How to Start a Laboratory Testing Business (2026)
Start a lab testing business: pick a test menu, write the business plan, budget startup costs, then cover CLIA, staffing, equipment and payers.
Jeffrey Williams
6/30/20238 min read
To start a laboratory testing business, do these things in order. First, pick your niche and test menu. Next, write a business plan covering your market, clients, workflow and five-year projections. Then work out your startup costs. After that, get the CLIA certificate that fits your highest-complexity test, along with any state license. Last, choose an accreditor, hire qualified personnel, and select equipment and a laboratory information system (LIS) before you take your first specimen.
This guide covers the business decisions behind a new lab: what to test, who you serve, what it costs and how the lab gets paid. For the regulatory build, step by step, see our companion guide, How to Start a Clinical Laboratory. Sound Lab Consultants (SLC) is a nationwide CLIA, COLA and CAP laboratory consulting network that supports new labs in all 50 states.
Step 1: Define Your Niche and Test Menu
Your test menu decides almost everything else: which CLIA certificate you need, who you have to hire, what equipment you buy and which clients you can serve. Common niches for a new lab testing business include:
General panels: chemistry, hematology, lipid, metabolic and thyroid panels for physician offices and clinics.
PCR and molecular testing: respiratory, infectious disease, women's health and pharmacogenomic panels.
Toxicology: presumptive screening and confirmatory testing for behavioral health, pain management and treatment programs.
Drug screening: employer, pre-employment and program testing. Workplace testing under federal programs has its own certification rules beyond CLIA.
DNA testing: paternity, ancestry or genetic testing. Note that some DNA and genetic tests may fall outside or alongside clinical CLIA rules, depending on how results are used.
Choose your complexity level
The FDA categorizes every test as waived, moderate complexity or high complexity. You can look up any test in the FDA CLIA test categorization database. Your most complex test sets your requirements:
Waived: simple tests with a low risk of error. Lowest regulatory burden, but also a narrower market.
Moderate complexity: most automated chemistry, hematology and immunoassay analyzers.
High complexity: most molecular work, confirmatory toxicology (for example LC-MS/MS) and laboratory-developed tests. This level has the strictest personnel and validation requirements.
Before you pick a level, match the menu to demand you can actually reach. Ask which referring providers or employers in your area need these tests, and what they use now.
Step 2: Write a Laboratory Business Plan
Lenders, investors and partners will want a written plan. It is also how you check whether the lab can pay its own way. Include:
Executive summary: what the lab does, who it serves and what makes it different.
Market analysis: local and regional demand for your test menu, existing reference-lab options, and any regulatory or payer trends that affect your niche.
Target clients: physician practices, clinics, skilled nursing facilities, behavioral health programs, employers or (where state law allows) direct-to-consumer patients.
Services and test menu: the tests you will offer, their complexity level and your expected turnaround times.
Operations and workflow: how specimens are collected (in-house, courier or mobile phlebotomy), how they are received and processed, and how results are reported, from order to result.
Organization and personnel: ownership, the laboratory director and the staffing plan (see Step 6).
Regulatory plan: CLIA certificate type, state licensure, accreditation choice and expected timeline.
Marketing and sales plan: how you will reach and keep referring clients, within healthcare fraud and abuse rules.
Financial projections (5 years): startup costs, monthly operating costs, expected test volume, payer mix, cash flow and break-even point.
Have a healthcare attorney review ownership and referral relationships early. The Stark Law and the Anti-Kickback Statute directly shape how a lab can be owned and marketed.
Step 3: Estimate Startup Costs
Startup costs depend so much on test menu, volume, location and equipment strategy that a single number would be misleading. Build your budget line by line from real quotes. Typical categories:
Government fees: CLIA certificate and survey fees, state license fees and local business permits.
Accreditation fees, if you choose a Certificate of Accreditation.
Facility: lease, build-out, electrical, plumbing, ventilation, biosafety requirements and any special room requirements (molecular labs usually need separate pre- and post-amplification areas).
