section 13(a) or
  15(d) of the Exchange Act since December 31, 1996, consisting of (i) the
  Company's Quarterly Reports on Form 10-QSB for the fiscal quarters ended
  March 31, 1997 and June 30, 1997, (ii) the Company's Current Reports on
  Form 8-K dated April 4, 1997 and May 2, 1997, (iii) Amendment No. 1 on Form
  8-K/A-1 to the Company's Current Report on Form 8-K dated April 4, 1997,
  and (iv) Amendment No. 1 on Form 8-K/A-1 to the Company's Current Report on
  Form 8-K dated May 2, 1997; and
 
    (c) The description of the Company's Common Stock contained in the
  Company's Registration Statement on Form 8-A, dated May 11, 1993, filed
  under Section 12 of the Exchange Act, including any subsequent amendment or
  any report or other filing with the Commission updating such description.
 
  In addition, all documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of
a post-effective amendment to the Registration Statement which indicates that
all securities offered hereby have been sold or which deregisters all such
securities then remaining unsold, shall be deemed to be incorporated herein by
reference and to be a part hereof from the date of filing of such documents.
 
  Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus. All
information appearing in this Prospectus is qualified in its entirety by the
information and financial statements (including the notes thereto) appearing
in the documents incorporated herein by reference, except to the extent set
forth in the immediately preceding sentence.
 
  Upon written or oral request, any of the documents incorporated by reference
in Item 3 of Part II of the Registration Statement (which documents are
incorporated by reference in this Section 10(a) Prospectus), other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference herein), as well as other documents required to be delivered to
employees pursuant to Rule 428(b), will be provided without charge to each
person (including any beneficial owner) to whom this Prospectus is delivered
upon the written or oral request of such person. Requests should be made to:
 
                       Diagnostic Health Services, Inc.
                       2777 Stemmons Freeway, Suite 1525
                              Dallas, Texas 75207
                  Attention: Stockholder Relations Department
                           Telephone: (214) 634-0403
 
                                       3
THE COMPANY
 
  The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information appearing
elsewhere in this Prospectus or incorporated herein by reference. Investors
should also carefully consider the information set forth under the heading
"RISK FACTORS."
 
  The Company is a leading outsource provider of medical services to
hospitals, physicians' offices and other healthcare facilities primarily in
the Midwest and South Central United States. The Company provides radiology
and cardiology diagnostic services and equipment, as well as departmental
management services to healthcare facilities on an in-house and shared basis.
The Company also provides skilled and allied healthcare personnel on a
temporary basis to perform a variety of functions in hospitals, long-term care
facilities, physicians' offices, clinics and home healthcare settings. The
Company is committed to offering a broad range of services in a manner
responsive to the healthcare industry's increased focus on cost containment
without compromising the quality of patient care.
 
  The market for the Company's services consists of hospitals, physicians and
other healthcare providers. According to the American Hospital Association
there are more than 5,000 hospitals, and according to the American Medical
Association there are more than 18,300 physician group practices, in the
United States. In the Company's core nineteen-state Midwestern and South
Central United States market, the Company estimates that there are
approximately 3,100 hospitals, approximately 13% of which are currently
serviced by the Company. Additional potential customers include long-term care
facilities, sub-acute care facilities and the expanding managed care
marketplace.
 
  The Company currently provides shared diagnostic services, and staffs,
equips, operates and/or manages in-house radiology or cardiology departments,
for approximately 1,200 customers. The Company has achieved this market
presence through internal growth and strategic acquisitions. The Company's
strategy is to capitalize, within its business lines, on its demonstrated
ability to reduce the costs of providing radiology and cardiology services and
to consolidate providers of these services. The Company intends to implement
this strategy by continuing its aggressive acquisition and development program
with a strong geographic focus, cross-marketing its service lines across its
customer base to generate internal growth, pursuing the conversion of shared
service arrangements to in-house service agreements, and offering ancillary
services to complement its core radiology and cardiology services. The Company
also intends to pursue acquisitions of other service providers, as this highly
fragmented sector of the healthcare industry continues to consolidate.
 
  In addition to diagnostic services, the Company provides, on a temporary
basis, allied healthcare personnel, including radiology technicians, physical
and occupational therapists and home healthcare professionals in its primary
market area and in Mexico City. Demand for such temporary personnel arises
from hiring freezes, the need to replace vacationing or sick personnel, and
other short-term needs. These services are complementary to the Company's core
business and afford the Company the opportunity to expand the services
provided to existing customers and to establish new client relationships.
 
  Since 1991, the Company has significantly expanded the breadth of its
radiology and cardiology services. From 1991 to 1996, through internal growth
and the acquisition of twelve local service providers, the Company's gross
revenues increased from approximately $3.5 million to approximately $24.1
million, and income from operations increased from approximately $0.4 million
to $3.9 million. During the same period, the Company's customer base increased
from 323 to approximately 1,120. From December 31, 1996 to the date of this
Prospectus, the Company consummated three additional business acquisitions.
 
  The Company was incorporated in Texas in 1983 and was reincorporated in
Delaware in 1992. Its principal executive office is located at 2777 Stemmons
Freeway, Suite 1525, Dallas, Texas 75207, and its telephone number is (214)
634-0403.
 
