In many health systems, the clinical laboratory sits at the intersection of multiple departments. Operations manages the physical space and day-to-day logistics. Pathology oversees the scientific and medical direction. Finance monitors budgets and cost allocation. Compliance manages accreditation requirements and regulatory readiness.

Each of these functions plays an important role in keeping the laboratory running. And in most organizations, there’s some level of coordination across them. But because responsibility is distributed across multiple groups, it can be difficult for any single function to maintain full visibility into the laboratory’s overall strategic performance.

This structure – common across many health systems – creates what we refer to as the “orphan asset” dynamic. The laboratory is highly visible operationally, but its broader strategic performance doesn’t always have a clearly defined point of accountability. When that happens, opportunities for coordination, efficiency, and strategic growth become harder to capture.

The Structure Most Health Systems Inherit

Few health systems intentionally design fragmented laboratory governance. More often, the structure develops gradually as different responsibilities settle into different departments over time.

Operational teams focus on specimen flow, equipment, and staffing. Pathology directs clinical quality and test interpretation. Finance evaluates budget performance and capital requests. Compliance ensures the organization meets accreditation and regulatory requirements.

Each department typically performs its responsibilities well. The challenge arises when decisions affecting the laboratory require coordination across several functions at once. In those moments, maintaining a unified strategic perspective becomes much harder.

Over time, the laboratory can drift into operating primarily as a shared service rather than a fully coordinated strategic program.

The Financial Impact of Fragmented Governance 

The consequences of distributed laboratory governance often appear gradually – and across multiple parts of the organization.

Duplicated Spending
Without centralized visibility, different departments may make laboratory-related purchasing or contracting decisions independently. Equipment procurement, reference laboratory contracts, and service agreements can end up negotiated in isolation – creating overlapping costs or missed opportunities for consolidation.

Uncoordinated Capital Planning
Laboratory capital investments require careful alignment between clinical demand, operational capacity, and financial performance. When these decisions are made in separate departmental contexts, your organization may defer valuable investments or pursue projects that don’t fully align with system priorities.

Hidden Revenue Opportunities
Some of the most meaningful opportunities in laboratory strategy require coordination across multiple departments—particularly outreach programs or test menu expansion initiatives. When no single leader owns that intersection, these opportunities can be difficult to fully evaluate or pursue.

In a recent engagement with an Upper Midwest health system spanning 11 locations, connecting financial, operational, and testing data across departments revealed nearly $9.5 million in recurring annual opportunity, including more than $4 million in labor optimization and $1.5 million in reference laboratory savings. For the full case study, see Transforming Into a Strategic Asset.

Compliance and Operational Risk 

Regulatory compliance also becomes more complex when oversight is distributed across multiple teams.

Personnel qualification records may sit within human resources. Equipment maintenance logs may reside with facilities or operations teams. Quality control documentation may remain with the technical supervisor or laboratory manager.

When accreditation surveys approach, assembling a complete regulatory picture can mean pulling together information from several systems and departments – rather than relying on a single coordinated oversight process.

Organizations with more unified visibility find it easier to maintain consistent regulatory readiness because they can monitor requirements holistically rather than through separate operational lenses. For a deeper look at the compliance areas most frequently targeted by federal regulators, see our analysis of the seven most common and costly laboratory compliance issues.

What Strong Laboratory Governance Looks Like  

The highest-performing health systems we work with tend to share one common structural feature: a clear point of accountability for laboratory strategy.

At Scripps Clinic, for example, the introduction of focused interim laboratory leadership transformed a $7 million annual loss into a $5 million contribution margin within six months—from the same book of business. The full case study is available here.

This doesn’t necessarily require reorganizing the laboratory under a single department. Instead, it means establishing a leadership structure that integrates operational, financial, clinical, and compliance perspectives into a unified strategic framework.

Effective laboratory governance typically includes:

Unified Financial Visibility
Leadership maintains a consolidated view of laboratory costs, revenues, and margin contribution across the entire system.

Cross-Functional Strategic Planning
Laboratory initiatives are evaluated through the combined lens of operations, clinical priorities, compliance obligations, and financial performance.

Clear Decision Authority
Capital investments, partnership decisions, staffing models, and test menu changes follow defined governance pathways rather than ad hoc committee decisions.

Consistent Performance Measurement
Operational metrics, financial performance indicators, and quality measures are reviewed together to provide a holistic view of laboratory performance.

A Simple Question That Reveals the Issue

For many health systems, the easiest way to identify a governance gap is by asking a single question:

Who is accountable for the laboratory’s strategic performance?

Not just its operational output. Not just its compliance readiness. But its overall strategic contribution to the health system.

If answering that question requires naming multiple departments rather than identifying a clearly accountable function, your laboratory may benefit from a more unified leadership structure.

Treating the Laboratory as a Strategic Asset

The clinical laboratory sits at the intersection of patient care, physician relationships, compliance oversight, and health system financial performance. Few departments influence as many aspects of the organization simultaneously.

Recognizing the laboratory as a strategic asset – rather than simply a supporting function – often begins with establishing clearer visibility and coordination across its operations.

When your laboratory’s operational, financial, and clinical dimensions are viewed together rather than separately, your health system is better positioned to make informed decisions about growth, investment, and performance improvement.

Transforming Into a Strategic Asset: An Upper Midwest Health System
How connecting data across departments revealed $9.5 million in recurring annual opportunity

Rightsizing the Laboratory: Scripps Clinic
How focused interim leadership turned a $7 million loss into $5 million in contribution margin

Seven Most Common and Costly Laboratory Compliance Issues
The areas most frequently targeted by OIG, CMS, and DOJ investigations

PAMA in 2026: Why Smart Labs Aren’t Waiting for Congress
How proactive laboratories are preparing for reimbursement changes regardless of the legislative timeline

At Colaborate, we work with health systems nationwide to evaluate laboratory governance structures, operational performance, and strategic opportunities. Our experience across thousands of laboratories helps organizations build the analytical foundation needed to support coordinated, cross-functional decision-making.

If your organization is exploring ways to strengthen laboratory leadership and performance, our team would be glad to start the conversation.