Starting a medical lab is no easy feat. On top of securing excellent medical lab software, cost-effective equipment, and a secure laboratory space, startup owners must also consider permits, marketing, and dozens of other factors.
Medical labs have always played an important role in American healthcare and beyond. As a matter of fact, diagnostic tools have existed since ancient times, and medical labs as we currently understand them have existed since the beginning of the 20th century.
Today’s clinical laboratories have built on earlier diagnostic methods, and now, these labs have formed key partnerships with healthcare professionals. They do everything from ruling out genetic diseases to recommending the best treatment pathways. They provide answers so that patients can live their best lives. In fact, medical labs often save lives by shedding light on what would have otherwise remained a mystery.
People outside of the medical field don’t always understand just how important these clinical laboratories are, but the events of 2020 and 2021 made their importance clear. When the demand for COVID-19 testing grew, so did the demand for laboratories that could process those tests. Today, clinical laboratories are more important than ever, and because existing laboratories are overflowing with demand, there’s now a significant need for new local laboratories that can pick up the slack.
New medical labs are in a unique position to grow and thrive these days. However, if you’re starting a medical lab, it’s important that you don’t jump into the business without the right tools. Running a laboratory requires more than passion and medical knowledge. You’ll also need to understand the business side of laboratory work. Read on to find out how you can start a successful medical lab, including how you can find the right medical lab software.
A startup medical lab can be a major success, provided that it has the right resources and that the owner of the lab knows their demographics. When your laboratory finds the right intersection between supply and demand, it can thrive in the market. That’s why a number of new laboratories “have boldly taken on the challenge of creating an entire lab company from the ground up–including construction of a new lab facility,” states an article for Dark Daily. The key is to do your research, seek help whenever necessary, and establish a sense of resourcefulness.
If you plan to open a new medical lab, then there’s a good chance that you already value the power of research. Now it’s time to see how far you can take those research skills, because research is one of the most important steps of opening a startup lab. Every choice from lab suppliers to medical lab software requires extensive research. The more research that you do upfront, the fewer snags you’ll run into as you set up your laboratory.
Just like with scientific research, your market research should start broad and then narrow as you go. Begin by choosing your laboratory’s specialty. You may already have a specialty in mind, or you may want to compare and contrast your options first. In any case, it’s important to learn as much as you can about your specific laboratory’s area of expertise and how you expect that specialty performs in the market.
While you figure out your specialty, take some time to identify potential blank spaces in your research. Are there any areas that require further knowledge? Make note of these areas and start a plan for learning more about them.
Next, focus on the market for your niche. Specifically, what is the current demand in your target area for your chosen type of medical lab? What are some things that you can do to make your lab more in-demand than similar labs? Apart from market demands, some other things to consider include:
You should also study as many sources as possible to make sure that you get the most accurate numbers. Once you’ve done this broad research, it’s time to narrow things down by taking a closer look at your competition. You may or may not have a lot of competition, but you shouldn’t necessarily get discouraged if you do. If you’ve done your research on market demands, you may find that you only have so much competition because the demand for medical labs is so high, and the market may still have plenty of space for your specialty. Furthermore, your specific geographical location may be a prime spot for your medical lab.
However, you’ll still want to learn as much as possible about your competition so that you can gain insight on your own potential for success. In what ways is your competition successful? Which areas could be stronger? What can you do to stand apart from your competition, and how can you learn from their strengths and weaknesses?
You can always do this research yourself, but if you have the resources, you might also consider hiring a market research team. If you get some experts on your side, you can benefit from more in-depth research. However, if you can’t afford a market research team, don’t avoid studying your competition altogether. You can still gain valuable insights from your observations, and those insights can make all the difference in your medical lab business plan.
Developing your business plan includes developing your testing menu, so why not start there? You don’t want too few or too many testing options, but keep in mind that it’s easier — and more cost-effective — to add to your testing menu than it is to subtract from it.
