The most common way to diagnose hip dysplasia is by having a doctor perform the Ortolani or Barlow maneuver. Ultrasonogram usage is on the rise as well.
Ortolani - The infant must be on its back with knees at a 90 degree angle. The doctor will spread them apart into the froggy position and listen/feel for a click that indicates that the hip head slipped into the socket.
Barolow - The infant must be on its back. The doctor will push the leg upward as if the baby were trying to knee itself in the head. The doctor will listen/feel for anything indicating that the hip head has slipped out of the socket.
Ultrasound - Can view more than bones, and since babies have little bone and a lot of cartilage, this is a good thing. The one administering the ultrasound can move babies hips and record exactly where the hip and hip head are throughout flexing.