The Cost of Laboratory Testing

By Michael J. Misialek, MD

There was silence on the phone when I told my colleague the cost of the test. He had ordered it in good faith, believing it was the right test for the patient. Actually, it was not the right test at all. In the past, when labs were much lower cost, ordering tests were not an issue. However, times have changed and costs have changed as well. The cost of this single test was $15,000. To make matters worse, it was ordered twice for this patient in the same month- leaving the patient with a large bill.

The over ordering of tests is not a new problem. However, in a new era of accountable care, physicians are thinking much more about the financial impact of each test. Doing more with less has become the new norm. With the implementation of personalized medicine, which includes costly tests and treatments, reducing waste and duplication are more essential now than ever before.

Today, the level of complexity in medicine has increased exponentially, particularly in cancer care.  For example, in the past, chemotherapy choices were very limited and there were not many options available. These options produced many side effects for the patient because treatment meant impacting  both cancerous and healthy cells equally. Now, treatment can be directed to specifically target a patient’s tumor, which we sometimes now call “personalized medicine.” This technology and advancement in medicine has led to a more accurate treatment of  breast, lung and colon cancer.  However, it comes at a price.

More than $124 billion was spent on cancer care in 2010 and this cost is estimated to grow to $173 billion in 2020.1 Drug costs have also been steadily increasing and are expected to continue to rise over the next ten years. Laboratory testing costs continue to dramatically increase year over year- leaving patients with larger bills to pay for these advances in treatment.

With more advanced options available to physicians and the costs of those options hitting the patients’ wallet, little focus has been paid to connect physicians with accurate cost information.  Many studies have shown that providing cost data of routine lab tests at the time of ordering, results in a decrease of inappropriate test ordering, particularly among low cost high volume tests.3High volume low cost testing done in routine care represents a significant source of waste and subsequent opportunity for savings.2  With this data available early on in the treatment process, physicians can make a much more informed decision.

Changing Behaviors

Changing physician ordering behaviors is not easy. With more than 70% of medical decisions based on lab testing, pathologists have a responsibility to control utilization. Using targeted education, process maps, and algorithm development, however, pathologists can assist in reducing these costs overall. It is also key that informatics and clinical decision support utilization help play a role in controlling costs by allowing physicians to utilize more cost data upfront in the treatment or prior to ordering tests.

In a recent study in which a clinical decision support tool was used to block unnecessary duplicate test orders during computerized physician order entry (CPOE), significant cost savings were realized.4 Over a 2 year period 11,790 unnecessary duplicate test orders were prevented, resulting in a cost savings of $183,586.4 From this test, there were no adverse effects reported.4 Interactions such as this demonstrate the potential to save significant health care dollars, which should also increase patient satisfaction and well-being.

Changing physician behavior will no doubt be difficult.  With over 5 billion lab tests per year, there is a lot of opportunity to reduce duplicate tests, reduce errors, and provide better care to patients.  A recent study found that there is somewhere near a 30% overutilization rate for tests ordered and a similar underutilization rate.  Granted most lab tests are inexpensive, however, consequences of inappropriate testing  leads to significant cost and waste, i.e. increased length of hospital stay, increased procedures and visits. Although lab testing only accounts for 3-5% of medical costs, the downstream impact is much greater.

Each test ordered  could result in harm and unnecessary expense to the patient. We must do everything possible to minimize these occurrences and be more proactive to drive down under/overutilization of tests, which leads to cost savings in medicine as a whole. These are enormous challenges that lie ahead to reduce costs and improve overall treatment; however, changing the way we order lab tests is a great place to start.



1. Mariotto AB, Yabroff KR, Shao Y, et al. Projections of the cost of cancer care in the United States:2010–2020. J Natl Cancer Inst, 2011;103:117–128.

2. Drozda J, Physician Performance Measurement: The Importance of Understanding Physician Behavior. JAMA Intern Med. 2013;173(15):1444-1446.

3. Feldman LS, Shihab HM, Thiemann D, Yeh HC, Ardolino M, Mandell S, Brotman DJ. Impact of providing fee data on laboratory test ordering: a controlled clinical trial. JAMA Intern Med. 2013;173(10):903-8.

4. Procop GW, Yerian LM, Wyllie R, Harrison AM, Kottke-Marchant K. Duplicate laboratory test reduction using a clinical decision support tool. Am J Clin Pathol. 2014 May;141(5):718-23.

5. Zhi M, Ding E, Theisen-Toupal J, Whelan J, Arnaout R. The Landscape of Inappropriate Laboratory Testing: A 15-Year Meta-Analysis. Plos One, 2013:8,e78962.

6. Song Z, Safran DG, Landon BE, He Y, Ellis RP, et al. Health Care Spending and Quality in Year 1 of the Alternative Quality Contract. N Engl J Med, 2011;365: 909–918.

7. Smoller BR, Kruskall MS, Phlebotomy for Diagnostic Laboratory Tests in Adults. N Engl J Med, 1986; 314:1233-1235.

8. Rourke C, Bates C, Read RC. Poor hospital infection control practice in venepuncture and use of tourniquets. J Hosp Infect. 2001 Sep;49(1):59-61.

9. Epner PL, Gans JE, Graber ML, When diagnostic testing leads to harm: a new outcomes-based approach for laboratory medicine. BMJ Qual Saf,2013;22:ii6–ii10.


Dr. Misialek currently serves as Associate Chair of Pathology at Newton-Wellesley Hospital, Newton, MA. He is the Medical Director of the Vernon Cancer Center, Chemistry Laboratory and Point of Care Testing. He practices in all areas of pathology in a busy community hospital. Holding an academic appointment at Tufts University School of Medicine as a clinical assistant professor of pathology, he regularly instructs medical students and pathology residents. 

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