CLN Daily 2026
More hospitals are electing to outsource their clinical laboratories in an attempt to expand services while cutting costs. In the last 3 years alone, major United States reference laboratories spent $700–$900 million annually to acquire three to four laboratories each.
That’s according to Leah Militello, MD, MBA, director of clinical chemistry, point-of-care testing, and the medical laboratory science training program for the Rochester Regional Health System. On July 28, Militello will lead a roundtable session at ADLM 2026 that explores the implications of the growing outsourcing trend.
Although there can certainly be benefits to outsourcing, Militello has found that it’s not always smooth sailing. In fact, if not done carefully, such arrangements can have surprising impacts on healthcare system operations and clinical care. They can even end up costing hospitals more in the long run, especially if they don’t work out and the healthcare system needs to rebuild their lab from the ground up.
“I’ve always been inherently interested in the business aspect of things, and I’ve been hearing more about this outsourcing, so it seemed like a really important topic that people might not know much about,” Militello said.
Her passion for business comes from the early part of her career, which had nothing to do with healthcare. Militello earned an MBA in accounting and worked as a tax accountant before turning to pathology, which gave her unique insight into the financial aspects of outsourcing. “I really wanted to tell the story of laboratories that have outsourced and where the pain points are,” she said.
For better or for worse, outsourcing changes the way clinical laboratorians interact with the health system, Militello said. For one thing, lab workers aren’t employees of that hospital anymore, and lab directors don’t really have control over the other company’s employees, she explained.
Because outsourced workers are employed by a different entity, they may have divergent benefits packages and policies about time off, acceptable dress, and other workplace issues. If the two work cultures don’t mesh, it can cause some conflict, she said. And outsourcing could bring hidden costs resulting from delays in communication, loss of expertise if long-time employees leave, and potential drops in quality — all of which can affect both patient experience and the bottom line.
Militello will also discuss what clinical laboratorians can do if their healthcare system is considering outsourcing their laboratories. “It’s usually not anyone in the laboratory involved in the decision-making,” Militello said. So, the practical aspects may be missed in favor of solely financial considerations. Thus, she’ll emphasize how to communicate and warn of the risks.
Militello also plans to present case studies on healthcare systems that initially outsourced their labs only to realize it was the wrong move for them. She’ll highlight the challenges they faced in trying to reestablish their own clinical laboratories. “You lose your staffing, you lose your supply chain, and you need to purchase new equipment,” she said. “It’s starting from scratch.”
Jen A. Miller is a freelance journalist who lives in Audubon, N.J. +Bluesky: @byjenamiller.bsky.social.