Top Threats Facing the Clinical Laboratory Industry in 2025 and Beyond: What Leaders Need to Know

Four industry threats that clinical laboratory leaders must monitor to protect their market position and drive future growth over the next decade

Photo portrait of Tyler Radke, MLS
Tyler Radke, MLS(ASCP)CM
Photo portrait of Tyler Radke, MLS

Tyler is from Green Bay, WI, and graduated from the University of Wisconsin-Oshkosh in 2012 with a bachelor’s in medical technology. He is an ASCP-certified medical laboratory scientist and worked at Froedtert St. Joseph’s Hospital in West Bend before relocating back to Green Bay as the technical lead of microbiology at Bellin Health. In 2017, he became the laboratory manager at Bellin Memorial Hospital and Bellin Health Oconto Hospital in Wisconsin. He is also a member of the laboratory technical advisory group (LabTAG) for the Wisconsin Clinical Laboratories Network (WCLN), serving as the representative for Region 7.

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Published:Oct 07, 2024
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Market dynamics in health care are in constant flux. Many laboratory leaders closely follow the release of new tests to improve their workflows, diagnostics capabilities, and enhance patient outcomes. Others look for opportunities to expand market share. However, savvy lab leaders not only track emerging innovations but also monitor external industry trends that could threaten market share to better guide their efforts toward sustained success.

Here are four top industry threats that clinical laboratory leaders should remain alert to safeguard their market position and drive future growth:

Direct-to-consumer testing

Offering patients the ability to order self-directed lab tests online from home (direct-to-consumer or DTC testing) is a growing industry trend. Consumer interest in DTC testing is growing with an estimated market of USD$2 billion by 2025. Some vendors have even purchased ad space on social media pages. Lab testing in this space includes niche services like food sensitivity tests, wellness panels, and microbiome composition determination. Other more basic assessments like complete blood counts, thyroid function, and STI determinations can also be found. 

DTC tests appeal to consumers who want more control over their healthcare decisions. Often, DTC vendors offer promotional prices to entice sales. This model works as it avoids the cost and hassle of third-party insurance, as well as avoids costs tied to filing claim forms, waiting for payment, and managing denials or prior authorizations. 

Consumers’ growing interest in DTC testing poses deleterious effects to an integrated healthcare delivery model for several reasons:

  • Revenue is pulled away from community health care
  • Test results and records are not integrated into patients’ local EMR
  • Ordering lacks of test clinical relevance/need
  • Lack of regulation/quality can yield false results
  • No specific patient history/context (no personalized medicine)
  • No comparator method may exist
  • Negligent follow-up on abnormal results
  • Loss of health system analytics

As the DTC testing market continues to take shape, clinical labs need to create their own strategy for dealing with this trend. For example, one option could involve a partnership with primary care that discourages the fragmentation of care. Another approach would be to leverage current system labs by offering DTC testing to outpatients. 

Read More: The Recent Growth of Concierge Laboratory Services

Third-party specialty lab services

Similar to the DTC market, third-party specialty laboratories that work directly with your providers to offer specialty referral testing may also pose a threat to your lab. Specialty testing is often targeted toward clinic patients and includes tests such as fetal-maternal genetic testing, toxicology services, rheumatology panels, and other laboratory-developed assays. 

Many specialty lab services have a clearly defined use cases, but their expanding menu of routine labs can sometimes begin to divert business from traditional laboratories. In the case of rheumatology services, some third-party laboratories perform extensive panels that also include common laboratory tests like compliment protein, anti-citrullinated protein, and anti-nuclear antibody. 

Third-party testing can also lead to fragmented and missing patient data from the electronic medical record, causing delays in care and potentially increasing follow-up costs. For labs, diagnostic stewardship is a key strategy that can help validate and manage the addition of referral services while minimizing the loss of critical lab tests.

