A medical laboratory which is also known as a clinical laboratory is a laboratory where tests are carried out on clinical specimens to obtain information about the health of a patient to aid in the diagnosis, treatment, and prevention of disease.
The large amount of information processed in laboratories is managed by a system of software programs, computers, and terminology standards that exchange data about patients, test requests, and test results known as a Laboratory information system or LIS.
Statistics have it that in the United States of America alone, the Diagnostic & Medical Laboratories industry Market Size in 2023 is put at 68.3 billion with market size of 3.2 percent, growing from 3.1 percent between 2017 and 2022. There are approximately 38,953 diagnostic and medical laboratories in the United States responsible for employing 336,673 people.
Steps on How to Start a Medical Laboratory Business
Table of Content
Conduct Market Research
The first step in conducting market research for your medical laboratory business is to develop market-based research questions in line with your overall business goals and objectives. Please note that market research helps businesses measure their reputation in the market over a period of time. It is a great way to measure the progress of your business as well as compare your status to your competitors to see where you are trailing or where you have an advantage.
a. Who is the Target Market for Medical Laboratory Business
- Hospitals
- Healthcare centers
- Research institutes
b. Is Medical Laboratory Business a Profitable Business?
Yes, the medical laboratory business is profitable. Statistics show that the industry generates an average of $68.3 billion annually.
c. Are There Existing Niches in the Industry?
Although there is no niche area in the medical laboratory business, it is common for some medical labs to specialize in any of the following;
- General pathology services
- Clinical pathology services
- MRI imaging
- Anatomic pathology services
- X-ray/radiology imaging.
d. Who are the Major Competitors?
- Laboratory Corporation of America Holdings
- Quest Diagnostics Inc.
- Sonic Healthcare USA.
- Sanofi Genzyme
- Abbott Laboratories
- Charles River Laboratories, Inc.
- Bio-Reference Laboratories
- Spectra Laboratories
- Genoptix Medical Laboratory
- ARUP Laboratories
- Clarient, Inc.
- Alere, Inc.
- DaVita Healthcare Partners, Inc.
- Genomic Health, Inc.
- Myriad Genetics, Inc.
- Siemens Healthineers
- SYNLAB International GMBH
e. Are There County or State Regulations or Zoning Laws for Medical Laboratory Business
Yes, there are county or state regulations and zoning laws for medical labs, and players in this industry are expected to work with the existing regulations governing such business in the county or state where their business is domiciled.
Please note that if you are planning to house your laboratory in a purpose-built facility or propose an extension to an existing building, you must apply to your local planning department for approval. Ideally, an architect experienced in laboratory planning will draft your initial plans.
They might collaborate with, or seek input from your local Fire Safety Officer to ensure that the appropriate safety measures have been accounted for, under the safety regulations as defined in the Regulatory Reform Order 2005 (RRO).
f. Is There a Franchise for Medical Laboratory Business?
Yes, there are franchise opportunities in the industry, and here are some of them;
- Vista Clinical Diagnostics
- Fas-Tes Franchise Systems, LLC (Fasted Labs)
- ARCpoint Labs
- Any Lab Test Now
g. What Do You Need to Start a Medical Laboratory Business
- A Feasibility Report
- Business and Marketing Plans
- Business Licenses and Permits
- A Good Lab facility
- Computers, Laptops, and Servers
- EIN (Employer Identification Number)/Federal Tax ID Number
- A Corporate Bank Account
- Dental Equipment and Tools
- Employees
- Startup Capital
Memorable Business Name ideas for Medical Laboratory
- One Block© Medical Laboratory, Inc.
- MT Connect® Medical Laboratory, LLC
- Lilly Brown© Medical Laboratory, Inc.
- Lab Solutions® Medical Laboratory, Inc.
- Clinics’ Expats™ Medical Laboratory, Inc.
- J Energies™ Medical Laboratory, LLC.
- Downe Lockers© Medical Laboratory, LLC
- Garry Nelis® Medical l Laboratory, Inc.
- Lab Pros© Medical Laboratory, Inc.
- Gaius Luke© Medical Laboratory, Inc.
- April Ro® Clinical Laboratory, Inc.
- Clarino® Medical Lab, LLC
- Stretch Prop® Medical Lab, Inc.
- International Lab Corporation, Inc.
- Gary Grass® Medical Laboratory USA LLC.
- Shannon Stev® Clinical Lab, Inc.