Instruments and equipment: purchase, lease or reagent-rental agreements, plus service contracts.
Reagents, controls, calibrators and consumables.
Proficiency testing (PT) enrollment for regulated analytes.
LIS and IT: software, interfaces to clients' EHRs and billing systems, and cybersecurity.
Personnel: laboratory director, consultants or supervisors, and testing personnel, including salaries before revenue starts.
Method validation and verification before patient testing.
Insurance, legal and professional fees.
Working capital to cover operations while payer enrollment and claims processing catch up.
Official CLIA fees (from CMS)
CLIA fees are the one cost category with published federal figures. Under the CMS CLIA Certificate Fee Schedule (updated 2024), all certificates are biennial (every two years):
Certificate of Waiver: $248
Provider-Performed Microscopy (PPM): $297
Registration certificate (issued while a non-waived lab awaits its survey): $123
Compliance and Accreditation certificates: set by annual test volume and number of specialties, from $223 (Low Volume and Schedules A–B) to $11,801 (Schedule J, more than 1,000,000 tests). Compliance labs also pay a survey fee, and accredited labs pay a much smaller validation-survey fee. Both are listed on the CMS schedule.
These fees took effect January 27, 2024 under CMS final rule CMS-3326-F. That rule also provides for biennial inflation adjustments, so confirm the current amount with CMS or your State Survey Agency before you budget. State license and accreditation fees vary, so get them directly from the agency or accreditor.
Step 4: Get Your CLIA Certificate and State License
Any facility that tests human specimens for diagnosis, prevention or treatment needs a CLIA certificate. There are five types:
Certificate of Waiver: waived tests only.
Certificate for PPM Procedures: specified microscopy by a physician or midlevel practitioner, plus waived tests.
Certificate of Registration: temporary. It lets a non-waived lab test until its compliance is confirmed.
Certificate of Compliance: non-waived testing, surveyed by the State Agency.
Certificate of Accreditation: non-waived testing, inspected by a CMS-approved accrediting organization.
To apply, file Form CMS-116 with the State Agency for the state where the lab is located. Then pay the fee through Pay.gov when you receive the fee notification. See CMS's Apply for a CLIA Certificate page. For non-waived certificates, you have to submit proof that your laboratory director is qualified.
State licensure: some states require their own laboratory license on top of CLIA, and some have personnel licensure rules as well. New York and Washington run CMS-exempt state programs. Check your state's requirements before you sign a lease, and if you plan to accept specimens from other states, check those states too. Our CLIA consultant services cover certificate and state license applications.
Step 5: Choose an Accreditation Path
Non-waived labs can either be surveyed by the State Agency (Certificate of Compliance) or get accredited by a CMS-approved organization (Certificate of Accreditation). Common options for new labs:
COLA: often chosen by physician office and community labs.
CAP (College of American Pathologists): common for high-complexity, hospital and reference labs.
The Joint Commission: often chosen by labs inside a health system that already holds Joint Commission accreditation.
Your choice should fit your test menu, your clients' expectations and any payer or contract requirements. SLC works with labs preparing for COLA, CAP and Joint Commission inspections, as well as State Agency surveys.
Step 6: Staff the Lab to 42 CFR Part 493
CLIA personnel requirements are in 42 CFR Part 493, Subpart M, and they depend on complexity:
Waived labs: need a laboratory director. There are no federal education requirements for the role.
Moderate complexity: laboratory director, technical consultant, clinical consultant and testing personnel.
High complexity: laboratory director, technical supervisor, clinical consultant, general supervisor and testing personnel.
Many startups can't afford a full-time, qualified laboratory director right away. SLC provides laboratory director services and the consultant roles CLIA requires, so new labs can start with qualified personnel in place.