                                       4
RISK FACTORS
 
  Prospective investors should consider carefully the following factors
associated with the ownership of Common Stock together with the other
information contained in this Prospectus or incorporated herein by reference.
 
RISKS INHERENT IN GROWTH STRATEGY
 
  A significant component of the Company's historical growth has come through
acquisitions of other healthcare service providers, and the Company intends to
continue to seek acquisition opportunities in the future. This growth strategy
is dependent on the continued availability of suitable acquisition candidates.
As of the date of this Prospectus, although the Company has signed a letter of
intent for one acquisition, the Company has no binding commitments or
agreements with respect to any acquisitions, and there can be no assurance
that the Company will be able to identify or come to agreement with any future
acquisition candidates. The Company may also find itself in competition for
acquisition candidates with competitors who have greater financial and other
resources than the Company and who may be willing to pay higher prices for
acquisition targets.
 
  In addition, even if the Company is successful in consummating future
acquisitions, there can be no assurance that any such acquisitions will be
beneficial to the Company. Any growth or success through acquisitions will be
dependent upon a number of factors, including the Company's ability to
evaluate properly the potential benefits of each prospective acquisition, the
Company's ability to consummate the acquisition on terms favorable to the
Company, and the Company's ability to promptly and profitably integrate the
acquired operations and retain key personnel and customer relations.
Acquisitions also place significant demands on the Company's financial and
management resources, which can divert management's attention from other
business concerns. Furthermore, the Company generally records significant
amounts of goodwill in connection with acquisitions, and if the Company were
to determine that the carrying value of goodwill was impaired, the Company
would be required to write down such carrying value, which would result in a
charge to earnings that could have a material adverse effect on the Company's
financial results.
 
UNCERTAINTIES SURROUNDING DILUTIVE IMPACT OF AND CAPITAL REQUIREMENTS RELATING
TO GROWTH STRATEGY
 
  In order to grow its business by means of acquisitions, the Company will
require significant capital resources, both for the payment of the cost of
acquiring businesses, and for the effective integration, operation and
expansion of the acquired businesses. In the past, the Company has utilized
its Common Stock as a means of making payment for acquired businesses.
Depending on the agreed-upon value of the acquired business and the value of
the Common Stock, the Company may be required to issue a large number of
additional shares of Common Stock, thereby diluting existing stockholders,
including investors in this offering. Alternatively, to avoid such dilution,
or if the acquisition candidate is unwilling to accept Common Stock as all or
part of the consideration for the transaction, the Company might be required
to utilize more of its cash resources (if available), or may be required to
seek additional capital. There can be no assurance that such additional
capital, if and when required, will be available on terms acceptable to the
Company, if at all. If the Company is unable to obtain required capital
resources, its growth could be limited, and its existing operations could be
impaired.
 
DECREASE IN POTENTIAL ACQUISITION CANDIDATES
 
  As the current consolidation trend in the healthcare services industry
continues, the Company can expect to encounter greater difficulty in
identifying suitable acquisition candidates, and in consummating acquisitions
of such businesses on terms favorable to the Company. Failure to identify and
consummate favorable acquisitions could have a material adverse effect on the
Company's business.
 
REDUCED CUSTOMER BASE DUE TO INDUSTRY CONSOLIDATION
 
  As consolidation among healthcare providers continues, the Company's
customer base may be reduced either because customers are consolidated or
acquired by other entities, or because outsourcing decisions shift to
individuals with whom the Company has not had a prior relationship. There can
be no assurance that the
 
                                       5
Company will be able to maintain relationships with its customers following
such an acquisition or consolidation. Any significant reduction in the
Company's customer base would have a material adverse effect on the Company's
business.
 
RELIANCE ON KEY EMPLOYEES
 
  The Company is substantially dependent on the personal efforts and abilities
of Max W. Batzer (Chairman of the Board and Chief Executive Officer) and Brad
A. Hummel (President and Chief Operating Officer). Each is a stockholder of
the Company and has an employment agreement with the Company. Mr. Batzer is
not required to devote his full time to the affairs of the Company, but is
prohibited from engaging in any other business activities which are
competitive with the business of the Company, or which materially interfere
with the performance of his duties and responsibilities to the Company. The
loss or unavailability of either of these officers or certain other key
employees for any significant period of time could have a material adverse
effect on the Company's business prospects or earning capacity. In addition to
$1.0 million per individual of key man life insurance payable to the Company's
commercial lender pursuant to a loan agreement, the Company maintains and is
sole beneficiary of key man life insurance policies on the lives of Messrs.
Batzer and Hummel in the amount of $500,000 per individual.
 
POTENTIAL FOR PROFESSIONAL LIABILITY CLAIMS
 
  The nature of the Company's business and services entails the risk of
professional liability claims, which could arise, for example, out of faulty
testing procedures or mishandling of test results. This concern is heightened
as the Company is called upon to perform services that might be deemed to be
"invasive" in nature (entering or placing objects inside a patient's body).
The Company maintains professional liability insurance coverage with limits of
$5.0 million per occurrence and $5.0 million in the aggregate in respect of
such contingencies. However, there can be no assurance that claims will not be
asserted in the future, or that any damages assessed against the Company will
not exceed the limits of available insurance coverage. In addition, the
potential negative publicity that could arise from a professional liability
claim could have a material adverse effect on the Company, even if the Company
were ultimately to prevail in the defense of the claim.
 
