How to buy an LIS or LIMS

Buying a Laboratory Information Management System (LIS or LIMS) is a lot more complex than buying a computer. The range of costs and features for a Laboratory Information System (LIS) system to support a lab with a couple of analyzers is between $4,000 and $100,000. The price will vary based on your devices and desired features. The choice you make can dramatically change the way your business operates. It will not be an easy decision. The right decision will result in significant improvement to the quality of your workflow, reduced costs and happier staff.

An LIS or LIMS is a complex system that will typically involve at least: Your EHR vendor, a network consultant, your IT staff and the LIS vendor. Managing a project this diverse is a little like herding cats. Deployment is likely to take weeks to complete. More if there will be HL7 interfaces to sendout labs or billing services. My best advice after 40 years in the business is to hire the best lab consultant you can find. It will be the best investment you can make. A good lab consultant will easily save you thousands of dollars setting up your new lab and more importantly ensure your lab operations are consistent with "best practices" and regulatory requirements.

Click on the CheckList image to get a free copy of my 160 question checklist for buying an LIS. Apex LIS checklist

Why do you want one?

An LIS to connect two waived devices to your EHR will vary in acquisition cost from a low of $4,000 to a high of $25,000. Annual operating costs will vary from $1000 to $5000. The $4,000 choice will be easy to use and will deliver results to your EHR. It will, however, be of no help if you acquire a non-waived device or need a third device. The $25,000 solution will be expandable and have lots of features. Initial cost is generally driven by: number of analyzers, waived vs non-waived, 3rd party interfaces and number of users. The price per analyzer can vary from $500 to $5000 depeding on complexity. Third party interfaces can vary from $1500 to $15,000 depending on the 3rd party.

Begin your LIS acquisition adventure by listing the features you will need your LIS to support. This is a team effort that should include all constituents and is greatly enhanced by someone who has experience and is on your team as either employee or consultant. Here is a list of must have features:

  1. Automatically accept orders from your (or your client's) EHR
  2. Support electronic interfaces to one, or more, reference labs
  3. Automatically stage orders onto lab devices (analyzers) in your lab
  4. Automatically accept results from analyzers in your office
  5. Automatically accept results from one, or more, reference labs
  6. Automatically send results back to your (or your client's) EHR
  7. Generate specimen labels with or without barcode labels
  8. Generate reports (you will need to list the ones you need)
  9. Fully automate the processing of analyzer controls including mandatory reports
  10. For a reference lab support billing function (you will need to define level required)
  11. Written guarantees of compliance with: CLIA, HIPAA and PHI applicable requirements
  12. Provide automated tools for managinf lab SOP and CLIA compliance

In order to generate this list you will need to first define your workflow and the roles the EHR and LIS will play. For example, which application is in charge of generating specimen labels and resolving exceptions? Do your lab analyzer use specimens with barcodes. Can the tests be staged by the LIS onto the analyzer saving the lab tech the need to type information onto the analyzer console?


Because the business model of most manufacturers is built on there expectations of monthly consumables sales for their analyzers there is room for negotiation. Many manufacturers will pay for the LIS interface or provide you with free consumables with a value equal to the interface fee. In a competitive situation most LIS vendors will give significant discounts. Be sure that your LIS vendor choice guarantees you interface fee price for any analyzers you may buy in the furure.

Analyzers come in four different flavors:

  1. Uni-directional analyzers require that lab tech manually enter specimen and test info. Interface costs range from $500 to $3000
  2. Bi-directional analyzers allow the LIS to automatically deliver the specimen and test info so the lab tech simply presents the barcode label. Interface costs range from $2000 to $5000
  3. Host Query analyzers include an on board computer that acts as a peer to the LIS letting it know when it will accept new work. Interface costs range from $3000 to $6000
  4. Complex analyzers are generally associated with large capacity specimen trays, robotics and sophisticated post processing rules. Interface costs range from $5000 to $10,000