Step 7: Select Equipment and an LIS
Choose instruments based on your test menu, expected volume and the space you have. For each one, compare:
Purchase, lease and reagent-rental terms
FDA clearance status and complexity categorization
Throughput and turnaround time
Service coverage and how long repairs take
Whether a backup method is available
Your LIS should handle orders, specimen tracking, result reporting, quality control records, client portals or EHR interfaces, and the data your billing partner needs. Every new instrument and method has to be verified, or validated for laboratory-developed tests, before you report patient results.
Step 8: Understand Reimbursement and Payers (Compliance Basics)
SLC does not provide billing services. This section is general compliance guidance only. How your lab gets paid shapes your business plan:
Payer mix: Medicare, Medicaid, commercial insurance, client billing (billing the referring practice) and self-pay or direct-to-consumer.
Enrollment: to bill Medicare or Medicaid, a lab needs a valid CLIA certificate that covers the tests billed, an NPI and payer enrollment. Commercial payers usually require credentialing and contracts.
Medicare pricing: most clinical lab tests are paid under the Clinical Laboratory Fee Schedule (CLFS).
Compliance: document medical necessity, use correct coding, keep orders on file, and avoid referral arrangements that could violate the Anti-Kickback Statute or Stark Law.
Work with a qualified billing company and healthcare attorney for these areas.
Typical Timeline
How long it takes depends on your state, test complexity, facility build-out and accreditation choice. A typical sequence:
Business setup and plan: form the entity, get an EIN, secure funding and get legal review.
Facility and equipment: sign the lease, do the build-out, and buy and install instruments.
Licensure: file the CMS-116 and your state application. Non-waived labs receive a registration certificate first.
Personnel and quality system: hire the director and staff, write procedures and enroll in PT.
Validation: verify or validate every method.
Survey or inspection: State Agency survey or accreditation inspection.
Payer enrollment and launch: start enrollment early, because it often runs alongside the steps above.
Frequently Asked Questions
How much does it cost to start a laboratory testing business?
It depends on your test menu, volume, facility and equipment strategy, so build your budget from real quotes. The fixed federal cost is the CLIA certificate fee. According to the CMS fee schedule, it is $248 every two years for a Certificate of Waiver, $297 for PPM, and from $223 to $11,801 every two years for compliance or accreditation certificates, depending on test volume. Compliance labs pay survey fees on top of that.
Is a laboratory testing business profitable?
It can be. Profitability depends on reaching enough test volume, a sustainable payer mix, how much you are reimbursed per test, and controlling reagent, staffing and equipment costs. Run your five-year projections carefully, and test them against conservative volume and reimbursement assumptions before you commit capital.
What license do I need to open a lab?
You need a CLIA certificate that matches your highest-complexity test, applied for on Form CMS-116. Many states also require a state laboratory license, and some require personnel licenses. You will also need local business permits.
Can I start a lab without being a doctor or scientist?
Yes. Ownership is not restricted by CLIA, but non-waived labs need a laboratory director who meets the 42 CFR Part 493 qualifications, along with other qualified personnel. Many owners contract these roles.
What's the easiest type of lab to start?
A waived-testing lab under a Certificate of Waiver has the lightest requirements. The trade-off is a narrower test menu and market. Moderate-complexity labs are a common next step.
Do I need COLA, CAP or Joint Commission accreditation?
Not always. Non-waived labs can choose State Agency surveys (Certificate of Compliance) or accreditation. Some clients, payers or contracts prefer or require accreditation.
How long does it take to start a lab testing business?
It depends on your state, the complexity of your tests, how long the facility build-out and validation take, and survey or inspection scheduling. Payer enrollment adds more time, so start it early.
What is the difference between this guide and starting a clinical laboratory?
This page covers the business side: niche, business plan, costs and payers. Our How to Start a Clinical Laboratory guide walks through the regulatory build step by step.
Get Help Starting Your Lab
Sound Lab Consultants helps new labs nationwide with CLIA certificates, state licensure, accreditation readiness and qualified personnel. Plans from $500.
Mailing address: PO Box 2135, Chandler, AZ 85244