Read More: 4 Tips for Creating a Successful Laboratory Stewardship Program

Commoditization and acquisition of lab services

Laboratory services operate at a significantly lower cost compared to other care teams like nursing, cardiology, oncology, etc. Patients’ costs are also significantly less per unit of service compared to a visit with any other department or specialty. With low operational cost and low patient cost, laboratory services tend to be viewed as a commodity in health care. 

This drastic diminishment of laboratory value can lead to becoming the target of external acquisition—essentially, an asset to be sold off. This is occurring at varying degrees across the US with entities like Quest and LabCorp acquiring hospital laboratories for their outpatient and outreach businesses.  

To combat the threat of acquisition, clinical laboratory leaders must clearly demonstrate their value to executive leadership and dispel their beliefs that selling the laboratory is a reasonable transaction without significant consequences to patients. Consider highlighting how laboratory operations directly contribute to integrated patient care, participating in quality and stewardship committees, and emphasizing the net positive revenue added to the system's financials.

Read More: Fight Inflation by Improving Your Lab’s Margins

Preferred laboratory networks

Although laboratory networks excel at providing continuity of care for patients, helping to reduce repeat visits or sample collections, preferred laboratory networks can also sometimes be a detriment to quality care. 

A preferred lab network is a listing of all laboratories that insurance companies encourage the insured patient to use. While the major insurers claim the preferred labs have met “higher standards,” the criteria defining those standards is proprietary and therefore not available to the public. Instead, insurance companies benefit from lower fee-for-service agreements that favor profit margins to enhance profitability. Unfortunately, the lower cost for insurance does not translate to lower out-of-pocket costs for patients, or more importantly, to better care.

Other types of laboratory networks may be designed to keep patient care and revenue within a state or local region. While that approach may seem laudable to local businesses, it can be detrimental to patients living near a boundary line who may have to drive several hours to find “in-network” care. This can cause significant patient dissatisfaction, as well as delay care.

Preferred laboratory networks can not only hurt patients but also other clinical laboratories, where labs outside of preferred networks are often left with few options. Insurers may reject laboratory claims not within their preferred network, causing labs to write off charges. That could be seen as patient inducement by providing free services to get patients to visit, a violation of federal law. 

Alternatively, some labs may opt to collect “out-of-network” patient samples only to send them to an “in-network” laboratory at an often significant operational cost, as labor, vehicle, and IT integration is necessary. 

Though preferred laboratory networks may seem like a distant or unlikely threat, lab leaders should familiarize themselves with these networks, as their popularity is likely to grow among commercial insurers. The problem with these arrangements is manifold, causing unnecessary travel, delayed care, dissatisfied patients, increased costs for specimen and report integration, etc. 

Adapting to ever-changing industry challenges

Threats to the lab industry are constantly changing in response to the political landscape, technological advancements, and shareholder profitability, requiring continual vigilance. For example, although DTC testing experienced initial setbacks and legal drama, it has since gained significant popularity among consumers. Similarly, the risk of labs being viewed merely as assets to be bought and sold is rising across the US as profit margins are increasingly squeezed in the post-pandemic economy. Laboratories that can attain a preferred status with insurers will secure stable revenue while maintaining continuity of care through an integrated delivery model. 


Tyler Radke, MLS(ASCP)CM
Tyler Radke, MLS(ASCP)CM

Tyler is from Green Bay, WI, and graduated from the University of Wisconsin-Oshkosh in 2012 with a bachelor’s in medical technology. He is an ASCP-certified medical laboratory scientist and worked at Froedtert St. Joseph’s Hospital in West Bend before relocating back to Green Bay as the technical lead of microbiology at Bellin Health. In 2017, he became the laboratory manager at Bellin Memorial Hospital and Bellin Health Oconto Hospital in Wisconsin. He is also a member of the laboratory technical advisory group (LabTAG) for the Wisconsin Clinical Laboratories Network (WCLN), serving as the representative for Region 7.


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Threats to the lab industry are constantly changing in response to the political landscape, technological advancements, and shareholder profitability, requiring continual vigilance.