Market forces have dramatically influenced the environment in which healthcare is delivered, but these changes do not need to be interpreted negatively by community laboratorians. Only total vertical integration of laboratory medicine can control episode-of-care cost. Opportunities also exist for horizontal integration with community partners to provide geographical coverage and to compete favorably for managed care contracts. Lowering cost through "economies of scale" may apply to the procurement of supplies and equipment, but the delivery of services must be considered in the context of their overall effect on episode-of-care cost. Laboratory services may make up 5% of a hospital's budget but leverage 60-70% of all critical decision-making such as admittance, discharge, and medication. Laboratory outreach can help the medical center's financial stability by: (a) providing tests and service that can reduce or avoid a hospital stay; (b) using the additional volume of testing to distribute existing fixed costs and lower unit cost; and (c) adding revenue as a direct contribution to margin. To successfully compete for contracted managed care services, the laboratory must network with other providers to demonstrate comprehensive access and capacity. Community hospital laboratories perform 50% of all laboratory tests in this country and have adequate excess capacity to fulfill the remaining community needs.