- Denver Porto® Medical Laboratory USA LLC
- Ferdinando® Medical lab, LLC
- Starlings® Medical Laboratory USA LLC
- South Bank® Medical Laboratory USA LLC.
Register Your Business
a. What Type of Business Structure is Best for Medical Laboratory Business
Even though there are several options when it comes to the business structure of a medical laboratory business, the one that most players consider is an LLC. It is common to consider an LLC because providers want to protect themselves from lawsuits.
Please note that an LLC will need an EIN if it has employees or if it will be required to file any of the excise tax forms listed below.
b. Steps to Form an LLC
- Choose a Name for Your LLC.
- File Articles of Organization.
- Choose a registered agent.
- Decide on member vs. manager management.
- Create an LLC operating agreement.
- Comply with other tax and regulatory requirements.
- File annual reports.
c. What Type of License is Needed to Open a Medical Laboratory Business
- General Business License
- Health and Safety Permit
- Zonal Permits (Applicable in some cities)
- Signage Permit
- Operational State Facility Inspections
d. What Type of Certification is Needed to Open a Medical Laboratory Business
- Medical Laboratory Scientist Certification – MLS (ASCP)
- American Society for Clinical Pathology Board of Certification
- SCSLM / Medical Laboratory Technology – Certification – CSMLS.
e. What Documents are Needed to Open a Medical Laboratory Business
- DBA
- EIN
- Business and liability insurance
- Federal Tax Payer’s ID
- State Permit and Building Approval
- Certificate of Incorporation
- Business License
- Business Plan
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Online Terms of Use
- Online Privacy Policy Document
- Contract Document
- Company Bylaws
- Memorandum of Understanding (MoU)
f. Do You Need a Trademark, Copyright, or Patent?
If you are considering starting a medical laboratory business, usually you may not have any need to file for intellectual property protection or trademark. This is because the nature of the business makes it possible to run the business with anyone infringing on your work.
Cost Analysis and Budgeting
a. How Much Does It Cost to Start a Medical Laboratory Business?
When it comes to starting a medical laboratory business, the startup costs could range from $50,000 to over $250,000 depending on how much equipment the business owner decides to purchase and the lab space leased.
b. What are the Costs Involved in Starting a Medical Laboratory Business?
- The total fee for registering the business in the United States of America – $750.
- Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines, and other software) – $3,300.
- Marketing promotion expenses for the opening of the medical laboratory, $3,500, and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
- The cost for hiring a business consultant – $2,500.
- Insurance (general liability, workers’ compensation, and property-casualty) coverage at a total premium – $2,400.
- The cost for payment of rent for 12 months at $1.76 per square foot in the total amount of $75,600.
- The cost for laboratory remodeling (construction of racks and shelves) – $10,000.
- Other start-up expenses including stationery and phone and utility deposits ($2,500).
- Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $30,000
- The cost for start-up inventory (medical laboratory supplies, tool box and equipment)) – $50,000
- The cost for store equipment (cash register, security, ventilation, signage) – $13,750
- The cost of purchase and installation of CCTVs: $3,000
- The cost for the purchase of office furniture and gadgets (Computers, Printers, Telephone, TVs, Sound System, tables and chairs et al): $4,000.
- The cost of launching a website: $600
- The cost of opening party: $3,000
- Miscellaneous: $5,000
c. What Factors Determine the Cost of Opening a Medical Laboratory Business?
- The size of medical laboratory business
- The choice of location
- The required licenses and permits
- The type of facility
- The additional services offerings
- The cost of hiring and paying a business consultant and attorney
- The cost for branding, promotion, and marketing of the medical lab
- The cost for furnishing and equipping the medical lab
- The cost for insurance policy covers
- The cost for registering the business
- Source of your supplies and ongoing expenses
- Cost of recruiting and training your staff
- The cost for the purchase and customizing of uniforms
- The cost for the grand opening of the medical lab
d. Do You Need to Build a Facility? If YES, How Much Will It Cost?
Actually, it is not compulsory to build a new facility for your medical lab, but, if you have the required finance, it will pay you to build your own facility. The truth is that building or reconstructing a facility will help you come up with a facility that will perfectly fit into your overall business goals and vision.
e. What are the Ongoing Expenses of a Medical Laboratory Business?
- Supplies
- Utility bills (internet subscriptions, phone bills, signage and software renewal fees et al)
- Equipment maintenance
- Salaries of employees
f. What is the Average Salary of your Staff?