Some startup laboratory owners make the mistake of starting with too many test options. However, if you offer tests that nobody wants to use, then your medical lab can’t remain profitable. In fact, you’ll likely lose money on your supplies. Before you set up your test menu, ask yourself which tests are the most in-demand in your area. Also, which tests are largely uncovered by your market? You may find a sweet spot at the intersection of these two questions so that you can build the perfect test menu for your startup lab.
Other parts of your business plan include finding the right location, choosing an approach to networking, looking for suppliers, and more. You can build your business plan off of your initial research.
Obtaining accreditation is one of the most important aspects of starting a medical lab. You’ll need two types of accreditation to start your lab legally: business accreditation and lab accreditation.
Business Accreditation
For many laboratory owners, obtaining business accreditation is the simplest of the two. All businesses – not just laboratories – require business accreditation. Different states and cities have different requirements for business accreditation. For example, some cities don’t require a business license at all, while others have specific rules and guidelines. To make sure that you don’t run into any legal snags, look up the accreditation laws for businesses in your city and state. If you need extra help, you can talk to a business consultant or an attorney.
In any case, obtaining your business accreditation requires having a name for your business. You’ll need a name so that you can put that name on any forms you fill out for your business accreditation. If you haven’t already chosen a name, start brainstorming possibilities as soon as possible. Once you have a potential business name, do some research to make sure that the name is available.
Lab Accreditation
Next, there’s laboratory accreditation, and this part is much more complicated and specific than business accreditation. We explained this process in an issue of Launchpad:
This part is hyper-dependent upon your specific laboratory, your specialty, and how deep down the accreditation hole you wish to go. The [principal] certifications for labs are the CLIA, COLA, CAP, and The Joint Commission. The primary accreditation is CLIA, which is administered and regulated on a state level. But, according to federal law, COLA, CAP, and The Joint Commission are also recognized accreditations (because they are “at least as strict as CLIA”).
Because your lab certification will depend on your unique situation, we highly recommend that you reach out to a lab consultant to make sure that you get exactly what you need and don’t miss anything important.
Once you’ve finalized your test menu, you can get a good idea of your spatial and supply requirements. If you haven’t nailed down your testing menu yet, you’ll want to finish that step before you begin gathering your supplies.
First, consider the amount of space that your medical lab will need to fulfill its processes.
Your lab will have unique spatial needs based on the type and number of tests you want your lab to perform. Those needs will include areas for storage, pre-process spaces, post-process spaces, and plenty of space for your lab technicians to work as they perform the tests. You should also consider non-working spaces like restrooms and break rooms.
Take some time to write down everything that you’ll need in terms of space, and then you can get to work mapping out your future laboratory. Remember that it’s not enough simply to have enough space in which to work. You’ll also want to establish a good flow. For example, you’ll want clear pathways from pre-process spaces to post-process spaces with lots of room for each step in between. Your space should flow logically and be conducive to productive work.
Second, you establish your spatial needs, you’ll also need to make sure that you have all of the right laboratory equipment.
Again, your test menu will help you figure out what you need. Once you know which tests you want your medical lab to perform, you can research the equipment needs for each one of those tests. What machinery will you need? Will you need any particular accessories? What about your medical laboratory software? What safety tools and testing equipment will you have at your disposal? What will you need in terms of organizational tools?
You have a lot of options for procuring this equipment, including purchasing used equipment, as we’ll explore below.
For many new medical lab owners, the financial aspect of running a lab is the most difficult part of getting started. You likely want to start your laboratory because you value science and research, but that doesn’t necessarily mean that the business side of running a laboratory will come naturally to you.
It does mean that you’ll need to spend some extra time researching and reviewing best business practices for running a laboratory. It’s also a good idea to get someone on your team who does have a mind for business.
You’ll need to set aside time to focus on your laboratory’s finances. Like we explained in Launchpad, we recommend dividing your financial strategy into two sections: budget and payroll. Although payroll will be a part of your budget, it deserves its own category due to its complexities.
Establishing a solid budget plan is important for two reasons. First, your budget will help you stay on top of your finances and help you make sure that you turn a profit instead of losing money.
