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Maximizing Your Lab’s Profitability: The Case for In-House Lab Billing
January 29, 2026
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Laboratory revenue cycle management (lab RCM) is a complicated mix of data, payers, rules, requirements, and regulations. When dealing with complex coding, multiple insurance companies and clients, varying policies, and regulatory compliance, it’s easy to see why even the most successful pathology practices and clinical labs often struggle with denials and rejections.
Given the outsized impact laboratory billing has on margins and long-term profitability, one would expect it to be a top strategic priority for lab leadership.
Yet despite its importance, many laboratories still choose to outsource their lab billing operations. Why?
In this post, we cut through the marketing narratives of third-party laboratory billing services and take a clear-eyed look at why medical labs should look beyond the hype and seriously evaluate in-house lab RCM, powered by modern, purpose-built billing software for labs.
Discover More: The LigoLab Difference - Demonstrating the Power of Lab RCM Automation in the Clinical Laboratory
Laboratory Billing Services: The Sales Pitch
Let’s lead this discussion by examining the sales pitch laboratory billing services commonly deploy to attract clinical labs and pathology groups.
Cost
Laboratory billing services often lead with this argument because even highly successful labs operate on thin margins and tightly controlled budgets. These RCM cycle service providers promote predictable pricing, typically a percentage of collections or a flat fee, while emphasizing the appeal of avoiding the cost and complexity of hiring, managing, and retaining lab billing staff, as well as eliminating the need to license, support, and maintain in-house laboratory billing software.
Efficiency
Laboratory billing services position themselves as having an advantage by claiming deep specialization in lab revenue cycle management. They also emphasize flexibility, arguing that their services can scale with a laboratory’s fluctuating needs, enabling lab leadership to focus on core diagnostic operations rather than on RCM process complexities.
Expertise
Laboratory billing services often position themselves as uniquely qualified, citing deep industry experience and specialized knowledge as key differentiators. They emphasize their command of healthcare regulations and compliance requirements, and promote their best practices (along with access to advanced laboratory billing system software) as reasons they should be the obvious choice.
On the surface, the pitch is compelling. But when you look beyond the talking points, it becomes clear that outsourcing laboratory billing is not always the straightforward decision it’s made out to be.
Industry Insights: Roundtable Discussion - Laboratory Billing Solutions and the Lab RCM Process
Laboratory Billing Services: The Reality
Now let’s concentrate on what’s missing from the sales pitch and focus on the real story.
The perceived cost savings of partnering with lab billing services quickly unravel when transparency, control, autonomy, customization, and motivation are factored in.
Transparency
“When the cat’s away, the mice will play.”
That old proverb can be used to describe the approach that lab billing services use with their customers because it’s a given that they will offer the lab a lot less transparency in day-to-day operations when compared to an in-house lab billing department using a modern laboratory billing system, one equipped with advanced laboratory billing solutions such as real-time monitoring and customized reporting capabilities.
Many lab billing services claim to offer 'detailed reports' on RCM process performance and analytics. However, these reports often function like a black box, lacking transparency and failing to disclose the criteria used to evaluate performance or justify decisions made on the lab’s behalf.
Outsourced laboratory revenue cycle management arrangements lack clarity and give lab billing services the cover and unchecked freedom to only go after the low-hanging fruit that’s easy to collect while avoiding the more time-consuming and difficult cases.
The Tradeoffs and Risks of Outsourced Lab Billing
It’s worth asking some hard questions. Will an outsourced lab billing service consistently go the extra mile, working every claim and pursuing every denial with the same rigor you would apply internally? Will it perform a thorough audit of your laboratory billing processes and actively support continuous improvement, even while managing dozens of other clients? Or will difficult cases quietly receive less attention once the path forward becomes complex?
The sharp rise in ransomware attacks across the healthcare sector magnifies concerns. Bringing a third-party lab RCM provider into your operations expands the organization’s digital footprint, increasing exposure to cybersecurity threats. At the same time, outsourcing billing, particularly to offshore organizations, introduces serious compliance considerations, including adherence to HIPAA requirements and the secure handling of protected patient health information.
What may appear to be short-term savings can ultimately create long-term financial, operational, and regulatory risk, costs that far outweigh any initial advantage.
Control and Autonomy
With something as important as being paid correctly and promptly for services rendered by your lab, is saving a little money by outsourcing worth losing direct oversight and total control over the entire laboratory billing process?
We recently consulted a nationally known healthcare expert to get his take on control, and the importance of keeping your lab billing in-house, and all should note his response.
"Overall, it may cost two percent more to perform your lab billing tasks in-house, but recovery of collectible dollars can be nominal, and you gain the autonomy of control over laboratory billing process outcomes," he said.
By keeping lab RCM in-house and teaming with a modern laboratory billing software provider with the latest solutions, your lab billing department will know that all revenue opportunities are being captured and reimbursement rates optimized. Even better, the organization will benefit from the department’s growing knowledge of all processes and requirements, evidenced by enhanced RCM cycle efficiency and productivity over time.
Customization
All labs are the same, except for their differences.
This is a common phrase used to describe the lack of customized laboratory billing solutions available.
Nearly every laboratory billing service claims to rely on “state-of-the-art” billing software. But that promise falls short if the laboratory billing system cannot be configured to support the unique workflows, payer rules, and operational nuances of each laboratory client.