- Chief Executive Officer (President) – $65,000 Per Year
- Lead Medical Lab Scientists (Lab Manager) – $45,000 Per Year
- Human Resources and Admin Manager – $42,000 Per Year
- Sales and Marketing Executive – $30,000 Per Year
- Accountant – $32,000 Per Year
- Medical Laboratory Technologists and Scientist – $36,100 Per Year
- Client Service Executive (Help Desk Office) -$28,000 Per Year
g. How Do You Get Funding to Start a Medical Laboratory Business
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for a loan from your bank/banks
- Pitching your business idea and applying for business grants and seed funding from, government, donor organizations, and angel investors
- Source for soft loans from your family members and your friends.
Write a Business Plan
a. Executive Summary
J Energies™ Medical Laboratory, LLC. is a global medical laboratory company headquartered in Abbott Park, Illinois, US. The company provides laboratory diagnostic products and services in a variety of areas including clinical chemistry, drug testing, hematology, immunology, molecular diagnostics, and more.
b. Products and Service
- General pathology services
- Clinical pathology services
- MRI imaging
- Anatomic pathology services
- X-ray/radiology imaging.
c. Mission Statement
Our mission is to establish a world-class medical laboratory business that will be known for highly reliable medical lab tests.
Vision Statement
Our vision is to become one of the leading brands in the medical laboratory line of business in Illinois.
d. Goals and Objectives
The goals and objectives of the medical laboratory business are to provide a facility where tests are carried out on clinical specimens to obtain information about the health of a patient to aid in the diagnosis, treatment, and prevention of disease.
e. Organizational Structure
- Chief Executive Officer (President)
- Lead Medical lab Scientists (Lab Manager)
- Pathologist
- Clinical biochemist
- Medical laboratory assistant (MLA)
- Phlebotomist (PBT)
- Histology technician
- Human Resources and Admin Manager
- Medical Laboratory Technologists and Scientist
- Sales and Marketing Executive
- Accountant
- Client Service Executive (Help Desk Office)
Marketing Plan
a. SWOT Analysis
Strength:
The strength of the medical laboratory business is that we have well-experienced and certified medical lab technicians under our payroll. So also, we operate in a location where we can easily collaborate with other key stakeholders in the medical laboratory industry.
Weakness:
As a new medical laboratory business, it might take some time for our organization to break into the market and gain acceptance especially from top profile clients in the fast-growing and highly competitive medical laboratory industry; that is perhaps our major weakness. Another weakness is that we don’t have the financial capacity to compete with multi-million dollar medical laboratories when it comes to working for a wide range of high-paying clients.
Opportunities:
The rising elderly population will drive demand for lab testing, bolstering industry revenue. So also, Medicare and Medicaid reimbursements account for 19.6% of industry revenue and lower patients’ out-of-pocket healthcare expenditures, thus stimulating greater patient demand for industry services. Federal funding for Medicare and Medicaid is expected to increase in 2023, presenting a potential opportunity for the industry.
Threat:
One of the major threats that we are likely going to face is an economic downturn and unfavorable government policies. It is a fact that the economic downturn affects purchasing power. Another threat that may likely confront us is the arrival of a new medical laboratory in the same location where ours is located.
b. How Do Medical Labs Make Money?
Medical labs make money by offering the following services;
- General pathology services
- Clinical pathology services
- MRI imaging
- Anatomic pathology services
- X-ray/radiology imaging.
c. Payment Options
- Payment via bank transfer
- Payment with cash
- Payment via credit cards
- Payment via online bank transfer
- Payment via check
- Payment via mobile money transfer
d. Sales & Advertising Strategies
- Introduce your medical laboratory business by sending introductory letters alongside your brochure to residents, all medical clinics and hospitals, and key stakeholders
- Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across
- Creating a basic website for your business to give your business an online presence
- Directly market your services.
- Join local medical laboratories associations for industry trends and tips
- Advertise the business in community-based newspapers, local TV and radio stations
- List your business on yellow pages ads (local directories)
- Encourage the use of word-of-mouth marketing (referrals)
Financial Projection
a. How Much Should You Charge for your Service?
Without insurance, lab tests can range from between $108- $1,139. If a patient needs multiple tests, the costs will likely be thousands of dollars. Blood test costs typically depend on the facility you get tested at, your health plan, and your location in the United States.
b. How Much Profit Do Medical Laboratory Business Owners Make a Year?
