Avalon 2026 Lab Trend Report Finds Diagnostic Spending Outpacing Utilization, Underscoring the Need for Smarter Diagnostic Management

Report explores opportunities and challenges reshaping diagnostic management—from routine and genetic testing to AI-enabled diagnostics and emerging biomarkers.

TAMPA, Fla., July 21, 2026 /PRNewswire/ -- Laboratory testing influences nearly 70% of clinical decisions and is the most utilized medical benefit in healthcare, yet it remains one of the least actively managed. According to Avalon Healthcare Solutions'newly released 2026 Lab Trend Report, diagnostic spending continues to outpace utilization across both routine and genetic testing, underscoring the growing need for evidence-based strategies that improve affordability while supporting high-quality care.

Now in its sixth year, the Lab Trend Report (LTR) uses data from 37 million health plan members, a subset of Avalon's 90+ million managed lives, to deliver critical insights for payers navigating the intersection of rising diagnostic demand, cost variability, and clinical innovation.

"Diagnostics are no longer simply supporting healthcare — they're shaping it," said Bill Kerr, MD, CEO of Avalon Healthcare Solutions. "Laboratory testing sits at the center of nearly every clinical pathway, yet it remains one of healthcare's least managed benefits. As innovation accelerates, from precision medicine to AI-enabled diagnostics, payers need smarter, evidence-based approaches that improve quality while managing cost. That's why we produce the Lab Trend Report each year."

Routine Testing: Healthcare's Largest Diagnostic Opportunity

Routine laboratory testing accounts for approximately 90% of all laboratory testing and remains the foundation of disease screening, diagnosis, and chronic disease management. While often viewed as low cost on a per-test basis, its scale makes it one of healthcare's largest opportunities to improve affordability.

The report found routine testing spend increased 3.7% in 2025 while utilization grew just 0.5%, indicating that higher costs are being driven less by increased testing volume and more by factors such as site of service, price inflation, and expanding test panels. Industry projections suggest routine testing spend will continue growing 5–7% annually over the next decade.

Site-of-Service Price Variation Continues to Drive Higher Costs

One of the report's most consistent findings over the past five years is the significant variation in laboratory pricing based solely on where testing is performed. Hospital outpatient laboratories charge 1.5 to 6.8 times more than independent laboratories for identical routine tests, without evidence of better quality. For example, comprehensive metabolic panels cost nearly 7x more, while complete blood counts cost more than 5x more in hospital outpatient settings than at independent laboratories. These persistent price disparities highlight the ongoing opportunity for health plans to improve affordability through smarter laboratory management and site-of-service optimization.

Genetic Testing Emerges as Fastest-Growing Diagnostic Category

While routine testing represents healthcare's largest diagnostic opportunity due to its scale, genetic testing continues to be the fastest growing and most complex area of laboratory medicine.

The report found health plan spending on genetic testing increased 35% in 2025 while utilization increased 22%, reflecting rapid adoption of precision medicine, oncology applications, reproductive health testing, and rare disease diagnostics.

Although genetic testing represents only about 15% of laboratory utilization, it now accounts for more than 30% of laboratory spending. Among members receiving at least one genetic test, average annual spending reached $1,504 per member — more than three times the average spend for routine laboratory testing ($490 per member).

The rapid pace of innovation is creating unprecedented management challenges. Approximately 10 new genetic tests enter the U.S. market every day, while more than 175,000 genetic tests are now commercially available. Coding limitations, expanding clinical applications, laboratory quality variation, and premium-priced new technologies continue to outpace traditional benefit management approaches. Industry forecasts project genetic testing spending will continue growing 14–21% annually over the next five to eight years.

"Routine testing represents healthcare's largest diagnostic opportunity because of its scale. Genetic testing represents its greatest management challenge because of its pace of innovation," Kerr said. "The challenge is no longer managing laboratory testing — it's managing diagnostic complexity. Health plans need evidence-based strategies that ensure members receive the right test at the right time while improving affordability and accelerating access to clinically valuable innovations."

Evidence-Based Diagnostic Management Delivers Results

Avalon is committed to helping payers and providers better manage testing to save money and ensure members receive access to appropriate testing.

Through evidence-based policies, intelligent automation, and utilization management, Avalon helped clients in 2025 achieve:

• $63.1 million in averted costs through Routine Test Management across more than 6.5 million members
• $70.3 million in averted costs through Genetic Test Management across more than 9.2 million members
• More than $133 million in combined averted laboratory costs, representing 15.5% of total laboratory spend, while also driving an additional 10–15% long-term provider behavior change through evidence-based policy management and clinical guidance.

Three Forces Reshaping Diagnostic Medicine

Beyond current utilization trends, the report highlights three developments expected to reshape laboratory medicine over the coming decade:

• AI-enabled diagnostics and an evolving regulatory landscape
• Next-generation blood biomarkers, including multi-cancer early detection (MCED), minimal residual disease (MRD), and Alzheimer's disease testing
• Consumer-generated diagnostic data, driven by rapid growth in direct-to-consumer laboratory testing and wearable health technologies

Together, these trends reinforce the need for payers to move beyond traditional utilization management toward a more comprehensive Diagnostic Intelligence approach that combines scientific evidence, clinical expertise, automation, and real-world data to improve quality, affordability, and patient outcomes.

The complete 2026 Avalon Lab Trend Report and companion infographic are available at:

https://www.avalonhcs.com/resources/2026-lab-trend-report/

About Avalon Healthcare Solutions

Avalon is the leader in diagnostic intelligence, helping health plans and providers unlock the full value of diagnostic science. We simplify complex diagnostics, accelerate the adoption of proven innovations, and optimize diagnostic investments. Through our proprietary Diagnostic Insights Platform, we integrate evidence-based policies, curated lab networks, and real-time insights to improve health outcomes, reduce costs, and enable personalized care at scale. With unmatched diagnostic focus, deep scientific expertise, and a proven performance-based model, we support over 30 health plans and 90+ million members nationwide — delivering smarter testing, better care, and measurable value. For more information about Avalon, visit www.avalonhcs.com.

Media Contacts
Michele Norton MS, RN
SVP Product Marketing, Avalon Healthcare Solutions
[email protected]

Janet Mordecai
Supreme Communications for Avalon Healthcare Solutions
[email protected] 

SOURCE Avalon Healthcare Solutions