Second, your budget will help you determine how much money you’ll need to get your startup lab off the ground, and once you figure out how much funding you’ll need, you’ll find it easier to apply for grants. You’ll want to know exactly how much money you’ll need so that your request for funding doesn’t turn out to be too small. Plus, the number that you submit to granting agencies will play a part in whether or not you receive funding. If your number is too low, these agencies may see your request as unrealistic, and that creates doubts about whether your medical lab will succeed in the long term. On the other hand, if the number is too big, agencies may not be able to afford your request. When determining your budget for grant purposes, accuracy matters.
To get the most accurate numbers, make sure that you consider as many factors as possible. What exactly will your medical lab need? For example, you should consider all of the following items:
If you establish a solid payroll plan upfront, you’ll get a better idea of just how many people you can afford to hire and what it will take to keep paying your staff members on a regular basis. You should include both laboratory technicians and support staff in your payroll considerations. While you make these considerations, take a look at CLIA requirements for your medical lab category. You may be required to hire people for specific laboratory positions.
Also, don’t just think about your payroll budget. You should also consider whether or not you want to outsource your laboratory’s payroll. Some medical lab owners choose to outsource, while others use an in-house software. Either option is fine. Just choose the one that you think will work best for your circumstances.
Obviously, getting a startup medical lab up and running takes a lot of time, effort, and money. While you shouldn’t cut corners, there are plenty of ways for you to save time and money. With the right resources, you can maximize your new laboratory’s productivity and cost-effectiveness so that you and your clients get the most from your laboratory right from the start.
When it comes to shopping for medical lab equipment, you’ve probably already figured out that there are a lot of benefits in buying brand-new equipment. However, don’t rule out the possibility of purchasing used equipment. There are plenty of benefits in shopping used as well, and one of the biggest benefits is cost-effectiveness. You can save a lot of money by purchasing used medical lab equipment, and you can even find some nearly-new pieces.
Each choice comes with its own set of pros and cons. For example, auctions may provide you with some of your cheapest equipment, but they also don’t come with any guarantees that you’ll find exactly what you need. Resellers, meanwhile, may require you to pay a little more, but they also allow you more time to browse and make your decisions. We detailed all of these options in a 2019 issue of Launchpad, so take a look for more information. You can always mix and match your equipment resources, depending on your laboratory’s needs.
When buying your equipment, you’ll need to make certain considerations. First, you’ll have to make judgments about whether certain equipment pieces will be worth your time and effort. Many will be worth it while others will not, even if they happen to be priced very low. For example, if a piece of equipment comes with significant repair needs, you may be better off buying something else.
Next, consider the age of your potential medical lab equipment. Almost always, newer equipment is better. If two pieces of lab equipment are more or less the same, but one piece is newer than the other, it’s generally a good idea to go with the newer equipment option.
You should also think about the environment in which your potential equipment spent most of its time. Is it a gently used piece of equipment, or does it have a lot of wear and tear? Was it stored carefully in a suitable environment?
You’ll obviously consider the cost of your medical lab equipment, but make sure that you think about the overall cost and not just the upfront cost. For example, will you need to make any changes or repairs to the equipment? Will you need to buy any accessories? How much will it cost to ship the equipment to your laboratory?
Finally, having the right laboratory software is an excellent way to boost cost-effectiveness. Start by looking for startup-friendly and budget-friendly medical lab software options.
While you will want to pay as little as possible upfront for your software, it’s not enough just to make sure that your software comes at a low price. You’ll also want to make sure that you get a lot for your money, so don’t jump into this decision right away.
For one thing, make sure that your potential software company offers a LIS that fits within your particular medical lab specialty. If you can customize your software, even better. This way, you can make sure that you only pay for exactly what you need without having to worry about anything extra.
If you’re looking for medical lab software for your laboratory startup, Psychē Systems can help. We offer customizable, startup-friendly laboratory software for all types of medical labs. Not only that, but we also offer educational resources for startup lab owners, on-demand customer service, and much more. Ready to learn more about your options with Psychē?