POSSIBLE SHORTAGE OF QUALIFIED PERSONNEL
 
  From time to time, the Company has experienced difficulties in obtaining
and/or retaining qualified healthcare professionals, and shortages of such
personnel may be expected from time to time in the future. The Company will be
competing for qualified personnel with numerous other healthcare providers,
many of whom have substantially greater financial and other resources than the
Company.
 
COMPETITION
 
  Radiology and cardiology diagnostic services, as well as the provision of
allied healthcare professionals, are characterized by a high degree of
competition. This competition comes from a number of independent local
operators specializing in one or two clinical applications, and from a few
large diversified healthcare companies (primarily larger hospitals having the
resources and capability to provide shared diagnostic services to other
healthcare facilities) which provide these services as part of their overall
business. Although the Company believes that it has a competitive advantage
over most of the small operators (primarily because most of them do not
provide the full range of services offered by the Company, and do not have the
same volume of revenues to absorb necessary fixed overhead costs), the Company
may be vulnerable to competition from the larger healthcare companies, at
least one of which can be found in each of the Company's geographic markets,
and all of which are substantially larger and possess greater financial
resources than the Company. There can be no assurance that the Company will be
able to compete successfully in its markets.
 
                                       6
GOVERNMENT REGULATION; POTENTIAL NATIONAL HEALTHCARE REFORM
 
  Many aspects of the medical industry in the United States are presently
subject to extensive federal and state governmental regulation, including
reimbursement rates and policies imposed by Medicare and other third-party
reimbursement programs (from which the Company receives a material portion of
its revenues). Laws and regulations affecting the Company's business include
federal and state "kickback laws," conflict of interest laws (such as the
federal "Stark" legislation), and licensing requirements relating to the
operation of independent physiological laboratories and the handling of
nuclear materials. In addition, both the Clinton Administration and the
Congress have periodically asserted a need to overhaul or reform the nation's
healthcare system. Such legislative initiatives, if enacted, could impose
pressures on the pricing structures applicable to the Company's services. In
particular, there is a possibility that a significant portion of healthcare
services will be rendered and administered through managed care systems, which
could have the effect of forcing price concessions and reductions on the part
of service providers such as the Company. Moreover, healthcare reform could
also entail a greater analysis of each patient's need for diagnostic testing,
with the aim of reducing the total volume of testing and the overall cost of
medical care. Depending on the nature and extent of any new laws and/or
regulations, or possible changes in the interpretation of existing laws and/or
regulations, any such changes may have a material adverse effect on the
Company's revenues, operating margins and profitability.
 
LIMITATIONS BROUGHT ON BY REIMBURSEMENT PROGRAMS
 
  In 1995 and 1996, the Company derived approximately 4.9% and 9.3%,
respectively, of its total revenues from Medicare and Medicaid, and
approximately 2.2% and 5.6%, respectively, from other third-party indemnity
payors. In January 1992, the federal government implemented, through the
Medicare program, a resource-based relative value scale ("RBRVS") payment
methodology. Implementation of RBRVS reduced reimbursement rates for certain
of the Company's diagnostic procedures. Policymakers have from time to time
advocated that a RBRVS type of reimbursement system be imposed on private-
sector third-party payors. Implementation of such a program would reduce
reimbursements by private third-party payors, and would adversely affect the
Company's operating margins to the extent that costs on these procedures could
not be concomitantly reduced. There can be no assurance that some or any of
these reduced operating margins could be recouped through cost reductions or
otherwise.
 
TECHNOLOGICAL CHANGE AND OBSOLESCENCE
 
  Diagnostic imaging technology is constantly undergoing development and
change. New technologies may be developed, or existing technologies refined,
which could render the Company's existing equipment technologically or
economically obsolete. Due to cost factors, competitive considerations or
other constraints, there can be no assurance that the Company will be able to
acquire or have access to any new or improved equipment that the Company may
need in order to serve its clients and customers.
 
POTENTIAL VOLATILITY OF STOCK PRICE
 
  The market price of the Common Stock has been and may continue to be highly
volatile, and could in the future be subject to wide fluctuations in response
to the timing and size of acquisitions, quarter to quarter variations in
operating results, changes in earnings estimates by analysts, market
conditions in the industry, prospects of healthcare reform, changes in
government regulation, and general economic conditions. In addition, the stock
market has from time to time experienced significant price and volume
fluctuations that have been unrelated to the operating performance of
particular companies. Investors in the Common Stock must be willing to bear
the risk of such fluctuations in earnings and stock price.
 
