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Healthcare Spending is Flat and Costs are on the Rise: Here’s How to Protect Your Pathology Business
August 17, 2026
The American healthcare system is at a crossroads. For years, clinical laboratories and pathology groups have successfully withstood growing financial pressures resulting from declining reimbursements, workforce shortages, and rising operational costs. Now, an additional, just as dangerous, threat needs to be accounted for: flat healthcare spending at the national level.
This issue took center stage at the annual Executive War College, where event founder and The Dark Report Editor-in-Chief Robert Michel highlighted the stagnation of diagnostic service investment.
Citing data from the Peterson-KFF Health System Tracker, Michel noted that U.S. healthcare spending as a share of GDP has remained virtually flat for over a decade, 17.2% in 2010 compared to just 17.8% in 2024, despite soaring demand. Simultaneously, inflation-adjusted reimbursements for laboratory services have declined by nearly 10%, further straining diagnostic providers.
So, what can independent medical lab service providers do to protect their businesses in this challenging environment?
This article outlines five strategies lab leaders can adopt to optimize efficiency, contain costs, and remain competitive in a flat-spending healthcare economy.
Industry Insights: CMS Data Collection Module for Clinical Laboratory Fee Schedule Reporting - Why Laboratories Need to Pay Attention
1. Modernize Laboratory Information System (LIS) Software
Many clinical labs and pathology groups still rely on outdated or siloed LIS (laboratory information system) software platforms that lack the flexibility, speed, and interoperability needed to gain an edge in today's healthcare ecosystem. Legacy LIS systems may be adequate for basic clinical and pathology lab management, but fail to support the level of automation and integration now required to thrive amid cost-containment pressures.
Modern, all-in-one LIS software platforms unify laboratory information system functions with laboratory revenue cycle management (RCM) workflows, helping to eliminate manual processes and reduce errors while boosting much-needed efficiency.
They also offer optimized interoperability and real-time business intelligence, which empowers lab managers to monitor operations, track KPI, and identify bottlenecks before they escalate.
A next-generation medical LIS enables diagnostic labs to:
- Automate specimen routing and quality control processes.
- Ensure accurate coding and charge capture.
- Reduce labor and supply costs.
- Integrate with the latest electronic health record (EHR) and digital pathology solutions for better collaboration.
By modernizing LIS software infrastructure, labs can build a more agile and data-driven operation that supports both laboratory workflow management excellence and financial resilience.
2. Optimize Laboratory Billing Workflows
Revenue leakage remains a significant issue for testing organizations, particularly those that use fragmented or outsourced laboratory billing solutions. A lack of visibility into laboratory revenue cycle management performance, delayed denials management, and poor payer communication can all impact collections.
To improve financial outcomes, diagnostic labs should implement integrated revenue cycle management tools that streamline lab billing and provide greater control over the RCM cycle. This includes:
- Automated upfront eligibility checks and insurance verification.
- Real-time denial alerts and claim edits.
- Configurable rules engines for coding and compliance.
- Payment posting and reconciliation tools.
A single unified medical laboratory information system and lab RCM platform enables labs to monitor (in real time) charge capture rates, track rejected claims, and identify underperforming payers. More importantly, it empowers laboratory billing teams to be proactive rather than reactive in addressing revenue issues.
By streamlining laboratory billing operations, clinical laboratories and pathology groups can recover lost revenue, accelerate payment cycles, and strengthen cash flow, even amid stagnant reimbursement rates.
3. Embrace Laboratory Information System Software Automation to Reduce Labor Dependency
Labor costs remain one of the biggest budget items for medical labs. With a persistent shortage of medical technologists and histotechnicians, the cost of recruitment, retention, and overtime continues to rise.
Laboratory information system software automation provides a powerful solution to this challenge. Whether it's automating data entry with LIS system support for optical character recognition (OCR) and natural language processing (NLP), leveraging AI for digital pathology interpretation, or using lab workflow engines to streamline case routing, the more a lab can reduce its dependency on manual processes, the more scalable and sustainable it becomes.
Areas to automate include:
- Requisition processing and order entry.
- Sample tracking and labeling.
- Results delivery and report generation.
- Reflex and add-on testing workflows.
Labs that embrace automation and modern laboratory information systems that support the latest technologies benefit from reduced staffing burdens and enhanced accuracy, speed, and consistency across the diagnostic continuum.