Modern laboratory revenue cycle management software designed for in-house lab billing offers the level of flexibility and control billing teams need to manage today’s complexity. These platforms are built to adapt to real-world challenges, not force labs into rigid, one-size-fits-all processes.
For example, LigoLab’s all-in-one laboratory information system (LIS) platform with advanced laboratory billing functionality includes a powerful Rule Engine that enables users to define and automate virtually any RCM cycle scenario using configurable, prebuilt rules. When combined, these rules form end-to-end automated workflows that replace highly manual, error-prone lab billing tasks.
Preconfigured Lab Billing Rules Enable Smarter, Automated Decisions
Let’s take this a step further and look at how preconfigured laboratory billing rules operate at a granular level.
Consider a scenario in which a claim is submitted to a payer and reimbursed at $98 instead of the expected $100. With an advanced laboratory revenue cycle management system, the lab can define a rule that automatically accepts and closes the claim when the variance falls within an acceptable threshold.
That same rule can be configured to escalate the claim for review when the underpayment exceeds the predefined amount, routing it directly to the appropriate decision-maker.
This level of configurability and automation ensures lab billing teams focus their attention where it matters most, maximizing reimbursement while eliminating unnecessary manual work on low-impact variances.
Get Insight: Six Reasons Why You Should Choose an Integrated Laboratory Billing Solution for Your Medical Lab
Motivation
Now let’s address the big elephant in the room. What motivates laboratory billing services? Is it fighting on behalf of lab customers for every dollar? Or is it maximizing profitability at the expense of its lab customers?
“Let’s be candid, the incentives are misaligned,” said LigoLab CEO Suren Avunjian. “Laboratory billing services are driven to maximize yield across their entire client base in the shortest amount of time.”
Avunjian illustrated this dynamic with a common operating model.
“Imagine a lab billing service managing 100 clients with a fixed staffing model,” he explained. “That team can efficiently process claims and collect payment on roughly 80 percent of them by focusing on the easiest, most straightforward cases.”
So what happens to the remaining 20 percent?
“Recovering that final 20 percent, especially the last 5 to 10 percent, is far more difficult and resource-intensive,” Avunjian continued. “It requires additional time, expertise, and effort.”
From the lab billing service’s perspective, pursuing the harder claims means higher labor costs and diminished margins. It is often more profitable to maintain the same staffing model, accept partial recovery, and simply onboard additional laboratory clients, rather than invest in extracting maximum value for every existing customer.
“That’s where the perceived savings disappear,” Avunjian concluded. “When incentives aren’t aligned, labs ultimately sacrifice revenue, even if outsourcing appears less expensive on paper.”
Why Incentive Alignment and Deep Lab Knowledge Matter in Lab RCM
The nationally recognized healthcare expert echoed Avunjian’s concerns, emphasizing that outsourced RCM process providers require clear incentives, either rewards or consequences, to deliver optimal results. He also underscored that exceptional laboratory billing depends on deep, day-to-day familiarity with a lab’s operations, payers, and workflows.
“Experienced, dedicated lab billing professionals who actively manage denials and payments will quickly identify errors and inconsistencies,” he explained. “But when this work is handled by interchangeable staff focused solely on processing volume, critical insights are lost.”
He added that most outsourced laboratory billing firms do not assign a dedicated team to a single client. In contrast, in-house lab revenue cycle management enables organizations to build a committed team with institutional knowledge and direct accountability, giving them greater control over both financial outcomes and continuous improvement.
Discover More: Is Your Lab RCM Software Vendor Putting Your Lab’s Needs First?
Frustrated With Your Laboratory Billing Process? Give LigoLab a Try
“At LigoLab, we’re focused on maximizing the total yield for our lab RCM customers,” continued Avunjian. “Our built-in laboratory billing solutions accomplish this by covering and automating most of the laboratory billing process, enabling our customers to concentrate on work that requires a higher degree of expertise.”
Avunjian added that LigoLab’s advanced laboratory billing solutions give customers added value because the platform is meticulously designed to ensure labs receive every penny they deserve.
“Our platform is designed to operate with maximum efficiency, transparency, and compliance, ensuring that financial outcomes accurately reflect the work your laboratory performs,” said Avunjian. He also highlighted a critical advantage LigoLab offers over legacy lab billing systems: the native integration of its laboratory information system and laboratory revenue cycle management modules.
Get Insight: The Power of Integration - Unleashing the Potential of LigoLab's LIS System & Lab RCM Platform
Replacing Standalone Laboratory Billing With an Integrated LIS-RCM Platform
Let’s close this blog post with a case study highlighting what happened when a LIS system customer replaced its legacy, standalone lab billing software with LigoLab’s integrated lab RCM module.
LigoLab: Redefining Lab Informatics With Modern Laboratory Information System Software
Since 2006, LigoLab has partnered closely with laboratories by taking full ownership of their laboratory informatics needs, from core LIS software functionality to end-to-end laboratory revenue cycle management.
The LigoLab Informatics Platform brings these capabilities together in a single, intuitive solution, unifying LIS system workflows and laboratory billing processes to drive sustainable growth and help laboratories operate as data-driven, future-ready organizations.