ANTI-TAKEOVER CONSIDERATIONS
 
  Certain provisions of the Company's Certificate of Incorporation, By-Laws,
Delaware law and certain executive employment agreements could, together or
separately, discourage potential acquisition proposals, delay or prevent a
change in control of the Company, and limit the price that certain investors
might be willing to pay in the future for the Company's Common Stock. These
provisions include a classified board of directors and the
 
                                       7
issuance, without further stockholder approval, of preferred stock with rights
and preferences which could be senior to the Common Stock. The Company is also
subject to Section 203 of the Delaware General Corporation Law, which may also
inhibit a change in control of the Company. In addition, the provisions of
certain executive employment agreements and stock option agreements may result
in economic benefits to the holders thereof upon the occurrence of a change in
control.
 
NO ANTICIPATED DIVIDENDS
 
  The Company has not previously paid any dividends on its Common Stock and
for the foreseeable future intends to continue its policy of retaining any
earnings to finance the development and expansion of its business. In
addition, the loan agreement between the Company and its commercial lender
prohibits the payment of dividends.
 
FORWARD-LOOKING STATEMENTS
 
  This Prospectus and the documents incorporated herein by reference contain
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. Such forward-looking statements may
be deemed to include, among other things, statements related to anticipated
improvements in financial performance and management's long-term performance
goals, as well as statements relating to the Company's business and growth
strategies, including anticipated internal growth and plans to pursue
additional acquisitions of other healthcare service providers. Actual results
could differ materially from those addressed in the forward-looking statements
as a result of the factors discussed in this "RISK FACTORS" section and
elsewhere herein and in the documents incorporated herein by reference.
 
                                USE OF PROCEEDS
 
  The Company will not receive any proceeds from the sale or other disposition
of the Shares by the Selling Stockholders hereunder.
 
                             SELLING STOCKHOLDERS
 
  This Prospectus may be used by certain officers, directors and controlling
stockholders of the Company for the resale to the public of Shares to be
issued to them upon exercise of options heretofore or hereafter granted under
the Plans. Such persons may be deemed to be in a control relationship with the
Company within the meaning of the Securities Act and the rules and regulations
of the Commission thereunder, and such Shares may be deemed to be "control
securities" within the meaning of General Instruction C to Form S-8. This
Prospectus may also be used for the resale to the public of certain Shares
heretofore issued upon exercise of options granted under the Plans. Such
Shares may be deemed to be "restricted securities" within the meaning of
General Instruction C to Form S-8. The securities referred to in this
paragraph may also be resold pursuant to Rule 144 under the Securities Act or
in other transactions exempt from registration.
 
                                       8
The persons who may resell Shares pursuant to this Prospectus are referred
to in this Prospectus collectively as "Selling Stockholders." The following
table sets forth as to each Selling Stockholder: the name of the Selling
Stockholder; the nature of any position, office or other material relationship
with the Company or its affiliates within the past three (3) years; the number
of shares of Common Stock of the Company and the percentage of the outstanding
shares of such class owned as of October 30, 1997; the number of such shares
which may be sold hereby for the account of the Selling Stockholder; and the
number of such shares and percentage of the outstanding shares of such class
that will be owned by the Selling Stockholder, assuming the sale of all the
Shares offered hereby.
SHARES OF                        SHARES OF
                              COMMON STOCK                     COMMON STOCK
                             OWNED PRIOR TO                    OWNED AFTER
                              THE SALE(1)      NUMBER OF         THE SALE
                           ------------------    SHARES     ---------------------
NAME AND                                      WHICH MAY BE
POSITION/RELATIONSHIP      NUMBER  PERCENT(2) SOLD HEREBY   NUMBER     PERCENT(2)
---------------------      ------- ---------- ------------  -------    ----------
Max W. Batzer............  581,395    5.8%      420,227(3)  161,168       1.6%
 Chairman of the Board
 and Chief Executive
 Officer
Brad A. Hummel...........  288,238    2.9%      288,227(4)       11         *
 President and
 Chief Operating Officer
Thomas M. Sestak.........  313,066    3.1%      186,645     126,421       1.3%
 Director
Bo W. Lycke..............   83,000      *        82,000       1,000         *
 Director
James R. Angelica........  445,052    4.5%       38,000(5)  407,052       4.1%
 Senior Vice President
 and
 Director
Carol J. Gannon..........  215,500    2.2%       15,000     200,500       2.0%
 Senior Vice President
Christopher L. Turner....  153,000    1.5%      153,000         -0-         *
 Chief Financial Officer
Bonnie G. Lankford.......  117,911    1.2%      117,911(6)      -0-         *
 Senior Vice President
Don W. Caughron..........   36,000      *        36,000         -0-         *
 Senior Vice President
Mark J. Foley............   10,000      *        10,000         -0-         *
 Vice President-Marketing
 and Sales
Gregory P. Blome.........    3,250      *         2,750(7)      500(8)      *
 Employee
Janice E. Bowser.........      200      *           200(7)      -0-         *
 Employee
Miriam Lopez Candelario..    1,750      *           500(7)    1,250(8)      *
 Employee
Michael Cooksey..........      500      *           500(7)      -0-         *
 Employee
9
SHARES OF                         SHARES OF
                             COMMON STOCK                      COMMON STOCK
                            OWNED PRIOR TO                     OWNED AFTER
                             THE SALE(1)        NUMBER OF        THE SALE
                         --------------------    SHARES     -----------------------
NAME AND                                      WHICH MAY BE
POSITION/RELATIONSHIP     NUMBER   PERCENT(2)  SOLD HEREBY  NUMBER       PERCENT(2)
---------------------    --------- ---------- ------------- -------      ----------
Larry B. Dees...........     3,400       *        1,000 (7)   2,400 (8)       *
 Employee
Linda Drum..............       500       *          500 (7)     -0-           *
 Employee
Alan B. Jones...........     1,900       *          200 (7)   1,700 (8)       *
 Employee
James S. Krieg..........     2,500       *          300 (7)   2,200 (8)       *
 Employee
Jeffery S. Lee..........     5,500       *        1,750 (7)   3,750 (9)       *
 Employee
Jeff Manor..............     1,000       *        1,000 (7)     -0-           *
 Employee
David Mayfield..........     2,950       *        1,000 (7)   1,950 (8)       *
 Employee
Susan E. McBride........       500       *          100 (7)     400 (8)       *
 Employee
Julie McCullough........       500       *          500 (7)     -0-           *
 Employee
Tina M. Naumann.........    11,250       *          500 (7)  10,750 (10)      *
 Employee
Craig H. Sidwell........     1,500       *        1,000 (7)     500 (8)       *
 Employee
Michele R. Walton.......     3,250       *          500 (7)   2,750 (11)      *
 Employee
Andrew P. Wynne.........     3,400       *          750 (7)   2,650 (8)       *
 Employee
  Total................. 2,285,012    22.9%   1,360,060     924,952         9.3%
--------
   * Represents less than 1% of outstanding Common Stock.
 (1) Shares of Common Stock issued or issuable to the Selling Stockholders
   upon exercise of options granted under the Plans or other employee benefit
   plans of the Company or currently outstanding warrants, whether or not
   exercisable, are included. Those individuals named as executive officers
   and/or directors have agreed to certain limitations on the amount of shares
   under the Plans which such individuals may sell from time to time. See
   "Plan of Distribution."
 (2) Percentages based on 9,987,757 shares of Common Stock outstanding as of
   October 30, 1997.
 (3) Includes 13,582 shares of Common Stock issued to Mr. Batzer in August
   1997 upon exercise of options granted under one or more of the Plans.
 (4) Includes 8,582 shares of Common Stock issued to Mr. Hummel in October
   1997 upon exercise of options granted under one or more of the Plans.
 (5) Represents 38,000 shares of Common Stock issued to Mr. Angelica in
   September 1997 upon exercise of options granted under one or more of the
   Plans.
 