Discover More: LigoLab’s LIS Software Platform vs. Legacy Laboratory Information Systems - Which Aligns Best with Your Lab's Future?
4. Expand Testing Menus Strategically
To stay competitive and profitable, many labs are diversifying their testing portfolios. Adding high-value, low-volume specialties such as molecular diagnostics, dermatopathology, or pharmacogenomics can create new revenue streams while supporting more personalized patient care.
However, expansion must be strategic. Before investing in new test types, lab leaders should evaluate:
- Market demand and payer coverage.
- Equipment and personnel requirements.
- Lab information system compatibility and lab workflow configuration needs.
- Profitability and reimbursement trends.
Modern LIS systems that support flexible test buildout and rapid validation workflows are key to agile service line expansion. When executed strategically, offering more specialized testing can help labs differentiate their services and protect margins.
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5. Strengthen Client Relationships Through Transparency and Reporting
As clients, hospitals, clinics, and physicians, face similar cost constraints, they're seeking greater transparency, value, and partnership from diagnostic providers. Labs that communicate clearly, provide value-added services, and deliver operational insights will be best positioned to retain and grow their client base.
Tools like provider portals, interactive dashboards, and automated report distribution enable clinical labs and pathology groups to:
- Share turnaround time metrics and quality performance data.
- Offer customized reports and interpretive comments.
- Facilitate easier order tracking and visibility into case status.
- Provide consultation and diagnostic support services.
Transparent, data-driven collaboration builds trust and strengthens client loyalty in uncertain economic times. It also positions the medical lab as a strategic healthcare partner rather than a commoditized service provider.
Learn More: Why Medical Labs Should Consider Deeper Alignment with Their LIS System Partner
Resilience Through Innovation
Stagnant healthcare spending doesn't signal the end of growth for clinical labs and pathology groups; instead, it presents an opportunity to rethink diagnostic delivery and transform lab operations.
By embracing modern laboratory information system technology, optimizing lab billing, automating workflows, diversifying services, and strengthening client engagement, forward-thinking labs can protect their margins, improve efficiency, and position themselves for long-term success.
The future belongs to labs that act decisively and strategically. In a landscape defined by constraints, innovation becomes the pathway to resilience.
Need Help Navigating the Storm?
LigoLab's all-in-one laboratory information system (LIS) & lab revenue cycle management (RCM) platform is designed to help medical labs thrive in today's economy. With powerful automation tools, real-time analytics, and unified lab billing integration, LigoLab customers report increased efficiency, fewer errors, and stronger financial performance.
Act Now: Contact a LigoLab product specialist!
Frequently Asked Questions About Protecting Your Pathology Business Amid Flat Healthcare Spending
How flat has U.S. healthcare spending actually been?
According to data cited from the Peterson-KFF Health System Tracker, U.S. healthcare spending as a share of GDP was 17.2% in 2010 and only 17.8% in 2024, remaining virtually flat for over a decade despite rising demand for services.
How much have lab reimbursements declined?
Inflation-adjusted reimbursements for laboratory services have dropped by nearly 10%, adding further financial strain on diagnostic providers already facing flat spending and rising costs.
What is the most impactful first step labs can take to protect margins?
Modernizing legacy laboratory information system software is often the foundation for other strategies, since a unified, automated platform reduces manual errors, improves billing accuracy, and provides real-time visibility to identify inefficiencies before they escalate.
How can labs reduce revenue leakage in their billing operations?
Labs can implement automated eligibility checks, real-time denial alerts, configurable coding and compliance rules engines, and payment reconciliation tools, ideally within a unified medical LIS and lab revenue cycle management platform that provides real-time visibility into charge capture and rejected claims.
Which lab processes are good candidates for automation?
Common areas to automate include requisition processing and order entry, sample tracking and labeling, results delivery and report generation, and reflex or add-on testing workflows.
Should labs expand their testing menus during a period of flat spending?
Strategic expansion into high-value, low-volume specialties like molecular diagnostics or pharmacogenomics can create new revenue streams, but labs should first evaluate market demand, payer coverage, equipment and staffing needs, and LIS system compatibility before investing.
How does transparency with clients help labs during cost-constrained periods?
Provider portals, dashboards, and automated reporting help labs share turnaround time and quality metrics with hospitals, clinics, and physicians, building trust and positioning the lab as a strategic partner rather than a commoditized service provider.