Getting lab results from most analyzers into the patient chart in your EHR is way more complex than connecting the device to the back of your EHR computer. Lab devices will output their results out of a computer port in the back of the device and send them via a cable that connects the lab device to your LIS computer or your Local Area Network (LAN). This cable is almost always an RS232 or USB cable but newer devices can connect directly to your LAN. When the results data arrive at the LIS computer they will be converted into an HL7 message that can then be sent to the EHR. And this is a gross simplification the technical issues that must be resolved between the LIS workstation the lab devices connected, the local area network over which the LIS will send results to the EHR and the software at each end whose purpose it is to accept and receive HL7 messages.

Evaluating Products

If all you want to connect is a reference lab you are in luck. In most cases the reference lab will cover the cost to connect to your EHR. Simply find the cheapest solution that guarantees interface to your EMR and selected reference lab.

If, on the other hand, you will be operating a lab with one, or more moderately complex devices choosing an LIS will be a whole lot more complex. The first thing you should do is find a local Lab Consultant to help you make the right choice. It will probably cost you a $1000, but is likely to save you much more and significantly improve the likelihood that you will still have a lab a year later. The range in LIS costs for a moderately complex lab with two, or three, lab devices will range from a low of $5,000 to a high of $30,000 and all systems will do what you need done. The $5,000 solution will only do what you need, but should allow you to add functions over time if you need them. The $30,000 system will have all the features you will ever need (and maybe some you will never need). Five year cost of ownership can range from a low of $20,000 to a high of $60,000.

Never buy an LIS without having first written down your required work flow. Once you have your work flow defined ask each vendor you are considering to show you how they deal with each required function. All vendors are happy to provide you with a web-based demo.

Never buy an LIS without having the person who will run the lab see the demo and be absolutely clear on how each function will work. If an LIS vendor cannot show you how their application performs each step of your required work flow you need to cross them off your list. Your LIS vendors will be happy to provide as many demos to as many members of staff as you would like. Don't let your providers tell you they are too busy to check the format of the LIS reports.

Get TEN references and call them. Make a spreadsheet listing all the functions that you know you will need. Ask each vendor to show you how they handle each function and then grade them (e.g. Poor, OK or Great).


Physician's Office Labs (POL) will normally require an HL7 interface that send orders to the LIS and accepts the results when the test is done. This allows the provider to request the order in the EMR which send an electronic request to the LIS. When the LIS is done it will send the reults automatically to the EMR which places them in the patient chart. This is the gold standard. Some EMR or LIS systems are unable to send or receive orders via HL7. Best to avoid these solutions.

Reference labs must have an LIS that allows them to accept client orders via HL7 or a cloud-based solution that allows for entry from both desktop PCs and mobile devices.

Just because your lab device can output HL7 results does not mean that they will end up in the EHR patient chart. Designing and deploying a local area network at your practice that transfers patient and lab information to and from lab devices, reference labs and your EHR over your local area network in compliance with both patient privacy requirements and the competing needs of your EHR and LIS is not for the faint of heart or amateurs. Find a lab consultant with plenty of experience.

Lab Devices typically output their results using an international standard like (ASTM) if you are lucky or some proprietary format (which means the interface cost will be higher) that must then be converted into the HL7 international standard for conveying health information between computer systems. The HL7 standard is what the US government has selected for use by EHR systems which are certified.

Specialty Lab Issues

All LIS applications will be able to accept lab orders and produce results reports. The required minimum functionality for a waived chemistry lab is drastically different than that of a Pathology Lab. A chemistry lab will report the measured level of an anlyte (e.g. LDL is 150). A pathology lab will produce a report detailings procedures, findings and conclusion. Those labs specializing in consult reports like histology, microbiology, neurology andpathology will require the ability to easily support: many specimens, coordinate activity of multiple providers and an easy-to-use report template module. Ideally a report module with phrase libraries and support for speech to text.