                                      10
(6) Includes 32,911 shares of Common Stock issued to Ms. Lankford in
   September 1997 upon exercise of options granted under one or more of the
   Plans.
 (7) Represents shares of Common Stock heretofore issued by the Company upon
   exercise of options granted under one or more of the Plans.
 (8) Represents shares of Common Stock underlying currently outstanding
   options heretofore granted under one or more of the Plans, which shares are
   being registered pursuant to the Registration Statement of which this
   Prospectus is a part.
 (9) Includes (a) 1,750 shares of Common Stock underlying currently
   outstanding options heretofore granted under one or more of the Plans,
   which shares are being registered pursuant to the Registration Statement of
   which this Prospectus is a part, and (b) 2,000 shares of Common Stock held
   directly by Mr. Lee.
(10) Includes (a) 1,350 shares of Common Stock underlying currently
   outstanding options heretofore granted under one or more of the Plans,
   which shares are being registered pursuant to the Registration Statement of
   which this Prospectus is a part, and (b) 9,400 shares of Common Stock held
   directly by Ms. Naumann.
(11) Includes (a) 1,750 shares of Common Stock underlying currently
   outstanding options heretofore granted under one or more of the Plans,
   which shares are being registered pursuant to the Registration Statement of
   which this Prospectus is a part, and (b) 1,000 shares of Common Stock held
   directly by Ms. Walton.
 
  The Company does not know whether any of the Selling Stockholders will use
this Prospectus in connection with the offer or sale of any Shares, or, if
this Prospectus is so used, how many Shares will be offered or sold. The
information set forth in this section may be updated by the Company by use of
supplements to this Prospectus issued subsequent to the date hereof.
 
                             PLAN OF DISTRIBUTION
 
  The Shares may be sold from time to time to purchasers directly by any of
the Selling Stockholders. Alternatively, the Selling Stockholders may sell the
Shares in one or more transactions (which may involve one or more block
transactions) on Nasdaq, in sales occurring in the public market off Nasdaq,
in separately negotiated transactions, or in a combination of such
transactions. Each sale may be made either at market prices prevailing at the
time of such sale or at negotiated prices. Some or all of the Shares may be
sold through brokers acting on behalf of the Selling Stockholders or to
dealers for resale by such dealers, and in connection with such sales, such
brokers or dealers may receive compensation in the form of discounts or
commissions from the Selling Stockholders and/or the purchasers of such Shares
for whom they may act as broker or agent (which discounts or commissions are
not anticipated to exceed those customary in the types of transactions
involved). However, any Shares covered by this Prospectus that qualify for
sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144
rather than pursuant to this Prospectus.
 
