Why Replace Your Laboratory Information System? Things To Consider

Many clinical laboratories and pathology groups are still operating with laboratory information systems (LIS systems) acquired a decade or more ago, systems chosen when budgets were more robust. Now, relying on outdated laboratory information system software can put these organizations at a clear disadvantage.

That's because there have been many changes in recent years, both in laboratory operations and in regulatory environments, with new constraints, an emphasis on cost containment, and rapidly advancing medical LIS software capabilities.

Discover More: Transforming Patient Care - The Power of Laboratory Information Systems (LIS Systems) in Healthcare

Many older LIS systems no longer meet the evolving needs of modern laboratories or the healthcare organizations they support. However, replacing legacy diagnostic lab software often requires significant planning and justification, as the transition typically involves substantial capital investment and operational resources. 

Industry Insights: Best LIS Systems - Top Laboratory Information Systems Compared for Clinical, Pathology, and Outreach Labs

Key Justifications for Replacing Legacy LIS System Software

To justify replacing an antiquated healthcare LIS, it will be necessary to develop and present strong operating, cost-impact, and business-related justifications.

14 Substantial Reasons to Replace Your LIS System

Limited Functionality and Scalability: Inadequate laboratory information system functions and limited scalability hinder test volume expansion and new client acquisition, constraining the laboratory's overall revenue opportunities.

Misaligned Pricing Model: The LIS lab solution is expensive to operate and maintain, and its pricing model no longer aligns with the lab's cash flow or financial situation.

Poor Integration with Laboratory Billing and Other Systems: The LIS system's integration with laboratory billing, lab revenue cycle management (RCM), and other institutional laboratory software systems is insufficient.

Interoperability Challenges: The laboratory's legacy clinical and pathology lab management software and hardware are inconsistent with national and industry standards, which creates interoperability challenges with modern lab applications.

Outdated Platform Without Cloud Capabilities: The lab information system operates on an outdated platform that lacks cloud capabilities and a modern, user-friendly design.

Inadequate Vendor Support: The laboratory information system vendor's support services are poor, with substantially delayed problem resolution and enhancements that may carry regulatory implications and put the institution at risk.

Lack of Leading-Edge Technology Support: The existing LIS medical solution lacks robust support for modern capabilities such as molecular diagnostics, digital pathology, customizable reporting, direct-to-consumer lab testing, AI-enabled workflows, and other advanced technologies, thereby preventing it from remaining competitive and adapting to evolving industry demands. 

Performance Issues: The LIS system experiences performance issues and processing delays that can adversely impact laboratory turnaround times. 

High In-House Maintenance Burden: Maintaining the LIS software requires significant in-house expertise, and the current LIS company is not sufficiently responsive to the lab's changing needs.

Regulatory Compliance Difficulty: The laboratory information system struggles to comply with evolving federal and state regulations.

Security and HIPAA Risk: Critical security vulnerabilities have been identified within the LIS lab platform, exposing the system to potential breaches and creating compliance risks related to HIPAA requirements. 

Vendor Out of Business: The original LIS company is no longer in business, and system support is limited or non-existent.

Discontinued Support for Current Version: The original LIS company has replaced the lab's current LIS model with a more modern version and will soon discontinue enhancements and support for the older version.

Acquisition by a Competing Company: The lab's LIS system has been acquired by a larger company with a competing lab information system, and the new company has failed to provide contractual assurances of continued support.

White Paper: What To Do When Your Laboratory Information System Is Sunsetting

A Guide to Replacing Your Legacy Laboratory Information System

Building a Financially Justified Case

If any of the above replacement criteria have been met, a replacement laboratory information system software is likely due. In times of tight budgets, there is significant competition for limited capital funds. To succeed, it will be necessary to prepare a well-thought-out, quantified rationale to justify the laboratory's request for budget approval to replace the laboratory information system.

A rigorous financial spreadsheet analysis is often required, with specific financial criteria that must be met for the proposal to qualify for funding. A spreadsheet model for this analysis may be available from your financial office, the LIS system department, or the laboratory information system companies offering the LIS software upgrade.

Discover More: What You Need to Know Before Contracting with a Laboratory Information System (LIS) Company

How SaaS and Transaction-Based Pricing Make LIS System Upgrades More Affordable

A Flexible Alternative to Large Capital Expenditures

Today, various financing alternatives can remove or significantly reduce the capital budget allocation requirement. These include leasing and paying for the laboratory information system on a per-transaction basis, based on testing types and volume, similar to the SaaS model.

A transaction can be defined as the processing of requisitions from accessioning through reporting, with the number of tests processed factored into the transaction volume cost formula.

Why the SaaS Model Works for Labs With Limited Capital

The SaaS model may be most attractive to laboratories with limited capital budgets, as there are little to no upfront costs and monthly costs for LIS system services vary with workload. If laboratory volume decreases, the monthly cost decreases as well. This contrasts with a capital acquisition model, where, after the initial LIS system acquisition expenses, there is a fixed monthly service and support cost that remains even if business declines. 