Labs involved in genetic, molecular testing have special requirements related to their ability to process many specimens in trays. Once the analyzer generates the results it may create an output file with thousands of data points. The LIS must be able to accept rules that allow clinician to programmatically perform first level analyses. In some cases the LIS must be able to automatically deliver processing requests to a third party for further analyses. In these cases the LIS must be able to send the test reqest, wait for results and then incorporate in final results report.

Specialty labs can achieve very high levels of efficiency and process quality when they partner with an LIS developer ready to assist in designing and deploying automated tools that assist the clinican. At Apex we welcome the opportunity to partner with our lab clients as evidenced by the work we did for one genetic testing client where we post-processed thousands of data points and then produced a 65 page report in both English and Mandarin!

In-house versus Cloud

A key decision you will make is whether you wish to have the LIS run independent of the Internet or not. In the past applications only ran on an in-house server to which PCs were connected. This required significant monthly costs to manage and maintain the network and equipment. With the emergence of complex and expensive requirements to protect Patient Health Information (PHI) there has been great incentive to deploy cloud-based solutions. For some the inability to hire qualified network employees has mandated a move to the cloud.

There are now LIS solutions that are totally cloud-based. These solutions allow you to run the LIS from ANY PC from ANYWHERE. This means that your Docs can connect with their smartphone to the LIS from her/his vacation in Bermuda and provide a consult if needed. If you are considering this option make sure your potential vendor provides you a written guarantee of HIPAA compliance for their solution. In general cloud-based solutions are fine. Besides HIPAA your primary concern should be what happens to communications with your analyzers when there are Internet interruptions (and there will be interruptions). Cloud-based solutions are best when the vendor provides a local PC that is directly connected to your analyzers and will keep running even if you lose internet connectivity.

New technolgies always bring with them tecnical challenges and mangement complexity. Note there are many new cloud-based options. With a younger firm you will have lower costs but higher risk of problems. A common problem with a new supplier is their inability to support new complex analyzers. Checking their references with labs with similar equipment is critical. Your lab consultant can guide you thru the many technical choices/issues you will need to asses for your LIS vendor options. My best advice is to make sure the cloud software you are considering is hosted on one of the top three cloud platforms (Amazon, Google or Microsoft). Each of these will provide you with regulatory PHI compliance, superb service and competitive costs.

Reference Lab Issues

The core component of any LIMS considered for a reference lab is its ability to easily accept and process orders from multiple clients. At a minimum the LIMS should be able to accept orders: (a) via HL7 orders interface, (b) upload of CSV file with order data, (c) client access to web portal for entry of orders and from your website.

The LIMS should be able to evaluate incoming orders to determine the performing lab. Factors impacting peforming lab would normally include: client preference, insurance requirement, patient location, lab capacity and type of panel.

Results reporting should reflect the client preference. Normally and encrypted copy of the report is stored on a web portal that can be accessed by client and patient. The LIMS should also be able to deliver results report via: email, fax and secure text link. The email would typically include a live HTML link and a QR code both of which will result in a display of the results report. The ordering provider should be able to designate additional individuals to receive a copy of the result report.

Given the varying types of reference labs and associated complexity of billing for services not all LIMS include a billing module. The LIMS should, however, provide the following support functions: ability to generate an invoice, generate a CSV export file with needed billing data, an HL7 DFT billing interface to 3rd party application and services summary reports sufficient to prepare a manual invoice.

PHI Compliance

At almost every country governments have passed laws designed to protect patient's health data. In the USA CLIA, HIPAA, PHI and CFR 22 Part 11 include specific requirements that the LIMS application and users must comply with. The combined complexity and cost has been a major factor in the rapid growth of cloud-based LIMS. With a cloud-based LIMS the vendor shoulders almost all the responsibility for complying with the myraid security technical issues.