  The Selling Stockholders and any dealer participating in the distribution of
any Shares or any broker executing selling orders on behalf of the Selling
Stockholders may be deemed to be "underwriters" within the meaning of the
Securities Act, in which event any profit on the sale of any or all of the
Shares by them and any discounts or commissions received by any such brokers
or dealers may be deemed to be underwriting discounts and commissions under
the Securities Act.
 
  Any broker or dealer participating in any distribution of Shares in
connection with this offering may be deemed to be an "underwriter" within the
meaning of the Securities Act, and if so deemed will be required to deliver a
copy of this Prospectus, including a Prospectus Supplement, if required, to
any person who purchases any of the Shares from or through such broker or
dealer.
 
  The Company will inform the Selling Stockholders that the anti-manipulation
rules under the Exchange Act may apply to sales in the market and will furnish
the Selling Stockholders upon request with a copy of such rules. The Company
will also inform the Selling Stockholders of the need for delivery of copies
of this Prospectus.
 
                                      11
The Selling Stockholders who are executive officers and/or directors of the
Company have agreed to restrict the sale of their Shares for a period of one
year following the date of this Prospectus as follows: none of the Shares held
by such individuals from time to time may be sold except within 20 business
days after the Company's filing of its then-current quarterly or annual report
with the Commission; and within such time periods, each such Selling
Stockholder may sell up to 10% of his or her Shares following the filing of
the Company's quarterly report for the third quarter of 1997, up to an
additional 15% of his or her Shares following the filing of the Company's
annual report for the year ending December 31, 1997, up to an additional 15%
of his or her Shares following the filing of the Company's quarterly report
for the first quarter of 1998, up to an additional 20% of his or her Shares
following the filing of the Company's filing of its quarterly report for the
second quarter of 1998, and all remaining Shares commencing one year after the
date of this Prospectus.
 
  Upon the Company being notified by a Selling Stockholder that any material
arrangement has been entered into with a broker or dealer for the sale of
Shares through a block trade, special offering or secondary distribution, or a
purchase by a broker or dealer, a supplement to this Prospectus will be filed,
if required, pursuant to Rule 424(b) under the Securities Act, disclosing (a)
the name of each such Selling Stockholder and of the participating broker or
dealer, (b) the number of Shares involved, (c) the price at which such Shares
were sold, (d) the commissions paid or the discounts or concessions allowed to
such broker or dealer, where applicable, (e) that such broker or dealer did
not conduct any investigation to verify the information set out or
incorporated by reference in this Prospectus, and (f) other facts material to
the transaction.
 
  In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold only through registered or licensed
brokers or dealers. In addition, in certain states, the Shares may not be sold
unless they have been registered or qualified for sale in such state or an
exemption from such registration or qualification requirement is available and
is complied with.
 
  There is no assurance that any of the Selling Stockholders will sell any or
all of the Shares offered hereby.
 
  All expenses incurred in connection with the registration of the Shares are
being borne by the Company, but all brokerage commissions and other expenses
incurred by individual Selling Stockholders will be borne by each such Selling
Stockholder.
 
                                 LEGAL MATTERS
 
  The validity of the Common Stock offered hereby will be passed upon for the
Company by Greenberg Traurig Hoffman Lipoff Rosen & Quentel, New York, New
York ("Greenberg Traurig"). Shahe Sinanian, a shareholder of Greenberg
Traurig, serves as the Secretary of the Company.
 
                                    EXPERTS
 
  The consolidated financial statements of the Company appearing in its Annual
Report (Form 10-KSB) for the year ended December 31, 1996 have been audited by
Simonton, Kutac & Barnidge, L.L.P., Independent Certified Public Accountants,
as set forth in their report thereon included therein and incorporated herein
by reference. Such consolidated financial statements are incorporated herein
by reference in reliance upon such report given upon the authority of such
firm as experts in auditing and accounting. Audited consolidated financial
statements to be included in subsequently filed documents will be incorporated
herein by reference in reliance upon the reports pertaining to such
consolidated financial statements of such independent accountants as are the
Company's auditors from time to time (to the extent covered by consents filed
with the Commission) and upon the authority of such accountants as experts in
auditing and accounting.
 
                                      12
PART II
 
              INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
 
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
 
  Diagnostic Health Services, Inc. (the "Company") hereby incorporates by
reference into this Registration Statement the following documents heretofore
filed by the Company with the Securities and Exchange Commission (the
"Commission") (File No. 0-21758) pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"):
 
    (a) The Company's Annual Report on Form 10-KSB for the year ended
  December 31, 1996;
 
    (b) All other reports filed by the Company pursuant to Section 13(a) or
  15(d) of the Exchange Act since December 31, 1996, consisting of (i) the
  Company's Quarterly Reports on Form 10-QSB for the fiscal quarters ended
  March 31, 1997 and June 30, 1997, (ii) the Company's Current Reports on
  Form 8-K dated April 4, 1997 and May 2, 1997, (iii) Amendment No. 1 on Form
  8-K/A-1 to the Company's Current Report on Form 8-K dated April 4, 1997,
  and (iv) Amendment No. 1 on Form 8-K/A-1 to the Company's Current Report on
  Form 8-K dated May 2, 1997; and
 
    (c) The description of the Company's common stock, par value $.001 per
  share (the "Common Stock"), contained in the Company's Registration
  Statement on Form 8-A, dated May 11, 1993, filed under Section 12 of the
  Exchange Act, including any subsequent amendment or any report or other
  filing with the Commission updating such description.
 