Discover More: LigoLab Informatics Platform - Uniquely Designed with Tiered Pricing to Deliver Maximum Value

Partnering with Lab Vendors and Finance Teams to Justify LIS Software Replacement

When considering the best laboratory information system software replacement options, discussions should include various payment options with prospective LIS software vendors and the institutional CFO.

Except in unusual and critically apparent circumstances, it will be necessary for the laboratory to perform the required analysis to help justify its case for a replacement laboratory information system. The more rigorous and definitive the analysis and cost-benefit projections, the greater the laboratory's chances of obtaining the necessary approvals and budget allocation.

Discover More: Best Pathology Lab Reporting Software - Buyers Guide and Checklist

Upgrade to LigoLab’s Advanced LIS Software and Future-Proof Your Lab Business

Don't let outdated laboratory information system software hold your business back. LigoLab's all-in-one medical LIS and lab billing informatics platform is designed to empower clinical, molecular, and anatomic pathology labs with cutting-edge features and functions that drive efficiency, accuracy, and financial growth.

Act Now: Contact a LigoLab Product Specialist!

Article References

• Winsten, Dennis. "Why Spend the Money? Justification of Laboratory Information Systems." Clinics and Laboratory Medicine, R. Aller & F. Elevitch, Editors. W.B. Saunders Company, March 1991.
• Weiner, H., and Winsten, D. Chapter 6, Pathology Informatics, Theory and Practice, Editors: Pantanowitz, L., Tuthill, J.M., Balis, U. American Society for Clinical Pathology Press, 2012.

Mr. Winsten is President of Dennis Winsten & Associates, an independent healthcare information systems consulting firm headquartered in Tucson, Arizona. He brings more than 40 years of experience in computer technology and healthcare information systems. Learn more at www.dwinsten.com.

Frequently Asked Questions About Replacing a Legacy Laboratory Information System

What are the signs that it's time to upgrade or replace your LIS system? 

Key indicators include limited scalability that prevents test volume growth, a pricing model that no longer fits the lab's financial situation, poor integration with lab billing and EHR systems, performance slowdowns affecting turnaround times, inadequate vendor support, security vulnerabilities, non-compliance with regulatory standards, and a lack of support for modern technologies such as digital pathology, molecular diagnostics, and direct-to-consumer lab testing.

What are the risks of continuing to use a legacy LIS system?

Continuing with an outdated LIS system poses multiple risks, including regulatory compliance failures, HIPAA security vulnerabilities, competitive disadvantages due to a lack of modern features, revenue loss from poor billing integration and claim denials, high in-house maintenance costs, and operational constraints that prevent the lab from scaling efficiently or pursuing new business opportunities.

How should a lab build a financial case for replacing its LIS system?

Labs should prepare a rigorous financial spreadsheet analysis that quantifies the cost of staying with the current system, including maintenance costs, revenue leakage from poor billing integration, staff productivity losses, and competitive opportunity costs, against the projected gains from a modern LIS. This analysis should be developed in collaboration with the institutional CFO and prospective LIS software vendors who can provide realistic cost-benefit projections.

What is the SaaS pricing model for laboratory information systems and how does it help labs with limited capital?

A SaaS-based LIS pricing model enables laboratories to pay according to transaction volume, typically measured by the number and type of requisitions processed from accessioning through reporting. By replacing large upfront investments with predictable operating expenses, the model better aligns costs with actual laboratory activity. When test volume declines, costs decrease as well, unlike capital purchase models that carry fixed expenses regardless of utilization. 

What happens when a lab's LIS vendor discontinues support for the current system?

When an LIS vendor sunsets a product or is acquired by a competitor, labs face an increasing risk of unresolved technical issues, security vulnerabilities, and regulatory non-compliance as support diminishes. In these situations, lab leadership should begin planning a transition to a modern platform immediately, as a well-managed replacement can take 15 to 18 months from initial research to go-live.

What features should a modern LIS system include that legacy systems typically lack?

Modern LIS systems should support cloud deployment, digital pathology integration, molecular diagnostics, flexible and customizable reporting, direct-to-consumer lab testing, AI-assisted workflows, embedded lab billing and RCM, robust security and HIPAA compliance, seamless EHR and instrument interoperability, and a responsive vendor support model, all within a single, unified platform.

How does LigoLab's pricing model address the capital budget challenge of LIS replacement?

LigoLab offers a tiered, transaction-based pricing model that eliminates large upfront capital requirements and hidden fees. Pricing scales with the lab's testing volume and includes all modules, users, upgrades, and support, aligning the cost of the LIS system directly with the lab's growth and financial performance rather than imposing fixed costs regardless of business conditions.