Dynacq Comments on Barron's Article.

Business Editors/Legal Writers

HOUSTON--(BUSINESS WIRE)--Sept. 16, 2003

Dynacq International Inc. (NASDAQ/NM:DYII) commented today on a Barron's article which analyzed Dynacq's outstanding growth and profitability and provided some of the reasons why the Company is more profitable than most hospital holding companies. After acknowledging that both Forbes and Fortune have recognized Dynacq as one of the outstanding growth companies in America, Barron's writer Rhonda Brammer raised questions whether the Company might face a more difficult environment in the future because of a previous lawsuit with a Texas workers compensation insurance carrier, the possibility of some as yet unannounced regulations from the Texas Workers Compensation Commission and a regulatory proceeding involving a surgeon who had staff privileges (now suspended) at one of the Company's subsidiary hospitals. Dynacq is a holding company which does not operate any hospitals. Any references to hospitals or to cases refer to hospitals owned and operated by Dynacq's subsidiaries and affiliates.

The Company believes that the Barron's article provided a slanted and mistaken account of Dynacq's current and future business and dredged up some old news regarding reimbursement disputes with one of the Texas insurers and a regulatory proceeding involving a surgeon who used to have staff privileges at a subsidiary hospital. The Company expects that the article will be welcomed by the short sellers who have been holding short positions of almost 1,500,000 shares of Dynacq stock, probably at a large loss. James N. Baxter, Executive Vice President, said, "The short sellers must be heaving a sigh of relief to have some negative 'news' to permit some covering of positions before the Company reports its results for the fiscal year ended August 31, 2003."

To set the record straight, the following are some of the reasons for Dynacq's remarkable growth and profitability:

-- Dynacq's business is diversifying away from workers comp 

cases. In the last quarter more than 50% of Dynacq's inpatient 

surgeries came from weight reduction or bariatric surgery and

related procedures--not workers comp cases. Dynacq's

successful newer subsidiary hospital in Baton Rouge handles

only a single digit percent of workers comp cases. Once

Dynacq's new Dallas hospital begins handling inpatient

surgical cases, expected late this year, the proportion of

Dynacq's workers comp cases is expected to decline further.

The New York Times recently reported that the surging demand

for obesity surgery is creating great demand for the

relatively few hospitals, like Dynacq's subsidiary hospitals

in Pasadena and Baton Rouge, which are equipped to handle this

surgery. We plan for the Dallas hospital to be similarly

configured.

-- Dynacq subsidiary hospitals focus on pre-certified

out-of-network complex surgical procedures utilizing minimally

invasive high tech surgical devices. Based on the Case Mix

Index of the Centers for Medicare and Medicaid Services,

designed to measure the relative difficulty of medical care

provided in hospitals to support appropriate reimbursements to

the hospitals, the average surgery at Dynacq's Pasadena

subsidiary Vista Medical Center is more than twice the

difficulty of the average surgery in U.S. hospitals overall.

Such surgical procedures understandably are entitled to larger

fees than simpler surgeries. The precertified nature of these

surgeries explains in part why Dynacq expects insurers to pay

Dynacq subsidiary hospitals the amounts which are due in

accordance with existing regulations.

-- The former litigation with Texas Mutual is a normal part of

Dynacq's business strategy of providing first class medical

facilities for complex surgeries and refusing to accept

payments from insurers which are less than the amounts

scheduled by the Texas Workers Compensation Commission. Texas

Mutual is only one of the workers comp insurance payers in

Texas and it cannot dictate what it is required to reimburse.

Whatever Texas Mutual may assert, only the Texas Workers

Compensation Commission can ultimately determine the

reimbursements. In any event, all of the underpayments by

Texas Mutual which were detailed in the Barron's article have

long since been fully accounted for and will have no adverse

effect on Dynacq's financials. In addition, the hospitals

involved are still pursuing certain of these claims in

administrative appeals.

-- Dynacq's subsidiary hospitals' use of minimally invasive

techniques and instruments permits patients to return to their

families sooner than traditional surgical techniques would.

Thus the average hospital stay at Dynacq subsidiary hospitals

is about three days. This means that a large number of

inpatient procedures per bed can be accomplished. Because the

hospitals do not keep unnecessary beds, the revenue per bed is

far greater than the rural general hospitals and far larger

HCA hospitals mentioned in the Barron's article.

-- Dynacq's relatively small size and the newness of its

hospitals permit them to be flexible and efficient in serving

the needs of their patients and doctors practicing in the

hospitals. For example, the hospitals' block scheduling of two

operating rooms for each high volume surgeon provides the

patient and the surgeon the benefit of reliable scheduling and

permits efficient use of the hospital facilities, also

increasing the revenue to the hospital, compared to larger

more inflexible bureaucratic hospitals.

-- Dynacq through its subsidiaries owns or leases 100% of the

land and buildings and equipment at the hospitals. Physicians

own 8.5% of the operating partnership at Vista Medical Center

in Pasadena, Texas. This is a substantially lower percentage

of physician ownership than that which prevails at a number of

other companies in the industry, and the Company does not

believe that it adversely affects the Company's business.

-- With the build up of Baton Rouge, the expected operations of

Dallas coming soon and other potential locations being

actively considered, the percentage contribution of Vista

Medical Center Pasadena is expected to decline over time as

anticipated operations from Baton Rouge and Dallas and other

locations are added. The Company is enthusiastic in

contemplating a bright future, especially with the addition of

both Baton Rouge and Dallas.

-- Any changes in the regulatory system and reimbursement system

of the Texas Workers Compensation Commission will receive the

Company's prompt attention, and, as in the past, management

will make decisions, in compliance with applicable laws and

regulations, which it deems in the best interests of patients

and shareholders. However, an undefined possible new

regulation which has not even been proposed cannot be

addressed by any participant in the healthcare industry,

including Dynacq.

-- The temporary suspension of the medical license of a

nonemployee physician practicing at any Dynacq hospital is of

course a concern, and Vista Medical Center promptly suspended

Dr.Scheffey's hospital privileges, in accordance with the

hospital's policies. But this concern does not affect Dynacq's

overall business, which is far greater than the status of a

particular doctor's license at a particular subsidiary

hospital.

-- As previously announced, the U.S. District Court for the

Southern District of Texas has dismissed with prejudice the

class action against Dynacq International Inc. and certain of

its officers which was brought in early 2002 following an

article by Herb Greenberg of The Street.com, which was quoted

in the lawsuit.

Certain statements contained in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially from its expectations. Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. More detailed information about factors that may cause actual results to materially differ is contained in the Company's filings with the Securities and Exchange Commission. The words "looking forward," "believe," "expect," "likely," "contemplating," "anticipating," "bright future" and "near future" and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date that such statements were made. The Company undertakes no obligation to update any forward-looking statements contained in this press release.