  In addition, all documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of
a post-effective amendment to this Registration Statement which indicates that
all securities offered hereby have been sold or which deregisters all such
securities then remaining unsold, shall be deemed to be incorporated herein by
reference and to be a part hereof from the date of filing of such documents.
 
  Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
 
ITEM 4. DESCRIPTION OF SECURITIES.
 
  Not applicable.
 
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
 
  The validity of the Common Stock to which this Registration Statement
relates will be passed upon for the Company by Greenberg Traurig Hoffman
Lipoff Rosen & Quentel, New York, New York ("Greenberg Traurig"). Shahe
Sinanian, a shareholder of Greenberg Traurig, serves as the Secretary of the
Company.
 
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
  Section 145(a) of the General Corporation Law of the State of Delaware (the
"General Corporation Law") provides that a Delaware corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation or enterprise, against expenses, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no cause to believe his or her conduct was unlawful.
 
 
                                     II-1
Section 145(b) of the General Corporation Law provides that a Delaware
corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or
in the right of the corporation to procure a judgment in its favor by reason
of the fact that such person acted in any of the capacities set forth above,
against expenses actually and reasonably incurred by him or her in connection
with the defense or settlement of such action or suit if he or she acted under
similar standards as set forth above, except that no indemnification may be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the
extent that the court in which such action or suit was brought shall determine
that despite the adjudication of liability, but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to be
indemnified for such expenses which the court shall deem proper.
 
  Section 145 of the General Corporation Law further provides that to the
extent a director or officer of a corporation has been successful on the
merits or otherwise in the defense of any action, suit or proceeding referred
to in subsections (a) and (b) or in the defense of any claim, issue or matter
therein, he or she shall be indemnified against expenses actually and
reasonably incurred by him or her in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of
any other rights to which the indemnified party may be entitled; and that the
corporation may purchase and maintain insurance on behalf of such person
against any liability asserted against him or her or incurred by him or her in
any such capacity or arising out of his or her status as such, whether or not
the corporation would have the power to indemnify him or her against such
liabilities under such Section 145.
 
  Section 102(b)(7) of the General Corporation Law provides that a corporation
in its original certificate of incorporation or an amendment thereto validly
approved by stockholders may eliminate or limit personal liability of members
of its board of directors or governing body for monetary damages for breach of
a director's fiduciary duty. However, no such provision may eliminate or limit
the liability of a director for breaching his or her duty of loyalty, failing
to act in good faith, engaging in intentional misconduct or knowingly
violating a law, paying a dividend or approving a stock repurchase or
redemption which was illegal, or obtaining an improper personal benefit. A
provision of this type has no effect on the availability of equitable
remedies, such as injunction or rescission, for breach of fiduciary duty. The
Company's Certificate of Incorporation contains such a provision.
 
  Article Ninth of the Company's Certificate of Incorporation eliminates the
personal liability of directors and/or officers to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director;
provided that such elimination of the personal liability of a director and/or
officer of the Company does not apply to (i) any breach of such person's duty
of loyalty to the Company or its stockholders, (ii) acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) actions prohibited under Section 174 of the General Corporation Law
(i.e., liabilities imposed upon directors who vote for or assent to the
unlawful payment of dividends, unlawful repurchases or redemption of stock,
unlawful distribution of assets of the Company to the stockholders without the
prior payment or discharge of the Company's debts or obligations, or unlawful
making or guaranteeing of loans to directors and/or officers), or (iv) any
transaction from which the director derived an improper personal benefit. In
addition, Article Tenth of the Company's Certificate of Incorporation and
Article IV of the Company's By-Laws provide that the Company shall indemnify
its corporate personnel, directors and officers to the fullest extent
permitted by the General Corporation Law, as amended from time to time.
 
  The Company has in force an insurance policy under which its directors and
officers are insured, with limits of $5,000,000 per occurrence and $5,000,000
in the aggregate, against certain expenses in connection with the defense of
such actions, suits or proceedings to which they are parties by reason of
being or having been directors or officers of the Company.
 
  The Company and its officers, directors and other persons are entitled to be
indemnified under certain circumstances for certain securities law violations
in accordance with the provisions of an underwriting agreement dated June 6,
1996 (the "Underwriting Agreement"), by and among the Company, certain selling
shareholders named in Schedule II to the Underwriting Agreement, and Rodman &
Renshaw, Inc., as representative of the several underwriters named in Schedule
I to the Underwriting Agreement.
 
                                     II-2
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company as
disclosed above, the Company has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
 
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
 
  The restricted securities to be reoffered and resold pursuant to this
Registration Statement were issued in transactions exempt from registration
pursuant to Section 4(2) of the Securities Act. Each such transaction involved
the issuance of shares of Common Stock pursuant to the exercise of options
granted under the Plans to persons who were officers, employees or directors
of the Company and who had access to material information with respect to the
Company.
 