It depends, but available reports show that Blue Diamond Medical Lab Owner earns $75,000 annually, or $36 per hour, which is 7 percent higher than the national average for all owners at $70,000 annually and 13 percent higher than the national salary average for all working Americans.
c. What Factors Determine the Amount of Profit to Be Made?
- The capacity of the medical laboratory business
- The types of service offerings
- The location of the medical laboratory business
- The management style of the medical laboratory business
- The business approach of the medical laboratory business
- The advertising and marketing strategies adopted by the medical laboratory business.
- The number of years the medical lab is in business
d. What is the Profit Margin of a Medical Laboratory Business?
The profit margin of a medical laboratory business is not fixed. It could range from 35 percent to 70 percent depending on the nature of the products and services in question.
e. What is the Sales Forecast?
Below is the sales forecast for a medical laboratory business. It is based on the location of the business and other factors as it relates to such startups in the United States;
First Fiscal Year:
- $100,000 (From Self – Pay Clients)
- $150,000 (From Medicaid Covers)
Second Fiscal Year
- $150,000 (From Self – Pay Clients)
- $200,000 (From Medicaid Covers)
Third Year
- $200,000 (From Self – Pay Clients)
- $250,000 (From Medicaid Cover)
Set Up your Office
a. How Do You Choose a Perfect Location for Medical Laboratory Business?
- The demography of the location especially as it relates to old people who are regulars when it comes to medical lab tests
- The demand for the services and products offered by medical labs in the location
- The purchasing power of businesses and the residents of the location
- Accessibility of the location
- The number of medical labs, dental clinics, hospitals, and medical healthcare facilities in the location
- The local laws and regulations in the community/state
- Traffic, parking and security et al
b. What State and City is Best to Open a Medical Laboratory Business
- Burlington, NC
- Cambridge, MA
- Secaucus, NJ
- Abbott Park, Il
- Wilmington, MA
- Elmwood Park, NJ
- Milpitas, CA
- Carlsbad, CA
- Salt Lake City, UT
- Aliso Viejo, CA
- Brattleboro, Vermont
c. What Equipment is Needed to Operate a Medical Laboratory Business?
You should be prepared to purchase microscopes, hematology analyzers, blood gas analyzers, autoclaves, hotplates, chemistry analyzers, differential counters, histology, and cytology equipment. You will also need computers or laptops, servers, storage, and internet facility, telephone, fax machine, and office furniture (chairs, tables, and shelves) amongst others and all these can be gotten as fairly used.
Hire Employees
When it comes to hiring employees for a standard medical laboratory business, you should make plans to hire a competent Chief Executive Officer (President), Lead Medical lab Scientists (Manager), Pathologist, Clinical biochemist, medical laboratory assistant (MLA), Phlebotomist (PBT), Histology technician, Human Resources and Admin Manager, Sales and Marketing Executive, Accountant, Medical laboratory Technologists, and Scientist and Client Service Executive (Help Desk Office).
Launch the Business Proper
In recent times, no medical laboratory business opens its door for business without first organizing a party to officially launch the business. You can choose to do a soft opening if you are operating on a low budget or you can go for a grand opening party.
The bottom line is that with a proper launching of the medical laboratory business, you will be able to officially inform people in your city that your medical laboratory business is open for business.
a. What Makes a Medical Laboratory Business Successful?
- You are generating profits from the business
- Your customers are happy and satisfied with your services and they are freely recommending your services to their friends, family members, and business partners.
b. What Happens During a Typical Day at a Medical Laboratory Business
- The office is open for the day’s work
- To-do list is reviewed
- Employees go straight to their job description (samples are taken, tests are conducted, reports are written, and patients are related with)
- Deliveries of orders are made
- Reports are written and submitted to superior officers
- The business is closed for the day.
c. What Skills and Experience Do You Need to Build a Medical Laboratory Business
- Excellent clinical testing skills
- Excellent scientific skills
- Good managerial and human development skills
- Visionary Leadership
- Team-building & Interpersonal Skills.
- Excellent communication and negotiation skills.
- Organizational skills.
- A strong understanding of morphology
- Attention to detail and the ability to concentrate for long periods
- Design skills and knowledge to copy shapes
- The ability to analyze quality or performance.
- Good Supervisory skills
- Experience in crown and bridge metalwork
- Work experience in a laboratory, or hospital
- Experience in managing people
- Experience in business administration
- Experience in handling software and hardware.