Key takeaways:
- Laboratories increasingly outsourced their billing in 2025 due to payer complexity, rising denial rates, staffing shortages, and the need for stronger financial visibility.
- Specialized laboratory billing partners provide deeper expertise in laboratory coding, compliance, toxicology lab billing, and overall laboratory RCM performance.
- Outsourced billing empowers labs to focus on core operations while strengthening cash flow and reducing administrative burden.
For every new laboratory that chooses PGM Billing as its billing partner, we always ask the same question: “Why are you outsourcing your billing?” The answers offer valuable insight into the challenges labs face and the outcomes they’re striving for, whether they operate in clinical laboratory billing, molecular diagnostics, pathology, or toxicology lab billing.
As we wrap up another year supporting laboratories nationwide, we reviewed all of these conversations to identify recurring themes. Across organizations of all sizes, labs are turning to outsourced laboratory billing and laboratory RCM (revenue cycle management) partners like PGM to reduce complexity, stabilize cash flow, and improve financial performance.
Here are the seven leading reasons laboratories outsourced their billing in 2025 and why these motivations are shaping the future of lab billing.
1. Rising denial rates and increasing payer complexity
One of the most frequently cited reasons laboratories outsourced their billing in 2025 was the surge in claim denials. Payers continued to introduce new documentation rules, updated reimbursement requirements, and revised limitations for specific tests. This was especially challenging in areas like molecular diagnostics and toxicology lab billing, where policies change quickly.
Labs shared that internal teams were struggling to keep pace with evolving billing rules, leading to denials that could have been avoided with more specialized expertise. Outsourcing connected them with specialized lab revenue cycle professionals who track payer trends daily, apply correct laboratory coding upfront, and work denials thoroughly to secure appropriate reimbursement.
For many labs, outsourcing became essential to staying ahead of evolving payer behavior instead of constantly reacting to it.
2. Persistent lab staffing challenges and difficulty retaining skilled billers
In 2025, staffing remained one of the biggest pain points for laboratory business offices. Experienced billers with knowledge of clinical laboratory billing, lab billing workflows, and broader laboratory RCM were increasingly difficult to hire and even harder to retain. Internal turnover created interruptions in cash flow, gaps in productivity, expensive recruitment efforts, and continual training demands.
Outsourcing removed these operational headaches. Instead of constantly battling the labor market, labs gained an established billing team with deep expertise in payer rules, compliance, and lab coding. Many leaders described this shift as the moment they finally felt confident in the long-term stability of their billing operations.
3. A growing need for transparent reporting and real-time revenue insights
Laboratories told us they needed more sophisticated reporting to navigate the financial pressures of 2025. Internal billing processes often relied on outdated tools, incomplete data, or end-of-month summaries that lacked meaningful insight.
Modern laboratory billing requires precise visibility into how claims move through the revenue cycle, including which payers deny most often, which tests generate the most revenue, and which parts of the accounts receivable (A/R) need immediate attention.
Outsourcing to PGM provided our laboratory clients with:
- real-time dashboards
- denial and reimbursement analytics
- revenue forecasting tools that help labs anticipate financial trends
- payer performance insights that identify bottlenecks and opportunities
These tools enabled labs to identify issues earlier, forecast more accurately, and make data-driven decisions to strengthen their overall RCM performance.
4. Heightened compliance requirements and increased audit pressure
Regulatory scrutiny intensified in 2025, particularly in areas like genetic testing, toxicology lab billing, and test panel billing. Evolving requirements around medical necessity, documentation, and coding accuracy contributed to compliance anxiety for many laboratories.
Internal billing teams often lacked the bandwidth or the specialized compliance knowledge to keep up with these changes. Outsourcing offered peace of mind by ensuring that:
- claims were coded correctly
- documentation met federal and payer-specific rules
- the lab was prepared for audits and payer reviews
- billing practices aligned with evolving regulations and payer guidance
For many organizations, compliance wasn’t just a risk factor. It was a driving force behind the decision to outsource.
5. The push to accelerate cash flow and reduce days in A/R
Cash flow challenges affected laboratories of all sizes this year. Slower payer processing times, aging A/R, and inconsistent follow-up often resulted in significant revenue delays. Internal teams juggling multiple responsibilities struggled to maintain the rigorous workflows needed for timely reimbursement.
Outsourced laboratory billing brought structure and consistency to claims submission, denial management, and underpayment resolution. Many labs saw measurable improvements in days sales outstanding (DSO), fewer stalled claims, and —critically — more predictable monthly revenue.
Additional advantages included:
- faster identification of coding or documentation gaps that delay payment
- systematic escalation of unresolved payer issues to accelerate reimbursement
Reliable cash flow became a critical advantage, particularly in a tightening reimbursement environment.
6. Scalability during periods of growth, expansion, or change
Laboratories expanding their test menus, entering new markets, or taking on new providers frequently encountered growing pains in their billing departments. Changes in volume, service lines, or payer mix often required additional staff, more training, or entirely new workflows.
Outsourcing delivered built-in scalability. Whether volumes increased, new tests requiring specialized coding were added, or the lab moved into new diagnostic areas, external billing teams could adapt quickly and efficiently. For our lab clients offering molecular or toxicology services, we saw that this flexibility was especially valuable.
7. The need to refocus internal resources on core laboratory operations
Finally, laboratories increasingly outsourced their billing because they wanted their internal teams to concentrate on what they do best: producing accurate, timely diagnostic results and delivering exceptional service to providers and patients.
Billing is complex, demanding, and administrative by nature. Managing denials, coding, documentation, and payer communication pulls staff away from mission-critical laboratory operations.
By outsourcing, labs regained the bandwidth to focus on workflow efficiency, turnaround times, client relationships, test quality, and strategic planning, while knowing their revenue cycle was in expert hands.
Ready to Strengthen Your Laboratory Billing Performance?
These seven reasons highlight why laboratories across the country outsourced their billing in 2025, and why outsourcing is quickly becoming the standard for efficient, compliant, high-performing laboratory RCM.
If your lab is navigating similar challenges or wants to explore how outsourcing can improve financial stability, PGM is here to help. Contact us today to learn why laboratories nationwide trust PGM as their billing partner of choice, and how we can help your lab achieve stronger, more sustainable financial performance in 2026 and beyond.