ITEM 8. EXHIBITS.
EXHIBIT
 NUMBER                                DESCRIPTION
 -------                               -----------
4.1    Specimen Form of Common Stock Certificate.
  4.2    1992 Stock Option Plan.
  4.3    1995 Incentive Stock Option Plan.
  4.4    1995 Non-Qualified Stock Option Plan.
  4.5    1997 Non-Qualified Stock Option Plan.
  5.1    Opinion of Greenberg Traurig Hoffman Lipoff Rosen & Quentel.
 23.1    Consent of Simonton, Kutac & Barnidge, LLP.
         Consent of Greenberg Traurig Hoffman Lipoff Rosen & Quentel (contained
 23.2    in Exhibit 5.1).
 25.1    Power of Attorney (included as part of the signature page to this
         Registration Statement and incorporated herein by reference).
ITEM 9. UNDERTAKINGS.
 
  (a) The Company hereby undertakes:
 
    (1) To file, during any period in which offers or sales are being made, a
  post-effective amendment to this Registration Statement:
 
      (i) To include any prospectus required by Section 10(a)(3) of the
    Securities Act;
 
      (ii) To reflect in the prospectus any facts or events arising after
    the effective date of this Registration Statement (or the most recent
    post-effective amendment thereof) which, individually or in the
    aggregate, represent a fundamental change in the information set forth
    in this Registration Statement. Notwithstanding the foregoing, any
    increase or decrease in volume of securities offered (if the total
    dollar value of securities offered would not exceed that which was
    registered) and any deviation from the low or high and of the estimated
    maximum offering range may be reflected in the form of prospectus filed
    with the Commission Pursuant to Rule 424(b) if, in the aggregate, the
    changes in volume and price represent no more than 20 percent change in
    the maximum aggregate offering price set forth in the "Calculation of
    Registration Fee" table in the effective Registration Statement; and
 
      (iii) To include any material information with respect to the plan of
    distribution not previously disclosed in this Registration Statement or
    any material change to such information in this Registration Statement;
 
  provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) shall not apply
  if the information required to be included in a post-effective amendment by
  those paragraphs is contained in periodic reports filed by the Company
  pursuant to Section 13 or Section 15(d) of the Exchange Act that are
  incorporated by reference in this Registration Statement.
 
                                     II-3
(2) That, for the purpose of determining any liability under the
  Securities Act, each such post-effective amendment shall be deemed to be a
  new registration statement relating to the securities offered therein, and
  the offering of such securities at that time shall be deemed to be the
  initial bona fide offering thereof.
 
    (3) To remove from registration by means of a post-effective amendment
  any of the securities being registered which remain unsold at the
  termination of the offering.
 
  (b) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of the annual report of the employee benefit plans
pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
 
  (c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
 
                                     II-4
SIGNATURES
 
  Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Dallas, State of Texas, on October
31, 1997.
 
                                          Diagnostic Health Services, Inc.
 
                                             
                                          By: /s/ Max W. Batzer
                                             __________________________________
                                             Max W. Batzer
                                             Chairman of the Board
                                             and Chief Executive Officer
 
                               ----------------
 
                               POWER OF ATTORNEY
 
  KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Max W. Batzer and Brad A. Hummel, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-
effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, and any other regulatory authority,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them, or their
substitutes, may lawfully do or cause to be done by virtue hereof.
 
                               ----------------
 
  Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
 
              SIGNATURE                      CAPACITY               DATE
 
          /s/ Max W. Batzer            Chairman of the        October 31, 1997
_____________________________________  Board and Chief
            MAX W. BATZER              Executive Officer
                                       (principal executive officer)
 
      /s/ Christopher L. Turner        Chief Financial        October 31, 1997
_____________________________________  Officer
        CHRISTOPHER L. TURNER          (principal financial
                                       and accounting
                                       officer)
 
         /s/ Brad A. Hummel            President, Chief       October 31, 1997
_____________________________________  Operating Officer
           BRAD A. HUMMEL              and Director
 
        /s/ Thomas M. Sestak           Director               October 31, 1997
_____________________________________
          THOMAS M. SESTAK
 
           /s/ Bo W. Lycke             Director               October 31, 1997
_____________________________________
             BO W. LYCKE
 
                                     II-5
EXHIBIT INDEX
EHIBITX
  UMBERN                                           DESCRIPTION
-------                                            -----------
4.1    Specimen Form of Common Stock Certificate.
    4.2    1992 Stock Option Plan.
    4.3    1995 Incentive Stock Option Plan.
    4.4    1995 Non-Qualified Stock Option Plan.
    4.5    1997 Non-Qualified Stock Option Plan.
    5.1    Opinion of Greenberg Traurig Hoffman Lipoff Rosen & Quentel.
   23.1    Consent of Simonton, Kutac & Barnidge, LLP.
   23.2    Consent of Greenberg Traurig Hoffman Lipoff Rosen & Quentel (contained in Exhibit 5.1).
   25.1    Power of Attorney (included as part of the signature page to this Registration Statement and
            incorporated herein by reference).
--------
All exhibits are filed herewith electronically.