The penalties for non-compliance can be draconian. If you intend to host the LIMS on one of your servers you should hire a security consultant. The security consultant should provide you with a report confirming compliance with applicable requirements or what is required to be in compliance. Once compliance has been achieved he should provide a new report confirming your full compliance. You will want to keep a copy of this report in a safe place. You will want to confirm that the server running the LIMS has:

  1. Endpoint protection like
  2. Proactive OS and software patching monthly
  3. Disk encryption
  4. 24/7 monitoring to detech breach attempts and hardware issues
  5. Backup and Disaster Recovery Plans
  6. Regular vulnerability scans

Hidden Costs

In the LIS business there is no end of ways in which well-intentioned professionals can misunderstand each other. For example, the EHR vendor tells you that their product is able to accept HL7 lab results messages. Does that mean you can connect your lab device to the EHR: No. Does that mean that if you buy an LIS that sends HL7 result messages to the EHR they will end up in the right patient chart: No. Does that mean that you will have to buy the "optional EHR HL7 Connector" they forgot to mention: Yes. There will still be an installation fee.

In more than 25% of LIS sales there are "surprises" after the LIS is purchased. Even after the buyer has been told the issues that this page addresses. A classic case is that the practice tells the EHR that they are buying an LIS and need the ability to deliver HL7 lab results. Somehow this frequently gets misunderstood by the EHR vendor as a request for connecting to a reference lab like LabCorp or Quest which is normally much more expensive that an LIS connection. Be sure you communicate in writing and get a response that confirms your understanding. The absolute best thing to do is to host a conference call where the EHR and LIS vendors review the work that will need to be done. In this way there is a clear communication of the technical issues and who will be responsible for what component of deployment. You can be sure they will both charge a fee.

Before you buy an LIS send your EHR vendor a letter or email that announces your intention to acquire an LIS and ask that the EHR respond by listing any fees that they may charge to connect orders and results HL7 processing to the EHR. Further request that they provide with you a date on which they would be prepared to work with the LIS supplier to connect and test the processing of orders and results.

In most, but not all, cases you will spend more with the LIS company in years two through five then when you acquired the LIS System. Have your vendor provide you with their fee schedule for:

  1. Annual license fees
  2. Support fees
  3. Charges to switch a lab device model
  4. Charges for a new additional lab device
  5. Charges for application upgrades
  6. Fee structure for new reports or screens
  7. Fees if you move or if you add an additional location

Managing Installation

We have customers where it has taken almost two years to complete installation of the LIS. We have one customer that waited seven months for their EHR supplier to schedule technical staff to allow connection to their EHR.

All LIS installations involve at least three parties and frequently more. A partial cast of possible players are:

  1. Your EHR
  2. The LIS supplier
  3. Your IT support person
  4. One, or more, reference labs
  5. A third-party provider of interface services to your EHR
  6. Your lab consultant

For deployment of the LIS System to be both timely and successful you will need to assign a senior staff member to babysit the process. A critical component of managing is a weekly conference call where each group reports on how they did on their committments from last week and what they will complete in the coming week. The weekly meeting brings focus to what needs to be done and highlights how each player is meeting their committments.

All installations of an LIS for either a first-time lab or a connection to an EHR will have problems during the first couple of months. The level of problems will be a function of:

  1. The EHR you picked
  2. The LIS you picked
  3. The Lab Devices you picked
  4. The staff you picked
  5. The complexity of your lab devices
  6. A third-party provider of interface services to your EHR
  7. Your lab consultant

There is an incredible amount of information that your staff will need to absorb and understand and for most deployments they are not going to get a couple of weeks off to train in a test environment that replicates the choices you have made. An EHR, complex new lab analyzer and a new LIS can tax even the most seasoned lab tech.

Count on there being problems. Make a plan that includes your staff and suppliers on how these problems will be resolved when they occur. The plan should include who to call for what type of problem and who is the backup. What expected resolution time will be and what is the escalation plan. The best measure of a supplier is not how they perform when things are going well, but rather how they perform when there are problems.